The Carmack Amendment: A Primer

Kevin Anderson Cargo Liability, Regulations, Transportation

Claims for damaged interstate cargo begin and end with the Carmack Amendment, part of the Interstate Commerce Commission Termination Act of 1995. Because it is federal law, the Carmack Amendment takes the place of state or common law claims on damaged interstate cargo. So even if there is a state law remedy to recover against a carrier for damaged cargo, it can’t be pursued thanks to the Carmack Amendment. This protects interstate carriers from facing a different body of law from each state they do business in. The Carmack Amendment is a big part of helping the United States economy stay fluid and competitive.

History of the Carmack Amendment

The Carmack Amendment is the natural product of America’s legal system. In America, each state has its own laws governing health, morals, crime, financing, etc. While most state laws are very similar on the majority of issues, there are variations and differences. Having differences in the law was not a big problem at the time of America’s founding because interstate travel and even commerce was not as prevalent as it is today. But as America grew it added states, built roads connecting those states, and improved the flow of goods and services from state to state. This growth and the ever increasing modes of transportation was great for business, but it did require our laws to evolve.

In 1906 the Carmack Amendment was added to the Interstate Commerce Act of 1887. Prior to 1906, the common law rule regarding damaged cargo was one of strict liability. Meaning, if cargo was damaged as it traveled from point A to point B, the carrier would be held liable, regardless of whether the carrier was negligent. This tradition dates back to 1702 when Lord Holt said that a carrier is “bound” to answer for the goods he is entrusted to ship. The Carmack Amendment made this part of the common law part of the U.S. Code. Since its enactment, the Carmack Amendment continues to be modified and interpreted, but it maintains the tenets of the common law.

The Carmack Amendment Today

Even though the Carmack Amendment essentially holds carriers strictly liable for damaged cargo, in many ways it acts as a limit on liability for companies. Businesses and the people running them understand how important predictability and certainty are to their success. The Carmack Amendment provides both predictability and certainty regarding cargo damages and claims on interstate cargo. As the Carmack Amendment continues to change and evolve, businesses are given even more tools to help them limit liability, predict losses, and fight claims made against them. Of course keeping track of changes to the Carmack Amendment, and knowing how to make those changes work towards a business’s advantage is key.

As was stated earlier, the Carmack Amendment is part of federal law. Being part of the federal legal system means that the law itself is part of a larger regulatory scheme that can be complex and change at a moments notice. Because of its complex and ever expanding nature, implementing the many tenets of the Carmack Amendment takes the experience and expertise of a law firm dedicated to that area of law. At Anderson & Yamada, P.C. we focus our practice on the Carmack Amendment and other issues that impact the transportation industry