What Is the Carrier's Liability?

Ask Augello
By Bill Augello

QUESTION: Can FedEx deny liability for a damaged guitar that I sold over eBay, when I purchased insurance for its sales value? FedEx?s ground for denial of liability is that I did not protect the guitar sufficiently, although it was protected with three inches of bubble wrap. The neck was broken, indicating that it suffered a severe impact. FedEx also states that its tariff limits liability for guitars and other musical instruments that are more than 20 years old to $500. No notice of this limitation was given to me before shipping, and I paid an excess value charge for much more than $500. Will I at least get the excess value charge back?

ANSWER: There are always two parts to a claim question: one, whether the carrier is liable, and two, if so, for how much? As to the damage to the guitar, you will need to prove that your packaging was sufficient to withstand ordinary handling in a parcel express environment, specifically FedEx?s environment. You may need to obtain the expert opinion of a packaging engineer at a packaging laboratory as to whether or not your packaging was sufficient to withstand normal shock and vibration in FedEx?s package express environment.

Frequent shippers that normally use the same packaging for most shipments would be well-advised to submit their packaging to FedEx and other carriers that they use to obtain their written approval as a rebuttal to claim declinations for ?insufficient packaging.?

The second issue is more difficult. Yes, FedEx does have a tariff limitation of $500 on guitars and other musical instruments that are more than 20 years old. This limitation also applies to artwork, film, commodities ?particularly susceptible to damage or the market value of which is particularly variable or difficult to ascertain,? antiques, glassware, jewelry, furs, precious metals, stocks and bonds, liquor stamps and collectors items. Many of these commodities are regularly sold on eBay and shipped via parcel express carriers, but I wonder how many eBay shippers know about these restrictions?

The tariff also states that any effort to declare a value higher than these limits is ?null and void.? There is no provision in the tariff for refunding the declared value premium that you paid for in excess of $500. You should demand a refund nevertheless. In one reported case, the carrier offered to refund the premium paid in excess of the tariff limitation. The carrier did not state why it does not automatically refund these excess amounts when it raises the tariff limit as a defense to the claim.
Unfortunately for shippers, these tariff restrictions and exclusions from liability are generally incorporated into the contract of carriage when the air bill is executed. However, this is not always true. In a case involving UPS, a court refused to limit UPS?s liability because ?the UPS air bill in this case makes absolutely no reference to the tariff or any extrinsic documents.? Therefore, claimants should carefully check the shipping document used for the claim shipment to determine whether the tariff has been properly incorporated into the contract. If not, the tariff limitations may not apply.

In another case, the court refused to apply the limitation because the front of the air bill did not make reference to the back, which is where the limitations were printed. The point is that shipping documents are contracts of carriage. The courts construe and apply the terms of contracts strictly. They may legally bind shippers and their customers/consignees to the terms and conditions if properly stated and cross-referenced with the carrier?s tariffs. They are binding whether the shipper reads the fine print or not.

The message for eBay shippers, infrequent parcel shippers and regular parcel shippers alike is to read and study the parcel express carrier?s tariffs and flag all of the restrictions, limitations of liability and exclusions from liability. There are many more than just those stated in this column, such as the $500 limitation when an article is dropped into a drop box. These restrictions are not uniform for all parcel carriers. Therefore, a separate file must be kept for each carrier used, and a separate file needs to be kept for international shipments on which liability is governed by treaty. (The Warsaw Convention as modified by the Montreal Protocol No. 4.) The latter treaty changed the Warsaw Convention limits from $9.07 per kilo to 17 SDR?s per kilo, which is an increase in liability for international airlines. Therefore, claims paid today should be based on the current value of an SDR, not the old Warsaw limit.