Apparent Good Order and Condition – Why You’re Not Eligible for a Cargo Claim

Apparent Good Order and Condition - Why You're Not Eligible for a Cargo Claim

If you’ve ever worked in the international transportation industry, you know what a Bill Of Lading is. If you’ve worked in international transportation for a while, you also probably know what cargo damage looks like. Many people unknowingly agree to rules and regulations on a Bill Of Lading that end up restricting themselves from legally filing a cargo claim. And it all boils down to the fine print on a Bill Of Lading – don’t miss this.

The Bill Of Lading serves as a receipt for your goods, a transfer of ownership, and a contract of carriage. In the case of damaged goods, fault may be placed on the shipper if damage occurs during the period in which the shipper had ownership of the goods (as defined by the BOL.) Upon arrival of the goods, the buyer is asked to sign the BOL and confirm “Apparent Good Order and Condition” of the goods (as found in a section on the Bill Of Lading.) However, signing on the line without a clear understanding of what this entails may leave you incapable of filing a claim for your damaged goods.

Don’t Overlook Apparent Good Order and Condition on Your Bill Of Lading

Article III Rule 3 of the Hague-Visby Rules regarding the Apparent Good Order and Condition of the goods states:

“After receiving the goods into his charge, the carrier or the master or agent of the carrier shall, on demand of the shipper, issue to the shipper a bill of lading showing among other things:

(a) The leading marks necessary for identification of the goods as the same are furnished in writing by the shipper before the loading of such goods starts, provided such marks are stamped or otherwise shown clearly upon the goods if uncovered, or on the cases or coverings in which such goods are contained, in such a manner as should ordinarily remain legible until the end of the voyage.

(b) Either the number of packages or pieces, or the quantity, or weight, as the case may be, as furnished in writing by the shipper.

(c) The apparent order and condition of the goods.

Provided that no carrier, master or agent of the carrier shall be bound to state or show in the bill of lading any marks, number, quantity or weight which he has reasonable ground for suspecting not accurately to represent the goods actually received, or which he has had no reasonable means of checking.”

The Apparent Good Order and Condition section of the Bill Of Lading serves as a request for the buyer to confirm that the goods appear in good order and condition on arrival. In other words, it is asking the buyer to confirm that upon reasonable review and examination, there was no noticeable damage to the cargo. Note that all shipment details on the Bill Of Lading must correspond to the actual state of the cargo.

Remember: Do not sign a confirmation that the goods have arrived in Apparent Good Order and Condition on your Bill Of Lading if there is damage upon reasonable examination of the arrived cargo.

What Qualifies as Reasonable Examination?

As the Hague-Visby Rules state, you must report if there is any noticeable damage or change to the good order and condition of the goods upon reasonable examination. Sounds a little bit like tricky, crooked-lawyer wording to me, doesn’t it? Here’s what it means.

Suppose you import a container full of large speakers. When the cargo arrives, you check the condition of the goods per the guidelines of the BOL. If you were to open the container to find the speakers had been damaged, crushed, or scuffed, your cargo would not be in Apparent Good Order and Condition.

However, suppose your cargo appeared to arrive in good condition, but upon closer examination later, internal parts had in fact broken loose during shipping. The term, Reasonable Examination, does not refer to any internal quality of the goods carried. It only relates to the external condition of the cargo and its contents.

What You Should Do If Goods Arrive Damaged

If your goods arrive in damaged or doubtful condition, there are a couple guidelines you may follow to ensure the matter is properly handled:

Step 1: Insert a Reservation on Your Bill Of Lading Immediately

Under the Hamburg Rules, the carrier is allowed to insert a “reservation” on the Bill Of Lading for any suspicion of inaccurately reported details. If your goods appear in damaged condition upon reasonable examination, you should issue a reservation on the BOL and detail an explanation of your grounds for objection.

Step 2: Clarify Your Terms of Reservation

Clarity is incredibly important when it comes to terms of reservation on the Bill Of Lading. After stating a reservation on the BOL, you are required to detail what your reservation is regarding. Using terms or phrases that are ambiguous by nature may render your reservation useless. The court may presume the goods are in good order and condition, leaving you and your company out of luck. Make sure to clearly detail why you are issuing a reservation, as well as a clear description of the type and extremity of damage caused to the goods.

All reservations must be placed on the front of the BOL. Detailing damage on the reverse of the BOL, warehouse receipts, or other shipping documents will not serve as sufficient grounds for a cargo claim.

Where to Go from Here

If you only retain one thing from this article it should be this – do not sign a Bill Of Lading, confirming that your cargo is in good order and condition before confirming your cargo has arrived undamaged.

It’s plain and simple. If you sign the Bill Of Lading, you confirm that you have reviewed the Hague-Visby Rules and have simultaneously agreed that the goods have arrived in Good Order and Condition without visible damage. Thus, you will not be eligible to file a claim on your damaged goods, since you have “knowingly” confirmed they have arrived in good order and condition.

If you want to file a claim for goods that have been damaged in transit, you must issue a reservation on the Bill Of Lading on the front of the BOL only. You need to also describe, in detail, the type, location, and extremity of the damage. Failure to describe these reservations in detail will result in a court ruling that your cargo has arrived in good condition (even if it hasn’t).

It’s a simple three step process: 1) Check your goods for damage before signing the BOL, 2) If your goods are damaged, insert a “reservation” on the front of the BOL, and 3) describe in detail all noticeable damage to the cargo. Then, and only then, will you be eligible to issue a cargo claim.

It isn’t difficult, but so many people have been burned by the process. If you have experienced related pains in the past and would like to learn, in more depth, how you can avoid issues in the future, call our team at Interlog USA and we would be happy to help you!

(Digital Marketing Coordinator)

Chris Fleming manages and oversees all digital marketing efforts and strategy of Interlog USA, including content marketing, email marketing, video production, and market research. Chris also works in supervision of the marketing and sales department to restructure, fine-tune, and manage the company's sales process to increase the effectiveness of outbound and inbound sales tactics.

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