COGSA “Fair Opportunity” Doctrine Depends on the Bill of Lading Terms

November 25, 2013

Under the “Fair Opportunity” doctrine of the U.S. Carriage of Goods by Sea Act (COGSA) §4(5), the $500 per package limitation is inapplicable if the shipper does not have a fair opportunity to declare higher value of his goods and pay the corresponding higher freight rates.

In determining whether the shipper received a fair opportunity, the carrier bears the initial burden of offering prima facie evidence, usually found in the terms of the covering bill of lading. If the carrier is able to cite the appropriate language in the bill of lading, the burden of proof then shifts to the shipper to demonstrate that a fair opportunity was not in fact provided.

The usual bill of lading clause provides that “unless the nature and value of such goods have been declared by the shipper before shipment, agreed by the carrier, inserted in the bill of lading and freight paid on an ad valorem basis.

Some carriers, in order to play it safe, provide a space or box on the face of their bill of lading in which to insert the declared value. As shippers usually obtain cargo insurance covering full value, the space or box is seldom filled in. (OOO “Garant-S” v. Empire United Lines Co.).

This article is from Montgomery McCracken’s Fall/Winter 2013 Maritime and Transportation Newsletter.