Legal Definitions - Carriage of Goods by Sea Act

The Carriage of Goods by Sea Act (COGSA) is a United States federal law enacted in 1936. It governs the rights and responsibilities of shipping companies (known as carriers) and cargo owners (shippers or consignees) when goods are transported by sea to or from U.S. ports under a formal document called a bill of lading.

COGSA primarily establishes the limits of a carrier's liability for any loss, damage, or significant delay to the cargo during its ocean voyage. Essentially, it provides a legal framework for determining who bears the financial risk when something goes wrong with international ocean shipments involving the U.S., balancing the interests of both the carrier and the cargo owner.

Here are some examples of how COGSA might apply:

• Damaged Industrial Equipment: An American manufacturing company imports a large, specialized piece of machinery from Germany. The machinery is shipped in a container across the Atlantic Ocean. Upon arrival at the port in Houston, Texas, and during unloading, it is discovered that the container was improperly secured on the vessel, causing the machinery inside to shift and suffer significant structural damage during rough seas. The manufacturing company would likely invoke COGSA to pursue a claim against the ocean carrier for the cost of repairs or replacement. COGSA would help determine if the carrier failed in its duty to properly load, stow, and care for the cargo, and what financial limits apply to the carrier's liability for the damage.

• Lost Pharmaceutical Shipment: A U.S. pharmaceutical distributor ships a container of high-value medical supplies from New York to a client in the United Kingdom. A bill of lading is issued for the shipment. During the voyage, the vessel encounters severe weather, and one of the containers, including the one holding the medical supplies, is swept overboard. The pharmaceutical distributor would rely on COGSA to establish the ocean carrier's liability for the complete loss of the cargo. COGSA outlines specific defenses for carriers (such as "perils of the sea"), but also sets out their responsibilities, and would ultimately define the maximum financial compensation the carrier would owe for the lost goods, unless a higher value was specifically declared and agreed upon in the bill of lading.

• Spoiled Perishable Goods Due to Delay: A U.S. agricultural exporter ships a large consignment of fresh produce from California to a buyer in Japan. The bill of lading specifies a transit time crucial for the perishable nature of the goods. However, due to a series of preventable mechanical failures on the vessel that were not addressed with due diligence by the carrier, the shipment is delayed by several weeks. By the time the produce arrives in Japan, it has completely spoiled and is unsellable. The exporter or buyer would refer to COGSA to determine if the carrier is liable for the financial losses incurred due to the spoiled produce. COGSA requires carriers to exercise due diligence to make the ship seaworthy and to properly care for the cargo, and it would help assess if the carrier's negligence contributed to the delay and subsequent damage, and what limits apply to their financial responsibility.