Cau v. Texas & Pacific Railway Co.

Background

A shipper and a carrier disputed responsibility after goods were damaged by fire. The carrier issued a bill of lading that excluded losses from fire. The shipper argued the carrier had no independent consideration for the exemption and that the carrier needed to present a real choice to the shipper. A lower court ruled against the shipper, and the Supreme Court reviewed and left that judgment in place.

Reasoning

The Court explained that carriers can limit their usual common-law responsibility when the shipper consents. Consent may be given by agreeing to a bill of lading, and the law will usually presume shippers know its terms. The Court rejected the idea that a carrier must physically offer an explicit choice at the time of shipping. It also held that the payment structure or rate is sufficient consideration for such contracting, and that a bill of lading’s stated terms can support the exemption. On negligence, the Court said the shipper generally bears the initial burden to prove the carrier’s negligence, though once damage is shown the carrier must show it resulted from an excepted peril and not from negligence avoidable by reasonable care.

Real world impact

This decision lets carriers use standard bills of lading and routine rates to limit liability when shippers accept those terms. Shippers will need to look closely at shipping terms and be prepared to prove carrier negligence in loss claims. The ruling preserves the rule that carriers cannot escape liability for loss that results from their avoidable negligence.