CHAPTER 6
THE CARRIAGE OF GOODS AND THE LIABILITY
OF AIR AND SEA CARRIERS
CASES IN THIS CHAPTER
El Al Israel Airlines, Ltd. v. Tseng
Olympic Airways v. Husain
J. Gerber & Co. v. S.S. Sabine Howalt
Z.K. Marine, Inc. v. Archigetis
Prima U.S. Inc. v. Panalpina, Inc.
Shaver Transportation Co. v. The Travelers Indemnity Co.
TEACHING SUMMARY
Once the buyer and seller have negotiated the contract for the sale of goods, and even,
perhaps, how those goods will get from point A to point B, an air, marine or land carrier must
actually transport those goods. While generally governed by a private contractual relation, in
aviation and maritime law there is greater uniformity than in other areas because international
conventions and treaties have helped to harmonize the effect of national laws. The chapter
focuses on the liability of air carriers for death or bodily injury to passengers on international
flights (Recall the 2013 summer crash of a flight from Korea that landed in San Francisco after
crashing into the seawall and then erupting in flames). Also examined are the loss or damage to
baggage and air cargo as well as the liability of marine carriers or transport intermediaries
(trucks, rail, etc.) for loss or damage of cargo. Some issues of insurance law are also noted.
Additional Background: Perils of Sea. The concept of a peril of sea is not uniform among
nations. In fact, the Anglo-Australian notion is different from the U.S. and Canadian conception. In
the U.S. and Canada, a peril of sea must be of an extraordinary nature “or arise from an
irresistible force or overwhelming power” and cannot be guarded against through ordinary
prudence. This is described by the 2nd Circuit in The Guila, 218 Fed. 744 (2d Cir. 1914) and The
Rosalia, 264 Fed. 285 (2d Cir. 1920). The U.K. and Australia, however, do not require that such a
burden be met. Instead, they require only that losses be extraordinary. Therefore, sea and
weather conditions that could reasonably be foreseen and guarded against may constitute a peril
of sea. (Great China Metal Industries Co. Ltd. v. Malaysian International Shipping Corp., High
Court of Australia Reports, vol. 98, no. 65 (1998)). Nevertheless, because the Hague rules are
intended to apply widely in international trade, courts strive for a relatively uniform construction of
them.
CASE QUESTIONS
El Al Israel Airlines, Ltd. v. Tseng
1. Why was Tseng not able to pursue a remedy under New York state law?
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Chapter 6: The Carriage of Goods and the Liability of Air and Sea Carriers
2. What policy reasons does the Court give for holding that the air liability convention
should preclude remedies under local or state law?
3. Why would Tseng not be successful in an action against the airline in federal court under
the Convention?
Olympic Airways v. Husain
1. Why were the events in this case deemed “unexpected or unusual”?
2. Why did the Court reject Olympic’s contention that the term “accident” refers only to
affirmative acts?
3. What is the significance of the attendant’s failure to move the asthmatic passenger away
from smoke when that was contrary to airline industry procedures?
4. How does this case differ from Air France v. Saks and the British “deep vein thrombosis”
cases, cited in the text?
1. What is a “peril of the sea”? Why do you think maritime law relieves a carrier from liability
for damages resulting from a “peril of the sea”?
2. Describe the sea and weather conditions here and explain whether they amounted to an
exculpatory peril of the sea.
3. If an insurance company pays a claimant for goods damaged during ocean transit, may
the insurance company bring the action against the carrier under COGSA?
1. Why might an unknowing or unadvised shipper have failed to properly value marine
cargo?
2. What is the proper role of the shipper’s freight forwarder in giving advice and in arranging
transport for ocean cargo?
© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom
use.
Chapter 6: The Carriage of Goods and the Liability of Air and Sea Carriers
3. How could the shipper avoided the result of this case?
Prima U.S. Inc. v. Panalpina, Inc.
1. Explain the difference between a carrier, a freight forwarder and a NVOCC.
2. How does their liability differ for damage or loss to goods?
3. Why did Panalpina’s contractual assurance that the shipment would “receive door to
door our close care and supervision” not subject them to liability?
Shaver Transportation Co. v. The Travelers Indemnity Co.
1. Tell whether coverage was awarded or denied under each of the following insurance
provisions, and why or why not: the perils clause; the shore clause; the “Inchmaree”
clause; and the negligence clause.
Answer: Coverage was denied under the perils clause as the loss contamination
2. How could the shipper have avoided this problem?
Chapter 6: The Carriage of Goods and the Liability of Air and Sea Carriers
ANSWERS TO QUESTIONS AND CASE PROBLEMS
1. Answer: Yes. The plaintiff was injured on board an international flight and the
3. Answer: The district court granted in part and denied in part United Airlines’
4. Answer: The court limited the carrier’s liability to 39 “big packs.” The court
defined a package as “a class of cargo, irrespective of size, shape or weight, to which some
5. Answer: It is not an accident if the passenger’s injury is caused by reaction to
the usual, normal expected operation of the airplane. The presence or lack of a defibrillator
6. Answer: COGSA does apply because it is a shipment from the U.S. to a foreign
8. Answer: In the first case, the court notes that the ship’s crew must help to save
merchandise if the ship is in danger. If they do so, they are to be paid and returned back to their
MANAGERIAL IMPLICATIONS
1. Answer: The pallets may qualify as packages as the furniture was placed on
such pallets, wrapped with heavier cardboard and fastened with steel bands. Students should
recall that the definition of a package is very broad and includes any “class of cargo, irrespective
2. Answer: The information needed will depend on the degree of risk assumed by the
importer. Whereas many risks can be insured against, some cannot. For instance, if supplies of
ETHICAL CONSIDERATIONS
The importance of ocean shipping to international trade cannot be overstated; it is its lifeblood.
Any threat to shipping can have global economic, and often political, ramifications, whether it is
caused by the closure of a canal by war, a hurricane or tsunami, or piracy off the coast of Africa.
Another threat is maritime crime. One form of maritime crime that often goes unmentioned to
the public is that of marine insurance fraud, a befitting topic for this chapter.
In the spirit of Sherlock Holmes, and other great detective mysteries, we thought this would be a
fun question for students. Some may know more about ocean shipping than others, and some
of our readers have become merchant mariners, and others insurers. But this should be
challenging and educational for all. The story is completely hypothetical, but is based on
compilations of many actual reported cases.
Chapter 6: The Carriage of Goods and the Liability of Air and Sea Carriers
What happened? O. L. Salt knew the sea, the shipping business, marine insurance, and how to
scam the system – and had it all planned – a retirement on the Greek Island of Corfu. He picked
an old ship, but one capable of being insured and carrying cargo, at least for a short time. Her
name is a giveaway, named for a ship belonging to another pirate, Blackbeard’s Queen Anne’s
Revenge. The voyage charterer in Venezuela had no idea that the oil would never make its
Ask students to research the case of the supertanker, Salem, lost at sea in 1980. Examine the
problem of maritime hull and cargo frauds. What other maritime crimes threaten the shipping
industry? As noted in the text, students might begin their research with the International
Maritime Bureau of the International Chamber of Commerce. The Journal of Commerce is an