Exculpatory and Limitation of Liability Provisions in Terminal Operator Tariffs

Abstract

The Shipping Act of 1916 (hereinafter Shipping Act) requires ocean carriers and other persons subject to the act to publish tariffs outlining their rates, charges, regulations and rules for services and the use of their facilities. Other persons subject to the Shipping Act are defined as those who "furnish wharfage, docks, warehouse, or other terminal facilities." 46 U.S.C. §801. The carrier and the terminal operator must establish and observe just and reasonable regulations and practices relating to "receiving, handling, storing, or delivering" property. 46 U.S.C. §816. While there is a statutory requirement that ocean common carriers file their tariffs with the Federal Maritime Commission (FMC), 46 U.S.C. §817, there is no statutory requirement that terminal operators file tariffs with the FMC.

It appears that as a rule general exculpatory clauses in terminal operator tariffs will not be enforced by courts without a showing of actual notice, alternative rates, and absence of monopoly. Some other kinds of liability clauses, however, may have good prospects of being upheld even without such a showing. Limitations on consequential damages, and provisions concerning burden of proof, evidentiary presumptions, and proportionate fault offer valuable protections to the terminal operator so long as the claimant has knowledge of the provisions. There are many ways an imaginative draftsman can compose provisions that should pass scrutiny. Whenever possible, provisions should comply with the U.C.C. and other analogous areas of the law. The availability of alternative rates tied to liability limits could be increased. Because the law governing terminal tariffs is so underdeveloped, interesting issues will continue to arise.

Keywords: Shipping Act of 1916, ocean carriers, tariffs, terminal operators, terminal facilities, Federal Maritime Commission, FMC, General Order 15, UCC, Uniform Commercial Code, negotiated contract arrangements, vessel owners, storage agreements

JEL Classification: K12, K23, K39, K49, R49, L92