Legal Implications of a Bill of Lading (2024)

In the U.S., the multi-part, non-negotiable UNIFORM DOMESTIC STRAIGHT BILL OF LADING is the most commonly used form. Shippers often use preprinted forms which often contain not only a description of their commodities and applicable class(es) but, in addition, make a reference to the carrier’s filed tariff. Since the filing of tariffs is no longer mandated by law,Shippers and carriers have since had the opportunity to negotiate the terms and conditions of the bill of lading contracts since this deregulation took place. Individual shippers and carriers as well as shipper and carrier trade organizations hire lawyers to draft Bills of Lading that protect their interests first.While the “filed rate doctrine” has been abolished with deregulation, compliance with the carrier’s tariff and the terms and conditions of the bill of lading can still be required under ordinary principles of contract law. This is why it is so important for shippers and carriers to understand the terms of the their agreement regarding hauling freight.

Carmack Amendment and Other Laws Affecting BOLs

The governing statutes are the Carmack Amendment of 1906 (“Carmack Amendment”),the Motor Carrier Act of 1980, the Trucking Industry Regulatory Reform Act of 1994,and the Interstate Commerce Commission Termination Act of 1995 (“ICCTA”). Carriers can provide either Section 14706 (common carrier) carriage or Section 14101(b) (contract) carriage within the United States.

a. Section 14706 (Common Carrier) Carriage

A carrier in today’s period of deregulation need not file tariffs with DOT’s Surface Transportation Board. Under Section 14706, carriers are liable to the person entitled to recover under a motor carrierbillofladingor a receipt for the goods. The liability regime is a Carmack Amendment liability regime. Under this liability regime, acarrier is liable for the actual loss or damage to the cargo caused by the receiving carrier, the delivering carrier, or an intermediate carrier over whose route the cargo is transported either (1) in interstate transportation within the United States or (2) from a place in the United States to a place in Canada or Mexico, provided the transportation takes place under a throughbilloflading.

The Carmack Amendment prohibits a carrier from limiting or exempting itself from liability, except under certain specified circ*mstances prescribed by the Motor Carrier Act of 1980. A carrier may limit its liability if that limit would be reasonable under the circ*mstances surrounding the transportation. The ICCTA is not specific as to who determines reasonableness. Consequently, this issue has been left to the courts to determine.

A civil action can be brought either in a federal or a state court against the delivering carrier or the carrier that caused the loss, damage or delay. Claims must be filed within 9 months, and the law suit must be brought within 2 years.

The General Rule of Bills of Lading

Regarding bills of lading,49 U.S. Code § 80107applies a general rule. Under the general rule of bills of lading the person who negotiates or transfers a bill warrants that the bill is genuine; that the holder has the right to transfer the bill and title to the goods described in the bill; the holder doesn’t know of anything that would adversely affect the value of the goods; that the goods are fit for their purpose when merchantability and fitness would have been implied in an agreement for transfer of the goods without a bill of lading.

A major concern these days is that there is no uniform or standard form of bill of lading used throughout the industry. Every carrier, shipper, broker, freight forwarder and other party involved in transportation often will use their own form of bill of lading. Many of these bills of lading are deficient because they do not contain a nonrecourse provision (or any terms and conditions for that matter), a Section 7 box, or places to mark if the shipment is “prepaid” or “collect.” Transportation contracts generally avoid these problems by demoting bills of lading to receipts. Parties also must take care in preparing their own form of bill of lading and using it whenever there is no contract. Finally, parties must know how to protect themselves if a different, deficient bill of lading is used.If a nonnegotiablebill of ladingis not conspicuously marked “nonnegotiable,” a holder who purchased thebill of ladingfor value supposing it to be negotiable may treat thebill of ladingas imposing upon the bailee the same liabilities it would have incurred had the document been negotiable. As you can see, this simple and commonly used document can be a source of traps for the unwary.

The bottom line in all of this is that parties involved in transportation and shipping of freight need to consult with competent counsel to review, revise or prepare their contracts to protect your business from unexpected liabilities.