views updated May 23 2018


A comprehensive legal term that describes the condition of being actually or potentially subject to a legal obligation.

Norfolk Southern Railway Co. v. Kirby

In Norfolk Southern Railway Co. v. Kirby, 543 U.S. __, 125 S.Ct. 385, 160 L.Ed.2d 283 (2004), the U.S. Supreme Court held that, where the dispute is not inherently local, federal maritime law controls the interpretation of conflicting terms in bills of lading regarding liability for shipping losses. The decision reversed an Eleventh Circuit Court of Appeals decision and also addressed, for the first time, some of the conflicting interests that emerge when dealing with back-to-back or combined bills of lading that follow cargo through its final destination.

James N. Kirby, an Australian manufacturer, hired International Cargo Control (ICC) to handle arrangements for shipping Kirby's machinery from Australia to Huntsville, Alabama. ICC issued a bill of lading (i.e., a contract) to Kirby that set shipping terms. Within those terms was a limitation in liability ($500 per package for the sea leg and a higher amount for the land leg) authorized by the default liability rule found in the Carriage of Goods by Sea Act (COGSA), 46 U.S.C. §§1300 et seq. Additionally, the bill of lading contained a "Himalaya clause," extending liability limitations to downstream parties/companies that ICC hired.

Subsequently, ICC hired German shipper Hamburg Sud to transport the goods. Hamburg issued its own bill of lading to ICC, which also invoked COGSA's default liability rule and extended it to any land damages. Through its own Himalaya clause, it extended these terms to all agents and inland carriers (i.e., independent contractors). Hamburg carried the goods by ship to port in Savannah, Georgia, and hired Norfolk Southern Railway to transport the machinery from Savannah inland to Huntsville.

Norfolk's train derailed en route, and Kirby sued Norfolk for $1.5 million in tort and contract damages in a Georgia federal district court . Jurisdiction was premised on diversity. (Kirby had been reimbursed for loss by its own privately retained insurance carrier, which joined Kirby in the suit. Both parties had also sued ICC in an Australian court.)

At the district court level, Kirby and its insurer argued that the $500 liability limitation under COGSA was not applicable because the damage occurred during the inland leg of the transport. They also argued that state, and not federal, law should govern liability issues for the inland leg of the transport. Third, they argued that Norfolk was not covered by either ICC's or Hamburg's Himalaya clause, either because of ambiguous language or because of lack of privity between Norfolk and Kirby.

The district court ruled in favor of Norfolk, holding that Hamburg's Himalaya clause covered Norfolk and limited its liability. The Eleventh Circuit reversed, ruling that Norfolk had not been in privity with ICC when ICC's Himalaya clause was issued; and Kirby was not bound by Hamburg's liability limitation because ICC was not acting as Kirby's agent. Therefore, again, there was a lack of privity.

The first detail that the U.S. Supreme Court determined was the applicability of federal maritime law. In a unanimous opinion delivered by Justice Sandra Day O'Connor, the Court found that the bills of lading were essentially maritime contracts, as their primary purpose was to accomplish the transportation of goods from Australia to the United States. Of course, a substantial portion of that transport was by ocean. Moreover, the case was not inherently local or implicating local interests so as to invoke the application of state law.

Next, the Court concluded that Norfolk was entitled to the limited-liability protections contained in both bills of lading. It found that the Eleventh Circuit had too narrowly interpreted Herd v. Krawill, 359 U.S. 297, 79 S.Ct. 766, 3 L.Ed.2d 820 (1959) in concluding that ICC's Himalaya clause was too vague to include Norfolk. The Eleventh Circuit also erroneously interpreted Herd as requiring privity between the carrier and the party seeking shelter under a Himalaya clause. The Supreme Court noted that nothing in Herd requires either such linguistic specificity or privity rules. The plain language of the Himalaya clause indicated intent to extend the liability limitation down the line to cover the various modes of transportation that were needed to perform under the contract.

Finally, Norfolk was also covered under Hamburg's Himalaya clause. Citing the rule articulated in Great Northern Railway Co. v. O'Connor, 232 U.S. 508, 34 S.Ct. 380, 58 L.Ed. 703 (1914), the Court reiterated that when an intermediary contracts with a carrier to transport goods, the cargo owner's recovery against the carrier is limited by the liability limitation agreed upon between the intermediary and the carrier, not the intermediary and the cargo owner.

Finally, the Court noted, an equitable result is produced by this decision, as Kirby still retained the right to sue ICC for any gaps in limitation (e.g., between the $500 and the higher value for the land leg), while Norfolk enjoyed the benefit of the Hamburg's limitation.

Wrote Justice O'Connor, in closing, "Having undertaken this analysis, we recognize that our decision does no more than provide a legal backdrop against which future bills of lading will be negotiated. It is not, of course, this Court's task to structure the international shipping industry. Future parties remain free to adapt their contracts to the rules set forth here, only now with the benefit of greater predictability concerning the rules for which their contracts might compensate."


views updated May 08 2018


LIABILITY (Torts ). Every person of full mental capacity, male or female (bk 15a), when causing injury to another person, is liable to the injured party for any damage which his negligent conduct causes the latter to suffer (see *Torts), even a husband to his wife (bk 32a). A person who lacks mental capacity – such as a deaf-mute, idiot, or minor – is exempt from liability for damage caused by the act of his person because he is incapable of foreseeing damage, whereas the injured party is required to take care, for most people know that one must be on guard against a person lacking in understanding as he tends to cause damage. For this reason too the latter's guardian or parents are not liable on his behalf (bk 87a).

A principal who commissions an agent to commit a tort is exempt from liability, but the agent is liable, for the latter, having discretion, should foresee resulting damage, whereas the principal cannot be required to know that the agent will carryout his evil mandate (Tos. to bk 56a; 79a). Where, however, the agent cannot foresee that the damage will result from the carrying out of his mandate – as in the case of an agent lacking mental capacity, or an animal incited by the principal, or in a case where the agent could not have known that he was doing wrong because, for example, the principal told him to fetch a chattel for him telling him that it was his – the agent is no more than a tool in the principal's hand, and the latter is liable for the damage caused by the agent (loc. cit.; bk 9b). Where the principal himself could not have foreseen that the agent would cause injury in carrying out the mandate, he too is exempt from liability, as in the case where he puts a glowing coal in the hands of a minor, who burns another's article (bk 59b).

If a slave, having full mental capacity, causes injury, the sages exempt his owner from liability – although he knows that slaves are in the habit of causing injury yet retains him despite the fact that he is unable to guard the slave – on the ground that no person can afford payment of such heavy damages as the slave is likely to cause (bk 4a). On the other hand the tortfeasant slave is personally liable, for – having understanding – he is liable for his negligence. As long as he is a slave and has no independent means he is treated in the same way as a poor man who does not have the wherewithal to pay for damage he has caused; but once he is manumitted and acquires his own means, he is obliged to pay for the damage. Such, too, is the law in the case of a married woman, who generally does not have the means to pay for damage she has caused, but is obliged to pay for the damage when she is able to do so, as for instance after being divorced (bk 87a).

His own negligence notwithstanding, the injuring party is exempt from liability for damage resulting from conduct which is licensed, whether consented to and authorized by the injured party or by the court. The injuring party is also exempt from liability if the damage caused is not of a physical nature, such as economic damage.

The law of the State of Israel (Civil Wrongs Ordinance, 1947) renders a person over the age of 12 years liable in tort. The law imposes vicarious liability on a person for the acts of his servants and for acts done by others authorized by him.

[Shalom Albeck]


views updated May 21 2018

li·a·bil·i·ty / ˌlīəˈbilətē/ • n. (pl. -ties) 1. the state of being responsible for something, esp. by law: the partners accept unlimited liability for any risks they undertake. ∎  (usu. liabilities) a thing for which someone is responsible, esp. a debt or financial obligation: valuing the company's liabilities and assets.2. [usu. in sing.] a person or thing whose presence or behavior is likely to cause embarrassment or put one at a disadvantage: he has become a political liability.


views updated Jun 11 2018


A comprehensive legal term that describes the condition of being actually or potentially subject to a legal obligation.

Joint liability is an obligation for which more than one person is responsible.

Joint and several liability refers to the status of those who are responsible together as one unit as well as individually for their conduct. The person who has been harmed can institute a lawsuit and recover from any or all of the wrongdoers—but cannot receive double compensation, for instance, the full amount of recovery from each of two wrongdoers.

Primary liability is an obligation for which a person is directly responsible; it is distinguished from secondary liability which is the responsibility of another if the party directly responsible fails or refuses to satisfy his or her obligation.