The Legal Significance of a Bill of Lading

The term bill of lading means “a list of the cargo.” While often thought of as a shipping document, it is also very much a legal document.

One of the two primary functions of a bill of lading is to serve as a receipt for the goods physically tendered to a carrier for transportation. While a bill of lading (or airbill or similar document) is generally prepared by the consignor, it is always issued by the carrier — typically when the driver picking up the goods signs the bill of lading. As with any other receipt, its purpose is to provide evidence as to what goods were given to the carrier and comes into play when all or a portion of the goods fail to arrive at destination.

The other function of a bill of lading is to serve as the contract for carriage, that is, the business terms and conditions that will govern the shipment… unless superseded by an individually negotiated contract entered into between a carrier and its customer. Although a bill of lading contains very few words with legal import, these words incorporate by reference all of the carriers’ terms and conditions, which can be hundreds of pages in length. Moreover, the carriers’ publications may themselves refer to additional publications such as the National Motor Freight Classification (NMFC).

As an example, a current FedEx “Airbill” states “By using this Airbill you agree to the service conditions on the back of this Airbill and in the current FedEx Service Guide, including terms that limit our liability.”

Similarly, a UPS “Shipping Document” states “All shipment are subject to the terms contained in the UPS Tariff/Terms and Conditions of Service, which are available at ups.com and local UPS offices.”

The Distinction Between A Carrier’s Liability For Damage to Cargo, Cargo Liability Insurance, and Cargo Insurance.

As discussed in Part I, carriers are responsible for loss and damage to the goods they are transporting. However, regardless of the transportation mode, there are almost always limits and exceptions to the carriers’ liability. Some exceptions, such as damage caused by an act of God, arise from laws or legal rulings. Other limits are set by the carrier, for instance, a maximum of $100 per package.

While most carriers will have cargo liability insurance, it is critical for a shipper to know that liability insurance will only pay out if the carrier is liable. Thus, if the carrier is not liable due to a defense such as an act of God or valid limit of liability in a carrier’s tariff, there is no coverage under a cargo liability policy because, simply put, the carrier is not liable.


In contrast to this is what is known as a shipper’s interest cargo policy. Although there will be exclusions or exceptions, the coverages of these policies are not fault based. Accordingly, many shippers will purchase their own cargo insurance (not cargo liability insurance) as a way of protecting themselves in the event that they are unable to recover from the carrier.

Time Limits, Time Limits, Time Limits

There are various time limits that are unique to the transportation industry. It is very important for a transportation professional to familiarize themselves with the time limits that could apply to their shipments and the carriers they use. Failure to know an applicable time limit, and thus miss the time limit, will result in the loss of a substantial financial right.

With respect to freight charges, there are time limits relating to claims for both the recovery of charges by a carrier and the recovery of overpayments made by a shipper to a carrier.

With respect to claims for loss and damage to cargo, there is generally a two step approach.
First, notice must be given by a shipper to a carrier of a claim within a certain period of time, and then, if not resolved, another time limit for the shipper to start a lawsuit.

Time limits for loss and damage claims vary by the mode of transportation. In some instances, such as for regulated motor carriers, the minimum time limits are prescribed by federal statute. For international air and ocean carriers, the time limits are set by international treaty. In addition, there are a host of unregulated service providers that set their own time limits and then publish them in a tariff.

All for now!


Brent Wm. Primus, J.D., is the CEO of Primus Law Office, P.A. and 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@primuslawoffice.com.
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