Parcel - August 2008 - (Page 8) what would augello say? by Brent Wm. Primus, J.D. Staying Out of Trouble William J. Augello was one of the country’s foremost transportation lawyers and a champion of shippers’ rights. In this column, we attempt to answer readers’ questions as we believe he would. Previous columns, including Bill Augello’s, may be found in the “Content Library” on the PARCEL website (www.PARCELindustry.com). In the last issue of PARCEL, we took a look at two areas where a shipper can get “in trouble” — packaging and labeling. In this column, we will continue with a look at three more. But before getting into the details of this topic, I would like to take this opportunity to remind you that I will be presenting an all-day pre-conference workshop on Monday, October 6 at the PARCEL Forum. This special course is designed to provide a basic working knowledge of the laws and regulations affecting the supply chain, with a special emphasis on parcel shipping. The details may be found at www.PARCELforum.com. Attendees will receive a copy of William J. Augello’s Transportation, Logistics and the Law. I am really looking forward to this event as it will provide me with an opportunity to meet the readers of this column and to better understand the unique concerns of the parcel shipper. So, if you have a question you’d like answered in this column, this would be the time to ask! In terms of marking/labeling, shippers can also get into trouble by failure to properly mark or identify the goods being shipped. In addition to packaging requirements, the NMFC contains requirements relating to certain pictorial symbols to be placed on the outside of the package which, if not followed, would be considered to be “insufficient packaging” in the context of a loss or damage claim. The consignor also has the duty to properly describe the goods on the bill of lading. At least one case has held that where a shipper had intentionally mis-described the goods to obtain a lower rate, the shipper was unable to recover the full value of a lost shipment. All right; hopefully that was a good enough refresher course. Let’s now move on to today’s lesson and examine the impact the terms of sale, duty to accept goods on delivery and mitigate loss, and liability for personal injury and wrongful death can have on a shipper. Terms of Sale A Quick Recap The terms of sale for a product entered into between the seller consignor and buyer consignee create obligations for both parties. Amongst other things, the terms of sale will determine who has the responsibility for payment of the freight charges and which party bears the risk of loss or damage to the goods in transit. For instance, when the term of sale is “FOB origin,” most people understand that this means that the consignee will be responsible for the payment of the carrier’s freight charges. Less well-known is the fact that even though the consignor will not be paying the carrier’s charges, the consignor has a duty under the Uniform Commercial Code (UCC) to make reasonable arrangements for transportation. In this day and age where most carriers have provisions in their tariffs to limit their liability to less than full value, a consignor seller could become liable to its consignee customer for breach of the sales contract if the consignor selected a carrier whose limit of liability was insufficient to cover the value of any goods damaged in transit. As you will remember from the previous issue, two major “hotspots” for shippers include packaging and marking/labeling. A consignor’s duty to properly package the products being shipped typically arises from a carrier’s packaging requirements, which are “incorporated by reference” by the bill of lading or other shipping document issued by the carrier when receiving the goods. Parcel carriers such as UPS, FedEx and DHL all have detailed requirements set forth in their own service guides. Furthermore, many less-thantruckload (LTL) carriers participate in the National Motor Freight Classification (NMFC), which also has packaging requirements. When a consignor fails to adhere to those requirements, no law is being broken; however, the consignor (or its consignee customer) may not be able to recover a damage claim as a carrier would in all likelihood deny the claim for “insufficient packaging.” Failure to comply with a carrier’s packaging requirements can also lead to increased freight charges. Duty to Accept Goods on Delivery and Mitigate Loss In my practice, I have observed a growing tendency for consignees to refuse to accept a shipment because a part of a load was damaged or even when the consignee forms an opinion that the product may have been damaged. However, the law places a duty upon consignees to accept damaged goods 8 August 2008 www.PARCELindustry.com http://www.PARCELindustry.com http://www.PARCELforum.com http://www.PARCELindustry.com
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