Complexities in Intercontinental and Domestic Shipping Paper

Complexities in Intercontinental and Domestic ShippingIn intercontinental ocean-to-inland shipping, carriers may or may not know whether theyare dealing with an intermediary, such as a freight forwarding company rather than acargo owner, or what legal obligations the cargo owner and intermediary have agreedupon. Moreover, the number of times goods change hands in the course of this intermodaltransportation of goods adds to the complexities regarding liability limitations andother bills-of-lading issues such as forum selection clauses. For Example, James Kirby,Ltd, an Australian manufacturer, hired International Cargo Control (ICC) to arrange forthe delivery of machinery from Australia to Huntsville, Alabama. The bill of lading thatICC issued to Kirby designated Savannah, Georgia, as the discharge port and Huntsville,Alabama, as the ultimate destination, and set ICCs liability limitation lower than the cargostrue value, using the default liability rule in the Carriage of Goods by Sea Act(COGSA) of $500 per package for the sea leg and a higher amount for the land leg.The bill also contained what is known as the Himalaya Clause, which extends liabilitylimitations to downstream carriers and contractors. When ICC hired a German shippingcompany, Hamburg Sd, to transport the containers, Hamburg Sd issued its own bill oflading to ICC. That bill of lading also adopted COGSAs default rule, extended it to anyland damages, and extended it in a Himalaya Clause to all agents (including inland)carriers. Hamburg Sd hired Norfolk Southern Railway (NS) to transport themachinery some 366 miles from Savannah to Huntsville. The train derailed, causingsome $1.5 million in damages. Kirby sued NS for the full value of its loss, and NS,
claiming the protections of the ICC and Hamburg Sd bills of lading, asserted that itowed just $500 per container. The U.S. Supreme Court held that when it comes to liabilitylimitations for negligence resulting in damage, an intermediary [ICC and HamburgSd] can negotiate reliable and enforceable agreements with the carrier it engages,32 thusupholding NSs limited liability of $500 per container. U.S. courts have also recognizedthe rule that a freight forwarder has a limited agency to bind a cargo owner to a forumselection clause by accepting a carriers bill of lading.33 The COGSA governs the terms ofbills of lading by ocean carriers engaged in foreign trade. It does not limit the partiesability to adopt forum-selection clauses.21-3 Factors and ConsignmentsA factor is a special type of bailee who sells consigned goods as though the factor were theowner of those goods.21-3a DefinitionsEntrusting a person with the possession of property for the purpose of sale is commonlycalled selling on consignment.34 The owner who consigns the goods for sale is the consignor.The person or agent to whom they are consigned is the factor or consignee; thisindividual may also be known as a commission merchant. A consignees compensationis known as a commission or factorage. For Example, consignor Rolly Tasker Sails Co.,C A S E S U M M

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