Consignee''s Right To Inspect Goods

Consignee''s Right To Inspect Goods

Copyright 2004, Traffic World, Inc.

Q:

We are a third party logistics provider that contracts with carriers for their services.

A consignee of one of our customers has requested that they be allowed to open most or all of the cartons of their inbound shipments to ensure that the goods inside do not have any damage. The carrier''s terminal manager instructed the driver not to allow the consignee to do this unless the exterior of the cartons shows that they were mishandled in some way (e.g. holes, tears, indentions, etc.). The terminal manager contends that it would hold up the driver too long if the consignee were allowed to inspect the goods, except only if the exterior of the boxes shows signs of potential damage.

The consignee is upset because they have signed off delivery receipts in the past only to find out there was "concealed damage" to the goods, which is invariably a difficult claim to get paid at 100 percent.

The carrier''s position is that the Carmack Amendment to the Interstate Commerce Act (49 U.S.C. ? 14706) does not specifically state that the consignees are allowed to open every box upon delivery, unless there are signs of potential damage (because as a matter of practicality, if every consignee did this, their drivers'' productivity would be greatly reduced).

Our position is that Carmack says just the opposite - every consignee has the right to open boxes and inspect goods upon receipt before signing the delivery receipt even if it slows down the driver. We have cited the Code of Federal Regulations concerning loss and damage claims, 49 CFR ?370.3(b)(2), "asserting liability for alleged loss, damage, injury or delay." Our position is that the consignee could not "allege" loss or damage unless they have been given the right to inspect the goods at the time of delivery. Who''s right?

A:

Your best answer, and the only one within your control, lies in the first sentence of your e-mail to me. That tells me it''s you who chooses the carrier to handle this traffic. Choose another one.

You''re never going to settle this by invoking the Carmack Amendment and Federal L&D regs for the simple reason that neither speaks to this issue. Indeed, the only document I can find that does speak to it is the (motor carrier) National Freight Claim & Security Council''s Freight Claim Rule Book, whose "regulations" governing inspection of freight say pretty much what your carrier does - the words you use are almost a direct quote - but which has no legal standing.

Furthermore, it''s been held in court that a carrier breaches no duty to anyone by allowing a consignee to inspect goods being delivered to it; Woodruff Oil & Fertilizer Co. v. Charleston & W. C. Ry. Co., 180 S.E. 793. In that case, it''s worth noting, the result of the inspection was that the consignee refused delivery and consequently the shipper lost a sale; even so, it was held that the carrier''s allowing the inspection did not give the shipper a valid cause of action against it.

What''s more, this isn''t the carrier''s decision to make. The consignee can resolve this unilaterally simply by refusing to sign the delivery receipt until it''s satisfied. If that includes opening "most or all of the cartons," then it can wait until then. The carrier''s only counter is either to drive off without a signed d.r., which is patently stupid, or refuse delivery unless the d.r. is signed before the goods are unloaded, which is, if anything, even stupider because that would open it up to all kinds of legally enforceable damages to both shipper and consignee. Indeed, the only way it''s getting by with this policy apparently is by bullying a consignee that doesn''t understand its legal rights.

The carrier''s stated reason for not wanting to allow opening of cartons while the driver waits - loss of productivity - does not impress me. The consignee will of course be liable for any detention charges if its ultra-cautious approach holds the carrier beyond free time, and that''s supposed to compensate the carrier for such delays.

If the carrier has free time set too long or detention set too low it always can make necessary changes, but the waiting time shouldn''t cause it any economic injury.

This leads me to a suspicion that the carrier isn''t being entirely truthful with you. Could its reason for trying to prevent the carton openings be that it, too, is aware that even undamaged cartons of these particular shipments may house damaged merchandise and it prefers to have such claims presented as "concealed damage" which are more easily declined or compromised? I won''t swear it''s being so deceitful, but the possibility is too obvious to ignore.

Either way, it seems to me you have two choices. One is to explain to the consignee about its rights to delay signing the d.r. and let it carry the ball from there, which strikes me as less than ideal customer service. The other is to change carriers. Oh, you might want to talk to this carrier first about its misperception of who has the right to do what and give it a chance to mend its ways. But if it won''t, you should have no compunction about switching to a carrier that''s less restrictive in its approach.



-- Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at P.O. Box 76, Morganton, Ga. 30560; phone, (706) 374-7201; fax, (706) 374-7202; e-mail, BarrettTrn@aol.com. Contact him to order the 536-page compiled edition of past Q&A columns, published in 2001, at $80 plus shipping.