In this installment of PARCEL Counsel, we will explore the topic of claims for loss or damage to cargo when the loss or damage is not noted on a delivery receipt by the consignee while the carrier is still at the point of destination. Thus, the carrier’s driver leaves with what is colloquially referred to as a “clear proof of delivery” or “clean delivery receipt.”

    There can be a variety of factual scenarios when this can occur ----- a trailer is dropped off to be unloaded later, a shrink-wrapped pallet is not broken down, or even just a single package that is not immediately opened. Then, later, a shortage is discovered or the contents are found to be damaged. 

    The claims that are subsequently filed to recover for the loss have come to be categorized as ones for “concealed damage,” that is, damage that is concealed from the view of the receiving dock worker (or delivering driver) at the time of delivery. To the best of my knowledge, there is no statute or regulation which defines “concealed damage.” Nor am I aware of any federal statute or regulation prescribing special or distinct procedures for the processing and settling of claims for concealed damage. 

    However, shippers must be very aware of the fact that many carriers have established tariff rules or have included terms and conditions in their service guide which do distinguish claims for concealed damage from claims for non-concealed damage. Generally speaking, such terms or rules define a claim for concealed damage to be one where there is no damage noted or described on the delivery receipt.

    From the point of view of a shipper or receiver of parcel freight, concealed damage is an inherent and inevitable component of today’s distribution system. As volume levels rise, it becomes increasingly impractical, if not impossible, to unload every trailer, break down every pallet, and open every package at the time of delivery. 

    From the carrier’s point of view, claims for concealed damage are inherently suspect. There is always that nagging suspicion that the damage may have occurred after the carrier had completed delivery of the freight ----- that it was the receiver’s forklift that jabbed the package, not the carrier’s forklift at an intermediate terminal. 

    Many, but not all, less-than-truckload (LTL) motor carriers participate in what is known as the National Motor Freight Classification (NMFC). UPS Ground Freight, Inc., a member of the UPS corporate family, and FedEx Freight East, Inc. and FedEx Freight West, Inc., two members of the FedEx corporate family, are licensed motor carriers who also participate in the NMFC. (See Fundamental Legal Differences within UPS and FedEx, PARCEL Counsel, February 2010.) 
    Accordingly, the first such rule we will consider is Item 300135 of the NMFC: Reporting Concealed Damage. It reads in relevant part as follows:

    “When damage to contents of a shipping container is discovered by the consignee which could not have been determined at time of delivery it must be reported by the consignee to the delivering carrier upon discovery and a request for inspection by the carrier’s representative made…If more than fifteen days pass between date of delivery of shipment by carrier and date of report of loss or damage, and request for inspection by consignee, it is incumbent upon the consignee to offer reasonable evidence to the carrier’s representative when inspection is made that loss or damage was not incurred by the consignee after delivery of shipment by carrier…” 

    The significance of this is that in order to successfully recover a claim filed after the 15-day period for shipments subject to this provision, the claimant has an extra burden of proof. The claimant always has the burden to prove the condition of the goods at origin and destination. When this requirement of the NMFC applies, the claimant also needs to prove that no damage occurred after the time of delivery and while in the possession of the consignee.
    For instance, the claim documentation could include a written statement by a person having actual knowledge of the facts to show that the shortage or damage did in fact exist at the time of delivery. To state the obvious, in situations involving concealed damage a claimant could avoid having this extra burden of proof by establishing procedures to inspect incoming freight and parcels as soon as possible after receipt so as to allow ample time to report the problem and request an inspection within the 15-day period. 

    In the next installment of Parcel Counsel we will continue our exploration of this topic with a focus on other time limits and when and how they apply.

    All for now!


    Brent Wm. Primus, J.D., is the CEO of Primus Law Office, P.A., the Senior Editor of transportlawtexts, inc. Previous columns, including those of William J. Augello, may be found in the “Content Library” on the PARCEL website (www.PARCELindustry.com). Your questions are welcome at brent@transportlawtexts.com.
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