You told the vendor he had to
deliver the machines Friday, not later than 10 a.m., for a new production line due to
start up Monday.
The vendor tells you he gave the machines to XYZ Express on
Tuesday and "must be delivered by 10 a.m. Friday" was typed on the bill of
lading the driver signed.
You've scheduled heavy equipment operators-at $200 an hour-to
meet the truck at 10 a.m., remove the units from the trailer and swing them into place so
the electricians and pipefitters-at $100 an hour-can complete the installation.
The truck is late. The XYZ Express dispatcher tells you the
trailer will not arrive until 8 a.m. tomorrow.
Oh, no! Your boss said that production line must be up and
running Monday or your company will lose $2,400 an hour in additional downtime.
Wait a minute. The carrier's going to pay for this loss because
it was specifically told "must be delivered by 10 a.m. Friday" right on the face
of the bill of lading. That's a contract enforceable in any court.
At 8 a.m. Saturday the trailer arrives and is unloaded. The
installers report that you'll miss the Monday startup.
"That's okay," you say to yourself confidently, -XYZ
Express is paying for this." Surprise!
To your shock and amazement, XYZ Express declines your $3,500
claim for labor costs and lost production. The basis of its declination: "We are not
liable for special and consequential damages."
Ever been in this position? Frustrating, isn't it? Is XYZ Express
liable, or not?
First, in the matter of bills of lading, we receivers
(shippers and carriers, too) are dealing with the laws of bailment. These legal principles
differ from the laws of tort (laws of wrong-doing), starting with
"forseeability." For instance, if you violate a traffic law and someone is
injured by that act, the tort-feaser (the wrong-doer) can be held liable. The injured
person could be awarded damages both foreseen (repair the car, pay hospital bills, etc.)
and unforeseen.
Unforeseen is that the person whose hand was crushed in the
accident you caused happens to be a brain surgeon. The court awards $100 million in
punitive damages.
The laws of bailment differ, explains an 1854 English case,
Hadley vs. Baxendale. As a general rule, XYZ Express (the bailee) would have had to know
the specific consequences or had to reasonably contemplate its liability |
for not delivering the machines on Friday at 10 a.m. at the time it signed
the bill of lading contract.
In a 1979 5th Circuit case, Hector Martinez & Co. vs. SP
Transportation Co. 606 E2d 106, 109, the court said, "Damage is foreseeable by the
carrier if it is the proximate and usual consequence of the carrier's action. "
If XYZ Express hauled for you all of the time under these conditions, had been delayed on
other occasions and had been told what those delays cost your company, you might make a
case that you served sufficient "constructive" notice.
Do you have to notify the carrier in writing of the consequences
of breaching the contract of carriage? Most attorneys I deal with say no. But, by the same
token, they say not having notice in writing sure makes knowledge harder for the claimant
to prove.
About the "must deliver by" notice on the face of
the bill of lading: Section 2(a) of the bill of lading contract says a common carrier is
bound only to deliver within a reasonable time.
In Chicago & Alton RR vs. Kirby, the court ruled that under
the Interstate Commerce Commission Act and the Elkins Act, common carriers are prohibited
from offering special services to one customer without offering them to all.
Another item to consider is the bill of lading itself. The
Interstate Commerce Commission made the document a two-party (bilateral) agreement and
also fixed its terms and conditions.
In printing new bills of lading, you're allowed to move parts of
the contract's terms and conditions around on the page to fit your needs. However, you
cannot change the bill of lading's specified color or wording.
Carriers' Rights
When confronted by the common problem that arises from notations
such as "must be delivered by 10 a.m. Friday," both the courts and the ICC
agree: Such notations on a bill of lading are contractually void and do not satisfy the
requirements for special and consequential damages.
Be aware that when a carrier is presented with a notice like ,'must be
delivered by 10 a.m. Friday or $2,400-an-hour losses will occur," it has the right to
refuse the shipment.
Sorry folks. In our example, XYZ Express has a proper
declination.
Wait until you show this column to your boss.
If you need claims training, the Shippers National Freight Claims Council (516)
549-8984, and James Baker and Associates (608) 837-7505, can conduct a seminar in your
town for your club or organization, or for your company. |
