Damage to Goods by Carriers

Principal Source : Ministry of Consumer Affairs.

The full text of the Carriage of Goods Act 1979 can be found on the internet at …

http://www.legislation.govt.nz/act/public/1979/0043/latest/whole.html

Businesses that distribute product should become familiar with their rights under theCarriage of Goods Act.Under the Act a carrier is a person who, in the ordinary course of their business,carries goods owned by another person -eg, specialist or general freight carrier,furniture remover, courier. It also includes:

a freight forwarder or forwarding agent
a carrier who carries both passengers and baggage -eg, bus company
for most purposes a person such as a stevedore or warehouse person who handles goods as part of their carriage -eg, offloading from a ship or fork lift operator in a consolidation warehouse.

The Act applies to all goods carried by road, rail, sea or air within New Zealand. The Act DOES NOT apply to New Zealand Post who has its own rules for postal articles (ie, letters). The Act can apply to packages sent by Courier Post.

Special arrangements for carrier's liability

You can make a special arrangement with the carrier about their liability. There are three types of special arrangements allowed by law.

1. A contract 'at declared value risk'.

The carrier is liable up to the amount agreed to in the contract.This contract must be in writing. The freight charged must match the riskundertaken by the carrier.

2. A contract 'at owner's risk'.

The carrier is not liable for the loss of or damage to the goods. This must either be a written contract signed by you and the carrier and containing the words 'at owner's risk'; or you must sign a statement agreeing that the goods will be carried at your risk and that the carrier will not be liable if the goods are lost or damaged. The freight charged for this contract must be lower than when the carrier has liability. The carrier CANNOT insist on carrying your goods 'at owner's risk'. Both you and the carrier must agree on the kind of contract to be made.

3. A contract 'on declared terms'.

You and the carrier must negotiate the arrangements. The contract can contain any terms agreed on by both parties. Unless you are in business or the goods are out of the ordinary you are unlikely to be concerned with this type of arrangement. Of course you cannot get back more than the actual value of the goods, or the loss in value as a result of damage.

No contract for special liability arrangement

If there is no special arrangement contract, the carrier is liable for damage or loss up to a limit of $1,500 for each unit of goods. (A unit of goods is each separate item you give to the carrier -eg, you give the carrier six packages. That is six units of goods. They stay as six units even if the carrier puts them all in one container. But -if you put six packages in one container and then give the container to the carrier that is one unit of goods.) If the goods are worth more than $1,500 a unit you should consider insuring the excess.

Damaged or missing goods If goods arrive damaged, give written notice of the damage immediately to the carrier you contracted with, and, if applicable, to the carrier whose depot you collected the goods from, or who delivered them to you. If the goods don't arrive, get in touch with the carrier immediately you begin to feel concerned about them.

Liability

The carrier is not liable if they were not at fault and if the loss or damage resulted directly from one of the following:

there was an inherent defect in the goods
the goods were not properly prepared and packed
a legal requirement was not met -eg, a requirement about the packing of dangerous goods
the goods were taken from the carrier by legal process -eg, by a bailiff
the carrier was saving, or trying to save, life or property.

Remember to prepare and pack goods carefully and to meet any legal requirements that apply to the goods.

Intentional damage

If the carrier or their employee intentionally damages or loses your goods, the person at fault is liable for loss or damage to the full value of goods. You would have to prove this, and would need legal advice.

More than one carrier

The carrier you made the contract with is liable, whether or not they had the goods when they were lost or damaged. This carrier makes their own arrangements with any other carriers involved. If the original carrier has disappeared or gone bankrupt you may be able to recover from the carrier who had the goods when they were lost or damaged. In such a case you should talk to a lawyer.

Goods that deteriorate

What happens if the goods deteriorate or become dangerous while they are beingcarried?If the goods deteriorate, the carrier may sell them, or if this is not practical, destroythem.If the goods become dangerous, the carrier may destroy them.

You are still liable for the freight costs. However, the carrier is liable for any loss or damage which had already occurred before the goods deteriorated or became dangerous.

Payment

The carrier CAN insist that you pay in advance. They may keep your goods until you pay and, after two months they may sell them to recover freight and reasonable charges. They must refund you the balance.

Contracting Out

Section 7 of the Act says … The parties to a contract of carriage are free to make their own terms in respect of any matter to which any of sections 10, and 18 to 27 of this Act

These are quite complex matters and should be read independently. (Legal assistance is recommended)

As a general rule, a carrier cannot contract out of their principal obligations under the Act. Unless a consignor has entered into a specific agreement (see above) the carrier is liable for damages. In practice however, a carrier who considers they may be subject to numerous future claims as a result of the nature of the product to be carried, simply says they will not carry the freight unless the consignor agrees to accept an alternative agreement. Note: If the consignor agrees to ‘At Owners Risk’ the freight charged for this contract MUST be lower than when the carrier has liability.

The carrier may elect to not carry the goods and cannot be forced to do so.

Action to recover

If a consignor (sender) or consignee (receiver) has not entered into any special arrangement with a carrier, they are entitled to claim for damages up to the value of their loss or $1500 whichever is the lesser. Most carriers have insurance. Most carriers who value your business will meet their obligations. However, if the carrier declines to remedy the loss for any reason the recommended action is to take the matter to the Disputes Tribunal. The Disputes Referees are usually well aware of Freight Claim issues and claims are usually successful. To understand the Disputes Tribunal processes see the internet at

http://www.consumeraffairs.govt.nz/consumerinfo/disputes.html

In all legal matters it is recommended that you consult a solicitor.