Business Law 101 / COMMON CARRIERS

By Albert L. Kelley

A “common carrier” is a business who agrees to furnish transportation of goods for compensation.  Examples are FedEx and UPS.  All members of the public may employ the common carrier to ship their goods.  This is as opposed to a contract carrier who transports goods based upon individual contracts for service, or a private carrier where the transportation is performed by the shipper.  The person sending the item (the shipper) is also referred to as the consignor; the person receiving the goods is the consignee.

Usually, when a common carrier accepts a shipment of goods, they will issue a bill of lading when the shipment travels by land or water, and an airbill when the goods travel by air.  This is an important document as it actually can transfer title to the property.  If the bill of lading states the goods are to be delivered “to the bearer” or “to the order of” a named person, it becomes a negotiable bill of lading.  In other words, the consignee may sell the goods being shipped merely by transferring the bill of lading to another party.  When the shipment is staying within state boundaries, the bill of lading will be governed by the Uniform Commercial Code; when the shipment crosses state lines, it becomes governed by the Federal Bills of Lading Act.  While the Uniform Commercial Code makes no restrictions on the form of the bill of lading, the Federal Act does.  Under the Federal Act, negotiable bills of lading must be printed on yellow paper, and non-negotiable bills must be printed on white paper.

Common carriers may charge any reasonable rate necessary to continue their business and obtains a lien on all goods that they transport to ensure payment.  If the carrier is not paid, they may retain possession of the goods until paid or until the lien is enforced and the goods are sold to make up the lost money.  In return, the carrier is required to accept goods from any person who offers them for shipment, without discrimination, so long as the carrier has room to ship them.  The carrier must follow the directions given by the shipper, must load and unload the goods and must deliver them to their stated destination.  If the goods are shipped under a negotiable bill of lading, the shipper must not deliver the goods until they receive a properly indorsed bill of lading, showing the person claiming title.  When the goods are shipped to the wrong location, the common carrier is liable for breach of contract and for conversion of the property.

During shipment, the carrier is liable for any damage or loss that occurs to the goods in their possession, unless they can clearly show that the damage or loss was due to an act of God, an enemy of the United States, a public authority (such as a law enforcement officer or health agency), an act of the shipper, or the inherent nature of the goods.  The carrier is also liable if they do not ship the goods in a reasonable time without ordinary delay.  In order to protect themselves, many common carriers will limit their liability by contract.  As an example, one common carrier has on their airbill “Our liability is limited to 100, unless you declare a higher value.”  By turning the property over to the carrier, you are accepting the limitations of liability printed on the bill of lading.

            Al Kelley is a Florida business law attorney located in Key West and previously taught business law, personnel law and labor law at St. Leo University.  He is also the author of “Basics of Business Law” and “Basics of Florida’s Small Claims Court” (Absolutely Amazing e-Books). This article is being offered as a public service and is not intended to provide specific legal advice.  If you have any questions about legal issues, you should confer with a licensed Florida attorney.

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