Definition of the Carmack Amendment
Passed in 1935, The Carmack Amendment was enacted to draw the lines of engagement on what constitutes a legal liability freight cargo damage and loss claim against a motor.
The Carmack Amendment details the duties, rights and liabilities of carrier parties in the event of cargo damage or loss claim. The amendment affects shippers and carriers participating in domestic and interstate shipments within the United States.
Unfortunately a freight claim is a part of everyday business within the freight and logistics industry and an understanding of the implications of the Carmack Amendment on a cargo claim is a must.
The Carmack Amendment places liability on the motor carrier in the event of a freight claim, unless it can prove otherwise through any one of the five exclusions for motor carriers under the Carmack Amendment.
Five Exclusions of the Carmack Amendment
Act of God
The “Act of God” exclusion can defend the carrier when a carrier experiences a natural disaster or physical anomaly. It is important to note this defense is not applicable in situations where the naturally occurring event, for example a severe thunderstorm, is foreseen and could be predicted.
The “Public Enemy” or the “Act of war”
As the name of the exclusion implies, this defense is applicable when military forces, that are enemies of the United States government, cause some sort of damage. An example of this defense would be most damaging acts during times of war, but not in the even the act is considered “organized crime.” Due to the fact that war has not been physically imposed on United States homeland, terrorism would be more commonly involved with the defense, but has yet to brought often to court.
Act of Default of Shipper
There are instances where the shipper is held responsible for the mistakes or negligence on their part. The faults of shippers can be found in loading and securing a load, insufficient packaging or mislabeling contents of a shipment. The BOL is overriding document when the details of the shipment are brought into question.
Public Authority
Government actions can negatively impact shipments and cause cargo damage indirectly, such as road closure or trade embargoes. This defense also extends to actions affecting the product itself, like product recalls. Because the carrier is not in control of implemented government actions, they cannot undertake liability.
The Inherent Vice or Nature of Goods Transported
In regards to temp-controlled solutions, perishable products are susceptible to become soiled or ruined if not shipped property. If the carriers took the appropriate steps to prevent delays and the product still becomes damaged, this defense is pertinent.
The Carmack Amendment is important because it protects the carriers from automatically taking responsibility for damage occurring outside their domain. Furthermore, it increases the importance of both parties, shippers and carriers, to understand who takes liability and when they take said liability.
In short, this amendment is not a valid reason for withholding payment to freight forwarders when the amendment applies. The Carmack Amendment ensures claims are filed under the correct grounds, saving multiple parties from wasted time and money.
To add to the topic, current case law analysis indicates a general trend of shippers, and their subrogated insurers, being more creative in seeking liability against brokers who were traditionally seen as likely responsible parties for cargo loss or damage. So, just because a freight broker does not own the freight assets does not make it exempt from the Carmack Amendment as has been cited in several law offices' papers published on the topic.
All said, the importance of the Carmack Amendment cannot be overstated and would suggest reading 49 U.S. Code § 14706 for the full details, as it is a part of every freight contract.
For more articles on motor carriers and insurance policies for protection against claims:
- Logistic Service Provider (LSP) vs Freight Broker: A Comprehensive Comparison
- Freight Cargo Insurance Policy Types Explained
- Logistics Service Providers (LSP) vs. Motor Carriers
- Freight Motor Carrier Defined
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