Carriage of Goods by Sea Act (COGSA): Carrier Liability, Bills of Lading and Cargo Claims

The Carriage of Goods by Sea Act (COGSA) is one of the most important statutes governing ocean carriage to and from the United States. It regulates the legal relationship between cargo interests and ocean carriers under bills of lading, especially where goods are lost, damaged, delayed, misdelivered, or affected by a dispute over carrier responsibility. COGSA was enacted to bring greater balance to a field that had historically been shaped by strict common law liability on one side and broad contractual exclusions on the other.

Under traditional admiralty common law, ocean common carriers were treated almost like insurers of cargo placed in their custody. They were held strictly liable for loss or damage, subject only to narrow defenses. In response, ocean common carriers began inserting wide-ranging exculpatory clauses into Bills of Lading (B/L). These clauses often attempted to shift nearly all risk away from the carrier and onto the shipper, making it much harder for cargo interests to hold the carrier responsible for cargo loss or damage.

Like many maritime nations, the United States attempted to create a more balanced system through legislation. The main statutory framework developed through:

Harter Act 1893
Carriage of Goods by Sea Act (COGSA) 1936
Federal Bills of Lading Act 1916 (Pomerene Act)

Under Carriage of Goods by Sea Act (COGSA), a carrier cannot use exculpatory clauses to avoid the statutory duties imposed by law. A carrier cannot require a shipper to accept bill of lading wording that removes the carrier’s core responsibilities for the ocean carriage. At the same time, COGSA does allow carriers and shippers the right to contract for certain lawful conditions, reservations, or exemptions, especially for periods before loading onto the ship or after discharge from the ship.

COGSA is therefore not a system of unlimited carrier liability. It does not make the ocean carrier automatically liable for every cargo loss. Instead, it creates a fault-based regime supported by defined duties, recognized defenses, limitation rights, notice obligations, and suit time limits. The statute protects shippers from unfair contract terms, but it also protects carriers from liability for losses caused by events outside their fault or control.

According to Carriage of Goods by Sea Act (COGSA), a carrier cannot require a shipper to buy cargo insurance for the carrier’s benefit. The carrier may not shift its statutory responsibility by forcing the shipper to procure insurance protecting the carrier. However, a shipper remains free to buy cargo insurance for its own benefit. In practice, prudent cargo owners normally insure their goods because COGSA’s carrier liability limits may be far lower than the full commercial value of the cargo.

Under COGSA, an ocean carrier is not strictly liable for loss or damage to cargo. The carrier must generally be shown to have been negligent, or unable to establish a statutory defense, before being held liable. The carrier can be liable for mis-delivery where goods are delivered to a person not entitled to receive them, such as someone who is not the named consignee under a non-negotiable bill of lading or someone who does not produce the proper original bill of lading where production is required.

An ocean carrier cannot delegate its core duty to properly load and stow the cargo on the ship. Under COGSA, the carrier’s duty to load, handle, stow, carry, keep, care for, and discharge the cargo is non-delegable as against the cargo interests. The carrier may agree commercially that the charterer pays for stevedores or arranges cargo work, but that cost allocation does not automatically remove the carrier’s statutory responsibility to cargo interests under the bill of lading.

Under COGSA, ocean carriers have several recognized defenses when cargo is lost or damaged while in their care:

Defenses relating to unseaworthiness of the ship and the negligence of the ship’s crew
Defenses relating to Acts of God, including hurricanes and natural disasters, and man-made events such as war, strikes, riots, or governmental restraint
Defenses where the shipper was at fault, including poor packing, wrong description, insufficient marks, or inherent problems in the goods
Defenses where the loss occurs despite the carrier’s exercise of due care

According to COGSA, an ocean carrier is liable for unseaworthiness only if the unseaworthiness resulted from the carrier’s lack of due diligence to make the ship seaworthy before and at the beginning of the voyage. If a defect could not have been discovered through due diligence, and that hidden defect later causes cargo damage, the carrier may not be liable. Likewise, the carrier is generally not liable:

When the unseaworthy condition is not reasonably discoverable
When the unseaworthy condition arises during the course of the voyage without earlier lack of due diligence

The carrier’s due diligence duty includes properly manning, equipping, and supplying the ship. If cargo damage is caused by crew negligence in navigation or ship management that the carrier could not have prevented through due diligence, the carrier may have a defense. For example, if the ship collides with another ship because of navigational error by the crew, the carrier may be protected. However, if the carrier hired crew members who were improperly trained, and that lack of competence should have been discovered through due diligence, then carrier may be liable.

The Defense of due diligence against a claim of ship unseaworthiness follows a burden-shifting structure. The Shipper bears the initial burden of proving that the loss or damage resulted from the ship’s unseaworthiness. If the shipper establishes unseaworthiness, the carrier then bears the burden of proving that it exercised due diligence to make the ship seaworthy before and at the beginning of the voyage.

COGSA also imposes a separate duty on the carrier to properly care for the cargo while it is on board the ship. This includes preparing holds, refrigerating spaces, cooling chambers, and all other cargo-carrying parts of the ship so that they are fit and safe for reception, carriage, and preservation of the goods. Even where a carrier has a seaworthiness defense, the carrier may be liable for loss or damage if it failed to care for the cargo properly during the voyage.

COGSA gives the carrier a defense in the event of fire. A ship owner is generally not liable for loss or damage to cargo caused by fire on board, unless the fire resulted from the design or neglect of the ship owner. The practical issue is often whether the fire was caused by an event beyond the owner’s fault or by managerial failure, poor maintenance, unsafe systems, or other conduct attributable to the carrier.

COGSA also gives a defense where cargo loss or damage results from perils, dangers, and accidents of the sea or other navigable waters. However, not every storm qualifies as a peril of the sea. Courts expect ocean carriers to prepare ships for weather conditions that might reasonably be expected on the voyage. A storm must normally be exceptional, extraordinary, or sufficiently severe to qualify. The Beaufort Scale, developed by the English Royal Navy and ranging from Force 0 to Force 12, is often used as a reference point for assessing wind and sea conditions.

Under COGSA, the carrier is not responsible where the goods themselves have inherent defects. This defense is known as inherent vice. The statute provides that the carrier is not responsible for damage arising from wastage in bulk or weight or any other loss or damage arising from inherent defect, quality, or vice of the goods. For example, some cargoes naturally sweat, heat, corrode, decay, evaporate, ferment, or deteriorate if not packed, ventilated, declared, or handled properly.

The shipper is generally responsible for ensuring that goods requiring special packaging are properly prepared for shipment. Where cargo requires special conditions, such as refrigeration, ventilation, segregation, temperature control, or protection from moisture, the shipper’s responsibility includes making sure that the carrier is aware of those conditions. Once the carrier has accepted the goods with knowledge of those requirements, responsibility for maintaining the agreed carriage conditions generally falls on the shoulders of the carrier.

COGSA also contains a catch all defense, commonly known as the Q Clause. This clause protects the carrier where the loss or damage is due to “any other cause arising without the actual fault and privity of the carrier and without the fault or neglect of the agents or servants of the carrier.” The carrier relying on this defense must prove that neither the carrier nor its servants or agents contributed to the loss.

An ocean carrier may also contractually assume greater obligations than COGSA requires. The carrier can agree to take on increased responsibilities and liabilities by contract with the shipper. COGSA prevents carriers from reducing statutory responsibility below the legal minimum, but it does not prevent them from accepting a higher level of responsibility.

Under COGSA, the ocean carrier may lose its defenses where the ship makes an unreasonable deviation from the agreed route. Deviation means an intentional and unreasonable change in the geographic route contracted. If the deviation causes cargo loss or damage, it may deprive the carrier of its defenses, including limitation rights. A deviation may be reasonable where the ship changes route to avoid storm or to assist another ship in distress. Quasi-Deviation refers to serious breaches of the carriage agreement other than geographic deviation, such as unauthorized on-deck carriage where under-deck carriage was required.

Where cargo loss or damage results from multiple causes, the carrier bears the burden of proving which part of the loss falls within a statutory defense. Once the shipper shows that the cargo was loaded in an undamaged condition and discharged in a damaged condition, the carrier must establish a COGSA defense. If the shipper proves that carrier’s negligence was a contributing cause of the damage, the carrier must attempt to separate the portion of loss caused by an excepted peril from the portion caused by its own negligence.

Traditionally, cargo damages are calculated by reference to the market value of the goods at the cargo’s destination. The basic measure is the difference between the value the goods should have had on proper delivery and the value of the goods in their damaged condition, together with recoverable incidental losses where applicable.

COGSA limits carrier liability to $500 per package or, where goods are not shipped in packages, per customary freight unit. The Bill of Lading (B/L) often controls what constitutes a package. If the Bill of Lading (B/L) discloses the contents of a container, the container itself may not be treated as the COGSA package. A carrier is not permitted under COGSA to impose a lower package limitation. The $500 per package figure is a ceiling, not a guaranteed recovery. The Shipper is only permitted to recover its actual damages up to the applicable limit. Carriers may agree by contract to higher damage limits.

A shipper is not necessarily trapped by the COGSA limitation. COGSA requires the ocean carrier to give the shipper a meaningful opportunity to declare a higher limit of liability. The carrier may charge additional freight for a higher declared value because it must cover the increased risk, often through additional insuring arrangements. In many commercial situations, shippers prefer to buy their own cargo insurance rather than pay the carrier for higher liability limits. This allocation is often economically efficient because the cargo owner usually knows the cargo value, vulnerability, and insurance needs better than the carrier.

COGSA may allow recovery for Delayed Delivery. If Delayed Delivery results from:

a cause permitted by the Bill of Lading (B/L), such as calling at intermediate ports to load other cargo
reasons beyond control of the carrier

the shipper may not recover delay damages. However, if the contract of carriage required delivery by a certain date, or if delay resulted from an unreasonable deviation that exposed the cargo to additional risks, the shipper may be able to recover actual losses caused by the delay. The parties may also agree contractually to specific consequences for delay.

A shipper establishes a prima facie cargo claim by producing evidence that the goods were delivered to the carrier in good order and were outturned damaged, short, or missing. A Clean Bills of Lading (B/L) may be important evidence of apparent good order at shipment. The carrier must then establish a statutory defense or show that damage resulted from unseaworthiness despite exercise of due diligence. The shipper may respond by proving negligence, lack of due diligence, or improper cargo care.

Carriage of Goods by Sea Act (COGSA) imposes a duty on the consignee to inspect goods before taking them away. If delivered goods are damaged, the consignee must give the carrier prompt notice. Unless notice of the loss or damage is given to the carrier or its agent at the port of discharge before or at the time of the removal of the goods into the custody of the consignee, removal of the goods is prima facie evidence that the carrier delivered the goods as described in the Bill of Lading (B/L).

The notice does not need to be overly specific. It usually needs to state the general nature of the loss or damage. If cargo damage is not immediately apparent, notice of the loss or damage must be given within 3 days of delivery. Many shippers employ cargo surveyors to inspect cargo on arrival, check quantities, sample goods, identify water damage, mold, heating, shortage, contamination, crushing, or other visible issues.

Failure by the consignee to inspect and give notice of damage is not necessarily fatal to the claim. COGSA states that such failure does not eliminate the shipper’s right to sue. However, failure to give timely notice can make the claim harder to prove because the carrier may argue that the cargo was in good condition when it left the carrier’s custody. The shipper may then need stronger evidence showing that the damage occurred while the cargo was under the carrier’s custody and control.

COGSA provides that a law case for cargo damage must be brought within 12 months of the delivery of the goods. There are different interpretations of cargo delivery:

Some courts interpret delivery to mean when cargo is taken off the ship, regardless of when the consignee physically receives it
Some courts interpret delivery as occurring only when the consignee has had a reasonable chance to inspect

According to the Fifth Circuit Court of Appeals, delivery occurs when the ocean carrier places cargo into the custody of whomever is legally entitled to receive it. If cargo is never actually delivered, the limitation period begins when the cargo should have been delivered. If cargo is delivered late and damaged, the time limit may still run from when the goods should have been delivered, depending on the facts and governing law.

Difference between Common Carrier and Private Carrier

Contracts for the carriage of goods by sea are based on general contract law principles, but maritime law adds special rules for bills of lading, charterparties, sea waybills, cargo liability, carrier defenses, dangerous goods, delivery obligations, and rights of suit. A central distinction is whether the carrier is acting as a common carrier or a private carrier.

What are the 3 types of carriers?

1- Common Carriers
2- Private Carriers
3- Other types of carriers with special rights and duties

Private Carriers Vs Common Carriers

The main difference between Private Carriers and Common Carriers lies in the Carrier’s Liability.

A Common Carrier holds itself out as ready to carry the goods or passengers of the public for reward, whether by land, sea, air, or another mode of transport. A Common Carrier must carry as part of a regular business and not merely as an occasional or casual activity.

A Common Carrier is generally bound to carry goods offered by persons willing to pay the freight, unless:

1- The goods are offered at an unreasonable hour
2- The goods offered are not of the type the common carrier professes to carry
3- The goods are not properly packed
4- Reasonable charges are not paid or tendered in advance where required
5- The common carrier has no space in the ship
6- The destination is not one to which the common carrier usually trades

If a Common Carrier wrongfully refuses to carry goods or passengers, the Common Carrier may be sued for damages. In Crouch & London v North Western Railway (1854), a railway common carrier refused packed parcels from another carrier that was undercutting its freight rates. The court held that the railway carrier was liable for refusal to carry. A similar principle may be relevant where a liner operator refuses cargo from NVOCs (Non-Vessel Operating Carriers) for anti-competitive or unjustified reasons.

What is meant by a Common Carrier?

Whether a carrier is a Common Carrier depends on the facts. If a person or company holds itself out to the public as ready to carry goods or passengers for reward, it may be treated as a Common Carrier. If the carrier reserves an unrestricted right to accept or reject cargo even when space is available, it is less likely to be a Common Carrier.

Common examples include shipowners operating liner services, railroads, airlines, taxi operators, and other public transport providers. In modern maritime practice, many carriers state expressly in their conditions of carriage that they are not Common Carriers, but the effect of that wording depends on the law and facts.

In the United States, the Federal Maritime Commission regulates ocean transportation intermediaries and has treated NVOCCs (Non-Vessel Operating Common Carriers) as common carriers under United States law. For this reason, shipbrokers and cargo interests may encounter NVOCCs whose legal responsibilities resemble those of ship-operating carriers, even though they do not own or operate ships.

What is the difference between Common Carrier and a Private Carrier?

The crucial distinction between Private Carriers and Common Carriers concerns Liability.

Common Carriers are traditionally strictly liable for loss or damage to goods in their care, even where they have not been negligent. In that sense, the Common Carrier was historically treated as an insurer of cargo safety.

Private Carriers are bailees of the goods and are generally liable only where loss or damage results from their negligence or breach of contract. Where loss is caused by delay, both Common Carriers and Private Carriers are usually liable only if the delay resulted from negligence or breach of an agreed obligation.

A carrier may contractually restrict or exclude common carrier strict liability, subject to statute and public policy. Modern contracts of carriage usually contain detailed terms governing the carrier’s obligations, defenses, exclusions, and liability limits.

There are traditional exceptions to Common Carrier strict liability. These are known as the four Common Law Excepted Perils. The burden of proving these defenses falls on the Common Carrier, and the defenses are unavailable if the carrier’s own negligence caused or contributed to the loss.

Common Law Excepted Perils

1- The Queen’s Enemies: A Common Carrier is not liable for loss caused by armed forces at war with the United Kingdom. In English law, damage caused by terrorists, robbers, or rioters is not traditionally covered by this exception, although other jurisdictions may use different war-risk terminology.

2- Act of God: A Common Carrier is not liable where the loss is caused directly and exclusively by natural causes, without human intervention, and where the loss could not have been prevented by reasonable foresight, care, and diligence.

3- Fault or Fraud of the Consignor: A Common Carrier is not liable where loss or damage is caused by improper packing, wrong addressing, misdescription, fraud, or other fault of the consignor.

4- Inherent Vice: A Common Carrier is not liable for loss caused by the internal qualities or natural behavior of the cargo itself, such as ordinary wear and tear, evaporation, natural deterioration, loss in weight, decay, or damage caused by insufficient packing. However, the carrier’s contractual and statutory obligations, including seaworthiness, reasonable care, dangerous goods rules, and cargo-care duties, must still be considered.

Common Carrier Exclusion of Liability

A Common Carrier may exclude or limit strict common carrier liability through valid contract terms, subject to applicable statutory controls. Private Carriers may also include Exclusion Clauses in charterparties or contracts of carriage to allocate particular risks.

Today, many exclusion clauses are controlled by statute. However, in some jurisdictions, certain statutory controls may not apply to charterparties in the same way as they apply to standard bills of lading or consumer contracts. Where an exclusion clause is properly incorporated under common law rules, it may be effective even if it appears commercially harsh, unless statute or public policy intervenes.

The Carriage of Goods by Sea Act 1971 incorporated the Hague-Visby Rules into English law. It provides rights and responsibilities that contracting parties cannot simply remove by agreement. It also gives carriers recognized defenses and limitation rights. Merchant Shipping legislation may also provide statutory exclusions of liability in certain circumstances.

Merchant Shipping Act 1979 (Section 18) provides a Statutory Exclusion of Liability for British shipowners in specific cases, including:

1- Loss or damage to gold, silver, watches, jewels, precious stones, or similar valuables caused by theft or dishonest conduct where their nature and value were not declared to the shipowner or Ship Master in writing at shipment.

2- Loss or damage to property on board caused by fire, in the absence of fault.

What is an NVOC operator?

NVOCs (Non-Vessel Operating Carriers) organize cargo transportation without owning or operating the ocean-going ships used in the sea leg. They may arrange door-to-door or port-to-port carriage, issue their own Bills of Lading (B/L), contract with ocean carriers for space, and accept liability as carriers to their customers.

NVOCs developed from freight forwarding, especially with the growth of containerization. Container lines advertised door-to-door container transport, but full container load service was not always suitable for smaller shippers. Freight forwarders identified an opportunity: they could buy space from container lines at FCL (Full Container Load) rates, consolidate smaller LCL (Less than Container Load) shipments, and issue individual Bills of Lading (B/L) to each shipper.

The container line issues a Bill of Lading (B/L) to the NVOC for the FCL container, while the NVOC issues separate Bills of Lading (B/L) to individual cargo interests. At the discharge port, the NVOC’s correspondent receives the container and releases individual consignments to the proper Bill of Lading (B/L) holders.

Because NVOCs accept carrier responsibility, the exclusions, exemptions, and liabilities that apply to ship-operating carriers may also apply to them. In the United States, NVOCCs are regulated as Non-Vessel Operating Common Carriers. For that reason, NVOCs must maintain suitable insurance, contractual terms, operational controls, and documentation procedures.

Dangerous Goods

Dangerous goods create special risks in sea carriage. If dangerous cargo is delivered to a carrier, the shipper is generally treated as warranting that the cargo is fit for carriage and that the carrier has been properly informed of its nature. If the shipper fails to disclose the dangerous character of the cargo, the shipper may be liable for resulting damage even if the shipper did not actually know the full danger.

The carriage of dangerous cargo by sea has long been regulated by merchant shipping legislation and international rules. The Merchant Shipping Act 1894 contained provisions on dangerous cargo, including requirements to inform the carrier in writing, penalties for misdescription, powers of the Ship Master or shipowner to deal with suspected dangerous cargo, and court powers concerning forfeiture.

The Hague-Visby Rules, Article IV Rule 6, provide that if inflammable, explosive, or dangerous goods are loaded without the knowledge and consent of the carrier, Ship Master, or agent, the goods may be landed, destroyed, or rendered harmless without compensation to the cargo owner. The shipper may also be liable for all damages and expenses directly or indirectly caused by such shipment.

Cargo may be dangerous even if it is not explosive, inflammable, or poisonous. It may be dangerous because it can heat, liquefy, shift, emit gas, corrode, contaminate other cargo, endanger the ship, or cause unreasonable delay. The boundary between risks accepted by the carrier and risks imposed by cargo misdescription often depends on the cargo description, declarations, documentation, packing, and the carrier’s knowledge.

The IMO (International Maritime Organization) publishes the IMDG Code (International Maritime Dangerous Goods Code), which provides international standards for the safe carriage of dangerous goods in packaged form. The IMDG Code helps harmonize classification, packing, marking, labeling, documentation, stowage, segregation, and emergency response. Many maritime nations have incorporated the IMDG Code into domestic law and port regulations.

Agent of Necessity

A carrier may have the right to sell cargo without first consulting the cargo owner where the carrier becomes an Agent of Necessity. This is an exceptional doctrine. It may arise where there is a genuine emergency, the cargo is at risk, and it is commercially impossible or impracticable to contact the cargo owner in time. Perishable cargo, deteriorating cargo, or cargo that must be sold to prevent greater loss may create such circumstances.

Transit

At common law, transit begins when cargo is delivered to the carrier or the carrier’s agent and accepted for carriage. Transit does not necessarily require physical movement. Cargo may be in transit even while stored in a warehouse, terminal, container yard, or other custody point.

Transit normally ends when the cargo is delivered or properly tendered to the consignee. For example, where containers are discharged into a container yard under a port-to-port CY/CY Bill of Lading, they may remain technically in transit until collected by the consignee or the consignee’s agent, depending on the contract and applicable law.

The carrier must deliver cargo to the consignee at the place required by the contract. The Ship Master is generally not justified in delivering cargo to a person who does not produce the required Bill of Lading (B/L). A shipowner may be liable for misdelivery if cargo is released without production of the Bill of Lading (B/L), unless there is a clear port custom or express contractual term allowing a different method of delivery.

Stoppage in Transitu

The Sale of Goods Act 1979 (Sections 44–46) provides that a carrier must obey proper orders from an Unpaid Seller who exercises the right of Stoppage in Transitu. This right allows an unpaid seller to stop cargo while it is still in transit if the buyer becomes insolvent.

The Sale of Goods Act 1979 gives the Unpaid Seller rights not available under ordinary common law, including the right of stoppage in transit. Section 45 provides that goods are in transit from the time they are delivered to the carrier or other bailee for dispatch to the buyer until the buyer or the buyer’s agent takes delivery.

When a Notice of Stoppage in transit is given by the seller to the carrier or other bailee in possession of the cargo, that carrier or bailee must redeliver the cargo to the seller or follow the seller’s directions. The redelivery costs must normally be paid by the seller.

Difficulties arise where the Unpaid Seller wishes to exercise Stoppage in Transitu after a negotiable Bill of Lading (B/L) has already been sent to the buyer or transferred to another party claiming cargo ownership. Problems become more serious if the buyer is insolvent but still holds the negotiable Bill of Lading (B/L).

The Right of Stoppage in Transitu was historically connected with the Bills of Lading Act 1855 and later developments under the Carriage of Goods by Sea Act 1992. Modern analysis depends on the document used, the transfer of rights, the buyer’s insolvency, and whether the bill of lading has passed to a lawful holder in good faith.

What is Stoppage in Transitu?

Stoppage in transitu is the right of an unpaid seller to stop goods while they are still in transit to the buyer and regain control of them. It usually arises where the buyer becomes insolvent after the goods have been dispatched but before the buyer has taken delivery.

The doctrine originated in English common law and has influenced other legal systems, including rules under the Uniform Commercial Code (UCC) in the United States. The purpose is to reduce the unpaid seller’s loss where the buyer is no longer financially able to pay for the goods.

The exact rules vary by jurisdiction, contract terms, sale documents, transport documents, and whether a negotiable bill of lading has been transferred. The right is mainly relevant in commercial trade rather than consumer transactions, where different consumer-protection rules may apply.

Contract Types for Carriage by Sea

There are two main contract types for carriage by sea:

1- Contracts evidenced by a Bill of Lading (or Sea Waybill)
2- Contracts incorporated in a Charterparty

If the charterer requires the full ship or a substantial part of the ship, the charterer normally hires the ship from the shipowner under a charterparty. The shipowner may then issue a Charterparty Bill of Lading (B/L).

If the cargo owner requires only space in a ship, the terms of the contract with the carrier are usually evidenced by a Bill of Lading (B/L) or Sea Waybill. The carriage contract may be agreed before the cargo reaches the quay, while the Bill of Lading (B/L) is usually completed and signed after loading. Even so, it operates as evidence of the contract and may become the governing document in the hands of a third-party holder.

The Combined Bill of Lading (B/L) may take effect when cargo passes into the carrier’s custody, not merely when it crosses the ship’s rail. This is why the Bill of Lading (B/L) is evidence of the Contract, rather than always being the original contract itself.

Where the cargo owner hires the full ship or a major part of the ship, the charterparty itself is the contract. In that situation, extraneous evidence is generally not admissible to prove terms that are inconsistent with or absent from the written charterparty. This is a major difference between charterparty-based carriage and bill of lading-based carriage.

What is a Contract of Affreightment (COA)?

The term Contract of Affreightment (COA) is sometimes used loosely to describe a charterparty, but shipbrokers should avoid treating the terms as identical. In commercial dry cargo and tanker practice, a Contract of Affreightment (COA) normally refers to a contract covering the carriage of an agreed quantity of cargo over a period, often using more than one ship.

A COA may specify total cargo quantity, shipment periods, load and discharge ranges, ship size limits, nomination procedures, freight rates, laytime terms, and cargo-program flexibility. The ship used for each shipment may be nominated later. The legal principles of contract and the special rules governing carriage of goods by sea may apply to both charterparties and COAs, but the commercial structure is different.

What is Carriage of Goods by Sea Act (COGSA)?

The Carriage of Goods by Sea Act (COGSA) is a United States statute governing the rights and responsibilities of ocean carriers and shippers in relation to goods carried by sea to or from United States ports in foreign trade. It was enacted in 1936 and represents the United States version of the Hague Rules.

COGSA applies most directly to bills of lading covering international sea carriage. In practice, many ocean bills of lading also contain a “Paramount Clause” that contractually incorporates COGSA, sometimes extending its terms beyond the period when the cargo is physically on the ship. This is important in container transport and multimodal carriage, where cargo may be received before loading and delivered after discharge.

The main elements of COGSA include:

Limitation of Liability: Carrier liability is generally limited to $500 per package, or for goods not shipped in packages, per customary freight unit.
Responsibility of Care: The carrier must properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods.
Bill of Lading: The carrier must issue a bill of lading on the shipper’s demand, showing key cargo details supplied by the shipper and the apparent order and condition of the goods.
Time for Suit: A lawsuit must generally be brought within one year after delivery of the goods or the date when the goods should have been delivered.
Jurisdiction and Validity of Contract Terms: COGSA affects the enforceability of contract terms, forum provisions, and clauses attempting to reduce statutory responsibility.
Act of God: The carrier may avoid liability where a natural event beyond reasonable prevention caused the loss.
Act of War: War or armed conflict may provide a defense to cargo claims.
Seaworthiness of the Ship: The carrier is protected if it exercised due diligence to make the ship seaworthy before and at the beginning of the voyage.
Negligence in Navigation or Management: The carrier may be protected against losses caused by navigational or ship-management errors by crew, subject to due diligence obligations.
Inherent Defect of the Goods: The carrier is not liable for loss caused by the natural qualities or defects of the cargo.
Insufficient or Inadequate Packing: Poor packing or inadequate marks may provide a defense.
Strike, Riot, or Civil Commotion: Labor unrest, riots, and civil disturbances may be excepted risks.
Other Exempt Causes: The carrier may also be protected where loss arises from saving life or property at sea, or from another cause without carrier fault.

COGSA balances the interests of cargo owners and ocean carriers. It requires carriers to exercise due diligence and properly care for cargo, while giving carriers statutory defenses and a monetary limitation where the legal requirements are satisfied.

The Burden of Proof under COGSA

In a COGSA cargo claim, the shipper or cargo owner bears the initial burden of proof. The cargo claimant must show that the goods were delivered to the carrier in good order and condition and were delivered out in damaged, short, or missing condition.

Once the cargo claimant establishes this prima facie case, the burden shifts to the carrier. The carrier must prove that the loss was caused by an excepted peril or that it exercised due diligence and was not negligent. If the carrier proves a defense, the burden may shift back to the cargo interests to prove that carrier negligence caused or contributed to the loss.

The Fair Opportunity Requirement under COGSA

Under COGSA, the shipper must be given a fair opportunity to declare a higher value for the cargo and pay a higher freight rate for increased carrier liability. If that opportunity is properly given and the shipper does not declare a higher value, the $500 per package limitation may apply.

The fair opportunity requirement is commercially important because the limitation can be much lower than the cargo value. Bills of Lading (B/L) should clearly incorporate COGSA and provide a meaningful way for the shipper to declare value where required by the applicable court’s interpretation.

Extension to Multimodal Transport under COGSA

COGSA originally applies to sea carriage, but it is often extended by contract to multimodal transport. A Clause Paramount may provide that COGSA applies before loading and after discharge, including terminal handling, inland carriage, or other periods while the carrier has custody.

This contractual extension can create complex legal questions where another law or convention applies to a non-sea segment. Courts may need to decide whether COGSA, another transport convention, local law, or a Himalaya clause governs a particular loss.

Deviation from the Agreed Route under COGSA

If a carrier makes an unreasonable deviation from the agreed route, it may lose COGSA defenses and limitation rights. A deviation to save life or property at sea is normally reasonable. A deviation for unauthorized cargo operations or other unjustified commercial purposes may be unreasonable.

The consequences of deviation depend on causation, contract wording, and court interpretation. Where an unreasonable deviation causes cargo loss or damage, the carrier may be exposed to full liability rather than the usual statutory limit.

Understanding the Carriage of Goods by Sea Act (COGSA)

Introduced in the 1930s, COGSA governs important rights and obligations between cargo owners, shippers, consignees, and ocean carriers. It applies to many contracts for carriage of goods by sea between foreign and United States ports where a Bill of Lading (B/L) is issued.

One of the most disputed features of COGSA is the $500 per package limitation in section 4(5). If a package is lost or its contents are damaged, the carrier may seek to limit liability to $500. However, United States courts generally require two conditions before the carrier may rely on this limitation.

First, the carrier must provide the shipper with Adequate Notice of the limitation by clearly incorporating COGSA into the Bill of Lading (B/L), often through a Clause Paramount. Second, the carrier must give the shipper a “Fair Opportunity” to avoid the limitation by declaring a higher value for the goods and paying any additional charge.

1- Adequate Notice

A carrier may satisfy adequate notice by incorporating COGSA into the Bill of Lading (B/L) through a clear Clause Paramount. This tells the shipper that COGSA governs the contract and that statutory defenses and limitations may apply.

Problems arise where the Bill of Lading (B/L) wording is printed in very small, blurred, or illegible text. Some courts have held that illegible incorporation language may not provide adequate notice. Carriers should therefore ensure that their Bills of Lading (B/L) are clearly printed and that limitation clauses are reasonably readable.

2- Fair Opportunity

The fair opportunity requirement means that the shipper must have a real opportunity to declare a higher cargo value and pay a higher freight rate if it wants greater carrier liability. Courts differ on what is required. Many courts find constructive notice where the Bill of Lading (B/L) clearly incorporates COGSA, while the 9th Circuit has required more specific opportunity, such as a space for the shipper to insert a declared value.

This distinction is commercially important for West Coast United States shipments and for carriers using standard form Bills of Lading (B/L). A carrier that fails to provide fair opportunity may lose the $500 per package limitation.

Marine Insurance

Most sophisticated shippers buy cargo insurance. A cargo policy can protect the shipper against loss or damage that exceeds the carrier’s limited liability or falls outside the carrier’s responsibility. However, insurance policies have their own exclusions, deductibles, valuation rules, notice requirements, geographic limits, and conditions.

Shippers should review cargo insurance carefully, especially for high-value cargo, oversized cargo, on-deck cargo, refrigerated goods, dangerous goods, project cargo, fragile goods, and cargo moving through multiple transport modes. A policy that appears broad may contain restrictions that reduce or eliminate recovery in a real claim.

For carriers, clear bill of lading wording, legible COGSA incorporation, and fair opportunity provisions reduce dispute risk. For shippers, understanding the effect of COGSA and buying suitable insurance are essential steps in managing cargo risk.

Differences Between the COGSA and the Harter Act

COGSA and the Harter Act both regulate carriage of goods by sea, but they operate differently. COGSA applies by force of law to contracts for the carriage of goods by sea to or from United States ports in foreign trade. The Harter Act applies to certain carriage connected with United States ports and may govern periods before loading and after discharge where COGSA does not apply by force of law.

COGSA generally governs the period from loading onto the ship until discharge from the ship, often described as “tackle to tackle.” The Harter Act applies from the preloading or receipt of cargo to the post-discharge or delivery of the goods. However, parties often extend COGSA by contract to cover periods before loading and after discharge.

Neither statute applies in the same way to every cargo. Live animals and some on-deck cargo may fall outside mandatory COGSA coverage. Carriage of Goods by Sea Act (COGSA) does not extend to cargo carried on the deck of a vessel. In drafting modern contracts, parties must check whether the cargo is covered by COGSA, the Harter Act, a contractual extension, another convention, or local law.

Another major difference is limitation. COGSA contains the well-known $500 per package or customary freight unit limitation. The Harter Act does not contain the same $500 package limit. COGSA also requires suit to be brought within one year, while the Harter Act does not specify a time limit for claims.

Because COGSA does not define “delivery” in detail, courts have interpreted the one-year time limit in different ways. Generally, delivery occurs when the carrier gives custody of the goods to the person legally entitled to receive them. If the goods are never delivered, the one-year period usually runs from when they should have been delivered.

Who is a COGSA Carrier and What Are the Carrier’s Duties?

A COGSA carrier may include the shipowner, the ship itself in rem, or a time charterer that enters into the contract of carriage and issues or authorizes the Bill of Lading (B/L). The identity of the carrier can be a major issue where a ship is chartered, sub-chartered, or commercially operated by a party other than the registered owner.

Under section 3(1), the carrier must, before and at the beginning of the voyage, exercise due diligence to make the ship seaworthy, properly man, equip, and supply the ship, and make the holds, refrigerating and cooling chambers, and other cargo spaces fit and safe for the reception, carriage, and preservation of cargo.

Section 3(2) requires the carrier to properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried. After receiving the goods, the carrier must issue a Bill of Lading (B/L) on the shipper’s demand. The carrier cannot use an exculpatory clause to escape these statutory responsibilities. Carrier liability under COGSA is based on fault, negligence, lack of due diligence, or failure to establish a statutory defense.

What Does the Carrier’s Obligation Entail in Ensuring Ship Seaworthiness?

Seaworthiness is a relative concept. A ship must be reasonably fit to carry the particular cargo on the intended voyage. A ship may be seaworthy for one cargo and voyage but unsuitable for another if cargo spaces, equipment, crew, documentation, or systems are inadequate for the cargo actually carried.

Under section 4(1) of COGSA, neither the carrier nor the shipowner is liable for loss or damage arising from unseaworthiness unless the loss results from failure to exercise due diligence to make the ship seaworthy. The due diligence obligation applies before and at the beginning of the voyage.

The carrier is not generally liable for a defect that was not reasonably discoverable by due diligence or for an unseaworthy condition that arises after the voyage begins, unless earlier fault caused or contributed to it. In practice, seaworthiness disputes often involve maintenance records, class records, surveys, crew competence, hatch-cover condition, refrigeration performance, cargo hold preparation, and machinery reliability.

Carrier Immunities Under the Carriage of Goods by Sea Act (COGSA)

COGSA contains a list of recognized defenses and immunities. These defenses reflect the commercial reality that sea carriage involves risks that cannot always be controlled by the carrier. Some defenses relate to external events, such as war, public enemies, governmental restraint, quarantine, strikes, riots, or perils of the sea. Others relate to the shipper’s conduct, such as poor packing, insufficient marks, inherent vice, or inaccurate cargo information.

Act, neglect, or default of the master, mariner, pilot, or servants of the carrier in the navigation or management of the ship;
Fire, unless caused by the actual fault or privity of the carrier;
Perils, dangers, and accidents of the sea or other navigable waters;
Act of God;
Act of war;
Act of public enemies;
Arrest or restraint of princes, rulers, or people, or seizure under legal process;
Quarantine restrictions;
Act or omission of the shipper or owner of the goods, his agent or representative;
Strikes or lockouts or stoppage or restraint of labor from whatever cause, whether partial or general, provided the carrier is not relieved from responsibility for its own acts;
Riots and civil commotions;
Saving or attempting to save life or property at sea;
Wastage in bulk or weight or any other loss or damage arising from inherent defect, quality, or vice of the goods;
Insufficiency of packing;
Insufficiency or inadequacy of marks;
Latent defects not discoverable by due diligence; and
Any other cause arising without the actual fault and privity of the carrier and without the fault or neglect of the agents or servants of the carrier, with the burden of proof on the party claiming the benefit of the exception.

These defenses are not automatic. The carrier must prove that the defense applies and must also overcome any evidence that its own negligence, lack of due diligence, or poor cargo care contributed to the loss.

The Obligations of Demonstrating Liability in a COGSA Case

The cargo owner begins by proving a prima facie case: cargo was delivered to the carrier in good order and condition, and it was discharged damaged, short, or missing. This is often shown through clean Bills of Lading (B/L), survey reports, mate’s receipts, tally records, photographs, sampling, and outturn evidence.

The burden then shifts to the carrier to show that the loss resulted from one of the COGSA excepted causes and that the carrier acted diligently in caring for the cargo. If the carrier succeeds, the burden shifts back to the cargo interests to prove carrier negligence or lack of due diligence.

If both an excepted cause and carrier negligence contributed to the loss, the carrier must separate the damage caused by the excepted peril from the damage caused by its own fault. If the carrier cannot make that separation, it may be liable for the entire loss.

Per-Package Limitation under COGSA

Where cargo loss or damage is not covered by a statutory defense, COGSA limits the carrier’s liability to $500 per package or, for goods not shipped in packages, to $500 per customary freight unit. This limitation is one of the most commercially important provisions in United States ocean carriage law.

Determining what counts as a “package” can be difficult. Where goods are fully enclosed in boxes, crates, cartons, bundles, or similar units, those units may be packages. In containerized cargo, the Bill of Lading (B/L) description is crucial. If the bill lists the number of cartons, pallets, bags, drums, or other internal units, those may be treated as packages rather than the container itself. If the contents are not described, the container may be argued to be the package.

Where goods are not shipped in packages, limitation is calculated by customary freight unit. The customary freight unit depends on the unit used to calculate freight under the carriage contract, such as weight, measurement, or item. The cargo interest cannot recover more than actual loss, even if the package limitation would produce a higher figure.

Unreasonable Deviations under COGSA

COGSA recognizes that some deviations are reasonable. A deviation made to save life or property at sea does not breach the contract of carriage and does not deprive the carrier of statutory protection. However, a deviation for loading or discharging cargo, passengers, or other commercial purposes may be unreasonable if not permitted by the contract.

COGSA does not fully define the consequences of unreasonable deviation. Many courts hold that an unreasonable deviation may deprive the carrier of COGSA defenses and the $500 per package limitation, where the deviation caused or contributed to the cargo loss or damage.

COGSA does not impose strict liability on ocean carriers. Liability is based on fault, failure to exercise due diligence, improper cargo care, or inability to prove an excepted cause. Both carriers and shippers should carefully assess cargo type, packing, route, ship suitability, documentation, insurance, and contractual terms before shipment.

What is the Article 3 of the Carriage of Goods by Sea Act?

Article III of COGSA sets out the carrier’s core responsibilities and liabilities. In broad terms, the carrier must exercise due diligence before and at the beginning of the voyage to:

Make the ship seaworthy.
Properly man, equip, and supply the ship.
Make the holds, refrigerating and cooling chambers, and all other parts of the ship where goods are carried fit and safe for their reception, carriage, and preservation.

Subject to Article IV defenses, the carrier must properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried. After receiving the goods into its charge, the carrier, Master, or agent must issue a Bill of Lading (B/L) on the shipper’s demand showing marks, number of packages or pieces, quantity or weight, and the apparent order and condition of the goods.

Carriage of Goods by Sea Act 1971 vs 1992

The Carriage of Goods by Sea Act 1971 applies in the United Kingdom and incorporated the Hague-Visby Rules into English law. It regulates important responsibilities and liabilities of carriers and cargo interests under bills of lading and certain other sea carriage documents.

The Carriage of Goods by Sea Act 1992 did not replace the 1971 Act. Instead, it addressed issues concerning rights of suit and the transfer of rights and liabilities under bills of lading, sea waybills, and ship’s delivery orders. It was designed to modernize and clarify who can sue and who may be subject to obligations under transport documents.

Key differences between the 1971 and 1992 Acts include:

Transfer of Rights and Obligations: The 1992 Act provides for transfer of rights under a bill of lading when it is transferred to a lawful holder. It also addresses liabilities that may pass with those rights in defined circumstances.
Expanded Definition of a Bill of Lading: The 1992 Act extends the legal framework beyond traditional bills of lading to include sea waybills and ship’s delivery orders.
Rights of Suit: The 1992 Act gives rights of suit to the lawful holder of a bill of lading or to the person entitled to delivery under certain transport documents.

Responsibilities and Liabilities of the Carrier: Under the 1971 Act and the Hague-Visby Rules, the carrier must exercise due diligence to make the ship seaworthy, properly man, equip, and supply the ship, and make cargo spaces fit and safe for the goods.

Limitations of Liability: Carrier liability is limited by reference to package, unit, weight, or declared value depending on the applicable rule.
Period of Responsibility: The Hague-Visby framework generally applies from loading onto the ship to discharge from the ship, although contract terms and other law may extend responsibilities.

The Carriage of Goods by Sea Act 1992 complements the 1971 Act by clarifying the legal position of parties who hold or receive transport documents after shipment. Together, the two Acts form a central part of United Kingdom law on carriage of goods by sea, but their application depends on the document, route, contract, and governing law.

Carriage of Goods by Sea Act UK vs USA

The Carriage of Goods by Sea Act exists in both United States and United Kingdom maritime law, but the two systems differ in scope, rules, and liability limits.

UK Version:

The United Kingdom system is based on the Carriage of Goods by Sea Act 1971, which incorporates the Hague-Visby Rules, and the Carriage of Goods by Sea Act 1992, which deals with rights of suit and transport documents. The Hague-Visby Rules use a different limitation formula from United States COGSA and generally apply mandatorily to certain outbound shipments.

USA Version:

The United States COGSA was enacted in 1936 and implements the Hague Rules rather than the Hague-Visby Rules. It applies by force of law to the period from loading onto the ship to discharge from the ship in foreign trade to or from United States ports. Through a Clause Paramount, parties often extend United States COGSA to periods before loading and after discharge.

Further Differences between the US and UK versions of COGSA

A major difference concerns liability limitation. Under the United Kingdom Hague-Visby regime, limitation is calculated by reference to units of account per package or unit, or by gross weight, whichever is higher. Under United States COGSA, the standard limitation is $500 per package or per customary freight unit.

The United States version applies mandatorily to outbound shipments from United States ports in foreign trade and also to inbound shipments covered by the statute, subject to contract and case law analysis. Its application may also be contractually extended by a Paramount Clause. The United Kingdom version operates within the Hague-Visby framework and the 1992 Act rules on rights of suit.

These differences show why bills of lading, sea waybills, charterparty bills, Paramount Clauses, jurisdiction clauses, and law clauses must be drafted carefully. The same cargo claim may produce different results depending on whether United States COGSA, the Harter Act, the Hague Rules, the Hague-Visby Rules, United Kingdom legislation, or another national law applies.

COGSA remains a central part of ocean carriage law because it defines the carrier’s duties, the shipper’s responsibilities, the burden of proof, the main defenses, the limitation of liability, the time for suit, and the treatment of cargo claims. For carriers, it provides predictability and important defenses. For shippers, it prevents carriers from avoiding core duties through unfair bill of lading clauses and encourages careful cargo insurance and documentation.