1. What is the Carmack Amendment?
The Carmack Amendment is a law applied to motor carriers by Congress in 1935. It was adopted to achieve uniformity in rules governing interstate shipment. The Carmack Amendment spells out rights, duties and liabilities of shippers and carriers when it comes to cargo loss.
The Carmack Amendment applies to shippers and carriers involved with interstate shipments of all commodities, with an exception for farmers, fisherman, and a few other categories.
The Carmack Amendment holds the carrier liable for damages to the goods it transported, without proof of negligence, unless it can prove it was not negligent and/or one of the exceptions listed in question 5.
To hold a motor carrier liable for cargo damage, the shipper must prove that:
a) The goods were in good condition when given to the shipper
b) The goods were damaged when delivered (or weren’t delivered)
c) The amount of damages
There are five exceptions outlined in the Carmack Amendment that a motor carrier can claim to deny liability for cargo damage:
1) an Act of God – a wind blows over a trailer, a tornado, flooding, heart attack of a driver
2) the public enemy
3) Act or Default of Shipper
4) Public Authority (the government)
5) the inherent vice or nature of the goods transported
[We will explain these, including examples, in an upcoming blog post -- stay tuned!]
The Carmack Amendment limits the motor carrier’s liability to the actual loss or injury to the property. Courts have generally interpreted this to be the difference between the market value of the property in which it should have arrived at the destination, less the market value of the actual condition in which it arrives.
Under the Carmack Amendment, a carrier can adopt a tariff that is applied to shipping rates based on the weight of goods, mileage required to transport, or the value of the goods. Shippers may agree to a lower shipping rate if they agree to limit the carrier’s liability for the cargo.
Motor carriers essentially have three choices when faced with a claim that they caused damage to cargo. They can either pay the full value of the cargo claim by the shipper, claim one of the five “outs” listed above in question 5, or pay under a proper limitation of liability.
Carriers are permitted to limit the time shippers can file claims to 9 months from date of delivery. The timeline for filing lawsuits can be limited to two years and a day from the date of which a claim is denied. Carriers must incorporate these timeframes (or their own more permissive standards) into the bill of lading or contract of carriage.
In a claim to carriers, the Carmack Amendment specifies that shippers must:
1) Use written or electronic communication
2) Include sufficient facts to identify the shipment or property involved
3) Assert liability against the carrier for loss, damage or delay
4) Demand a specified or determinable amount of money
Contracts can extend or overrule any provisions of the Carmack Amendment. Contract language, for example, can be used to incorporate Carmack for intrastate moves and for exempt commodities.
Contract terms can also waive any rights or responsibilities outlined under Carmack. The waiver must be expressed and it writing, and if waived, parties are left to the terms of the contract and state laws when determining who is responsible for cargo loss and damage.