Duty of care; contractual limitation of carrier's liability

(a) A carrier that issues a bill of lading, whether negotiable or nonnegotiable, shall exercise the degree of care in relation to the goods that a reasonably careful person would exercise under similar circumstances. This subsection does not affect any statute, regulation or rule of law that imposes liability upon a common carrier for damages not caused by its negligence. (b) Damages may be limited by a term in the bill of lading or in a transportation agreement that the carrier's liability may not exceed a value stated in the bill or transportation agreement if the carrier's rates are dependent upon value and the consignor is afforded an opportunity to declare a higher value and the consignor is advised of the opportunity. However, such a limitation is not effective with respect to the carrier's liability for conversion to its own use. (c) Reasonable provisions as to the time and manner of presenting claims and commencing actions based on the shipment may be included in a bill of lading or a transportation agreement. History: 1953 Comp., § 50A-7-309, enacted by Laws 1961, ch. 96, § 7-309; 2005, ch. 144, § 75. OFFICIAL COMMENTS UCC Official Comments © by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved. Prior Uniform Statutory Provision. — Former Section 7-309 [55-7-309 NMSA 1978]. Changes. — References to tariffs eliminated because of deregulation, adding reference to transportation agreements, and for style. 1. A bill of lading may also serve as the contract between the carrier and the bailor. Parties in their contract should be able to limit the amount of damages for breach of that contract including breach of the duty to take reasonable care of the goods. The parties cannot disclaim by contract the carrier’s obligation of care. Section 1-302 [55-1-302 NMSA 1978]. Federal statutes and treaties for air, maritime and rail transport may alter the standard of care. These federal statutes and treaties preempt this section when applicable. Section 7-103 [55-7-103 NMSA 1978]. Subsection (a) does not impair any rule of law imposing the liability of an insurer on a common carrier in intrastate commerce. Subsection (b), however, applies to the common carrier’s liability as an insurer as well as to liability based on negligence. Subsection (b) allows the term limiting damages to appear either in the bill of lading or in the parties’ transportation agreement. Compare 7- 204(b) [55-7-204(b) NMSA 1978]. Subsection (c) allows the parties to agree to provisions regarding time and manner of presenting claims or commencing actions if the provisions are either in the bill of lading or the transportation agreement. Compare 7- 204(c). Transportation agreements are commonly used to establish agreed terms between carriers and shippers that have an on-going relationship. 2. References to public tariffs in former Section 7-309(2) [55-7-309(2) NMSA 1978] and (3) have been deleted in light of the modern era of deregulation. See Comment 2 to Section 7-103 [55-7-103 NMSA 1978]. If a tariff is required under state or federal law, pursuant to Section 7-103(a), the tariff would control over the rule of this section. As governed by contract law, parties may incorporate by reference the limits on the amount of damages or the reasonable provisions as to the time and manner of presenting claims set forth in applicable tariffs, e.g., a maximum unit value beyond which goods are not taken or a disclaimer of responsibility for undeclared articles of extraordinary value. 3. As under former Section 7-309(2) [55-7-309(2) NMSA 1978], subsection (b) provides that a limitation of damages is ineffective if the carrier has converted the goods to its own use. A mere failure to redeliver the goods is not conversion to the carrier’s own use. "Conversion to its own use" is narrower than the idea of conversion generally. Art Masters Associates, Ltd. v. United Parcel Service, 77 N.Y.2d 200, 567 N.E.2d 226 (1990); See Kemper Ins. Co. v. Fed. Ex. Corp., 252 F.3d 509 (1st Cir), cert. denied 534 U.S. 1020 (2001) (opinion interpreting federal law). 4. As used in this section, damages may include damages arising from delay in delivery. Delivery dates and times are often specified in the parties’ contract. See Section 7-403 [55-7-403 NMSA 1978]. Cross References. — Sections 1-302 [55-1-302 NMSA 1978], 7-103 [55-7-103 NMSA 1978], 7-204 [55-7-204 NMSA 1978], 7-403 [55–7-403 NMSA 1978]. "Action". Section 1-201 [55-1-201 NMSA 1978]. "Bill of lading". Section 1-201. "Carrier". Section 7-102 [55-7-102 NMSA 1978]. "Consignor". Section 7-102. "Document of Title". Section 1-102 [55-1-102 NMSA 1978]. "Goods". Section 7-102. "Value". Section 1-204 [55-1-204 NMSA 1978].