Carriage of Goods by Sea Act - COGSA
The bulk of maritime commercial activity involves carriage of goods. The most important document used in this type of transaction is the bill of lading. A bill of lading is basically a contract of carriage. Since ocean bills are negotiable, they control possession of the goods and allow for the financing of the movement of merchandise and commodities around the world. The good faith purchaser of a bill of lading, or holder in due course, is given privileged status. The debt is said to be "merged" with the instrument, which means that when the instrument is discharged, so is the underlying debt. It also means that only payment to a holder of the bill or note (someone in physical possession) will discharge the debt.
One of the most important issues dealt with by maritime law is the loss for lost or damaged goods. The basic statute regulating the subject is the Carriage of Goods by Sea Act of 1936 (also known as Cogsa). The thrust of Cogsa, which followed the Harter Act of 1893 and the Hague Rules, was to prevent ship owners from contracting out of the duty to use care to put his vessel in good shape for the voyage, or the duty to properly care for the goods aboard. If he did however provide a seaworthy vessel, he would not be liable for those in charge of the vessel. Cogsa only applies to foreign trade. Its application is also limited to the period running from the time when the goods are loaded until they are discharged from the ship. In those areas where Cogsa does not apply, Harter is still applicable law. Also, pursuant to Cogsa, every bill of lading incorporates the statute. It is allowed to contract out of Cogsa's terms but only by increasing the ship owner's liabilities and not by decreasing them.
Among the duties of a carrier are the exercise of due diligence to 1) make the vessel seaworthy; 2) properly equip, supply and man the vessel; 3) make the holds, cooling compartments and al other areas where the goods are to be stored, fit and safe for their reception, preservation and carriage. Once the due care is given, the law protects the carrier by stating in Section 4 (1) of Cogsa that:
Section 4(2) of Cogsa lists the causes for which the carrier shall not be liable. The most important is 4(2)a:
Sections 4(2) b through p list other causes of damage which are excepted. Fire, for example, is excepted unless caused by the actual fault or privity of the carrier. The perils of the sea are also excepted. A carrier is also not liable for acts of God or, as stated in the statute,
Other exceptions related to human force include: acts of war; acts of public enemies; arrest or restraint of princes; seizure under legal process; quarantine restrictions; riots and civil commotions; strikes; lockouts or stoppages of work; acts or omissions of the owner or shipper of the goods; losses arising from inherent defect of the goods or insufficiency of packing. Section 4(2) provides a catchall exception as follows:
The effect of deviation is addressed by Cogsa in Section 4(4) to the effect that a deviation does not breach the Act or the carriage contract if it is undertaken to save life or property at sea. a deviation undertaken to load or unload cargo or passengers is not deemed reasonable and is therefore in breach.
Suits based on cargo loss or damage or other breach of the contract of carriage, are within the admiralty jurisdiction. Actions in personam may be brought either in federal court under the admiralty jurisdiction or in state courts under the saving clause. It should be noted, however, that maritime liens arising out of the shipper-carrier relation may be enforced only in federal court under admiralty jurisdiction.
Carriage of Goods by Sea Act (COGSA): 46 U.S.C. Sec. 1300-1315