KELOWNA, B.C. – Carriers take huge risks transporting valuable
goods from a shipper to a receiver, and according to Michael Silva, a
lawyer with Whitelaw Twining Law, bills of lading may not be enough.
If a common carrier, whose liability amounts to the liability of an
insurer, picks up an undamaged load and delivers a damaged product, the
carrier, barring an act of God, riot, defect or inherent vice in the
goods, or acts of default by the shipper, will be liable for that
Uniform conditions should be present in a bill of lading and must be
intended to define the contract of carriage between a carrier and
shipper. Within these conditions is a provision that limits a carrier’s
liability to $2 per pound based on the weight of the cargo, but a
shipper can place a higher value on the goods and are often charged a
premium by the carrier due to the increased risk during transport.
The $2 per pound rule, however, does not apply to business losses.
Because each province has been delegated by the federal government to
regulate their own motor carrier legislation, there are some
differences from province to province, making it important when
determining which province’s laws will apply to a shipment.
A properly drafted and signed bill of lading is vital to carriers
looking to limit their liability, but because this is determined
differently depending on the province of origin, it is important to
first nail down which provincial law will govern the contract.
Seven of ten provinces have rules that state that contracts made in
their respective province is a matter of law, while B.C., Saskatchewan,
and Prince Edward Island require a bill of lading be issued and the
uniform conditions be contained in the bill.
Alberta and Ontario have no requirement to properly issue bills of lading, while in B.C. and Saskatchewan the opposite is true.
But Silva said it is important to ensure you have a primary contract
that stands above all other contract, including bill of lading. In
circumstances where there are multiple bills of lading for a single
shipment, problems can arise if there is no primary contract to fall
back on. The contract should include details pertaining to all aspects
of the shipment.
There are also times when trucking companies cannot get every
provision it desires in a bill of lading, Silva pointed out, citing an
example that if a large company like Coca Cola had certain requirements
one carrier had an issue with, it would simply hire another company that
With multi-modal transport operations, there is the through bill of
lading, which leaves open the issue of who performs the carriage. The
contract permits the original carrier to perform the carriage or
subcontract it out to a third party.
The Himalaya clause is a key feature of through bills of lading by
extending the bill’s exemption and limitation of liability clauses to
third parties before loading and after discharge, but the clause’s
effectiveness depends on the language used and the court’s
interpretation of that language.
Silva, speaking during the B.C. Trucking Association AGM and
Management Conference June 3, underscored that the Canadian trucking
industry generates $67 billion in revenue each year, with road-based
trade from Canada to the U.S. totaling $327 billion per year.
“This is a massive industry,” he said, “and there is a huge amount of cross-border work.”
Despite the Carmack Amendment, which was enacted by the U.S. congress
in 1935 in an effort to achieve uniformity in rights, duties and
liabilities governing interstate shipments, Canadian carriers could face
large losses for damaged shipments south of the border if they don’t
properly establish the value of the shipment.
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