Ask around a yard what happens when a load gets damaged and you will usually hear some version of the same answer: we’re not liable unless we agreed to be. It is a reasonable thing to assume. It is also the wrong way round, and the section that makes it wrong catches more operators than any other part of the law of carriage.
This is about what Part 5, subpart 1 of the Contract and Commercial Law Act 2017 actually says — the rules that govern every contract of carriage in New Zealand, from a single pallet across town to a machine on a low loader.
Every job is one of four kinds
The Act divides contracts of carriage into four kinds, and the kind decides who carries the loss.
- At owner’s risk — the carrier is not liable at all, except for loss or damage it caused intentionally.
- At declared value risk — the carrier is liable up to an amount written into the contract.
- On declared terms — liability is whatever the contract’s own terms say.
- At limited carrier’s risk — the carrier is liable, capped at $2,000 for each unit of goods.
(Section 248.)
The default is not “no liability”
Here is the part that surprises people.
A contract that does not say which kind it is is a contract for carriage at limited carrier’s risk. The carrier is liable, capped at $2,000 per unit. Silence does not protect you — it selects the one kind where you pay.
Worse, so is a contract that claims to be one of the other kinds but does not meet that kind’s requirements. Naming a kind is not enough. The contract has to use the term for it and satisfy the requirements in sections 250 to 253.
(Section 249(3).)
This is the trap for anyone who has written “at owner’s risk” across the bottom of a docket and considered the matter closed. If the contract does not actually meet the requirements for that kind, you are back at limited carrier’s risk, liable, and you have spent months believing otherwise.
The cap, and how the units are counted
The $2,000 applies per unit of goods, not per consignment. So how the units are counted matters as much as the figure.
A unit of goods is each unit as accepted for carriage by the actual carrier — or by the first actual carrier where more than one is involved. Repacking, unpacking, aggregating or separating the goods later in the journey does not change the count.
(Section 259(4).)
The practical consequence: the size of your exposure is fixed at the moment the first carrier takes the goods, by how they were presented at that moment. Forty cartons accepted as forty cartons stay forty units even if they are consolidated onto two pallets at a depot an hour later.
The cap applies to carriage at limited carrier’s risk and at declared value risk. It does not apply to carriage at owner’s risk or on declared terms. And it does not cover loss the carrier caused intentionally, damages for something other than loss of or damage to the goods, or consequential damages.
(Section 259.)
When your responsibility starts and stops
A contracting carrier’s responsibility begins when the goods are accepted for carriage under the contract.
It ends when they are tendered to the consignee under the contract. Where freight is unpaid at that point, it ends when the carrier can tender them and has given notice to someone liable for the freight. Where the consignee collects, it ends when they collect, or on the expiry of the fifth day after notice.
(Sections 256 to 258.)
Inside that window the contracting carrier is liable whether it or any actual carrier caused the loss. Which brings us to subcontracting.
Subcontracting does not move the liability
The contracting carrier is the one who contracted with the customer. An actual carrier is whoever physically carries the goods. They are often not the same party, and on a busy week they are frequently several parties.
The customer claims against the contracting carrier. That carrier is liable for loss in its responsibility window whether it or a subcontractor caused it. The contracting carrier then claims against the actual carrier — subject to the same $2,000 per unit cap, and to a 10-day notice requirement.
(Sections 256 and 261 to 265.)
If you broker work out, you have not brokered out the liability. You have added a second claim you have to make yourself, on a shorter clock.
What actually gets a carrier off the hook
A carrier is not liable to the extent it proves the loss or damage resulted directly, and without fault on its part, from:
- inherent vice in the goods
- a breach of the terms implied by section 273
- seizure under legal process
- saving or attempting to save life or property in peril
The burden of proving it sits with the carrier, and this applies despite the rest of the subpart.
(Section 260.)
Note the shape of that: these are things you prove, after the fact, with evidence. They are not things you assert on a docket.
The clock is shorter than you think
Three deadlines, and missing the first one ends the matter.
30 days. Written notice giving reasonable particulars of the damage must reach the contracting carrier within 30 days after its responsibility for the goods ends. Without it, no proceeding can be brought for damage or partial loss.
10 days. A contracting carrier that receives such a claim has 10 days from receiving it to notify the actual carrier.
12 months. No proceeding for damage or partial loss may be brought more than 12 months after the date notice was served, or — where no notice was required — after the date the contracting carrier’s responsibility ended.
(Sections 274 to 276, 279 and 280.)
Notice is not required where the carrier is or ought to be aware of the damage, or in the case of fraud. The 12-month limit does not apply in the case of fraud by the carrier, and a proceeding may still be brought later with the carrier’s consent or the leave of the court.
What to do with this
Four things worth checking this week.
- Read your own terms and find the kind. If your contract of carriage does not name a kind and meet its requirements, you are at limited carrier’s risk. Knowing that is better than assuming otherwise.
- Count a typical job in units. Not consignments. That number multiplied by $2,000 is the shape of your exposure on that job.
- Check how a damage claim reaches you. If a customer’s email sits unread for a month, the 30-day notice has run and so has your chance to pass it to the subcontractor inside 10 days.
- If you subcontract, diary the 10 days. It is the deadline most often missed, and it is the one that leaves the contracting carrier holding a loss somebody else caused.
This is general information about New Zealand transport law, not legal advice. It reflects Part 5, subpart 1 of the Contract and Commercial Law Act 2017 as at the date of publication. Every section referenced above can be read in full at legislation.govt.nz. For a specific contract or a live claim, talk to a lawyer.