Understanding Your Liability Contract Packaging & Bailment John F. Horvath 10 South LaSalle Street, #1400 Chicago, Illinois 60603 Horvathlaw.org
Discussion Points Standard of Care Limitation of Liability Liens Customer Contract Issues Insurance Coverage
You re A Bailee Public Warehouse Operators Other Carriers Contract Packagers
Duty/Standard of Care Bailee Evolved from English Common Law Slight Great Reasonable
Uniform Commercial Code (1) A WAREHOUSEMAN IS LIABLE FOR DAMAGES FOR LOSS OF OR INJURY TO THE GOODS CAUSED BY HIS FAILURE TO EXERCISE SUCH CARE IN REGARD TO THEM AS A REASONABLY CAREFUL MAN WOULD EXERCISE UNDER LIKE CIRCUMSTANCES BUT UNLESS OTHERWISE AGREED HE IS NOT LIABLE FOR DAMAGES WHICH COULD NOT HAVE BEEN AVOIDED BY THE EXERCISE OF SUCH CARE.
Reasonable Care Fluid Concept Depends of Facts
What Defines Reasonable Care? Laws Customer Agreements Industry Providers Own Policies Advertisements/Website Reasonable Person
Primary/Secondary Loss
Burden of Proof Civil Law Suit Presumptions Rebuttable
Damages No Limitation of Liability Replacement Cost No Profit-Unless
Damages Limitation of Liability Uniform Commercial Code Sec. 7-204 DUTY OF CARE: CONTRACTUAL LIMITATION OF WAREHOUSEMAN S LIABILITY
(2) DAMAGES MAY BE LIMITED BY A TERM IN THE WAREHOUSE RECEIPT OR STORAGE AGREEMENT LIMITING THE AMOUNT OF LIABILITY IN CASE OF LOSS OR DAMAGE, AND SETTING FORTH A SPECIFIC LIABILITY PER ARTICLE OR ITEM, OR VALUE PER UNIT OF WEIGHT, BEYOND WHICH THE WAREHOUSEMAN SHALL NOT BE LIABLE; PROVIDED, HOWEVER, THAT SUCH LIABILITY MAY ON WRITTEN REQUEST OF THE BAILOR AT THE TIME OF SIGNING SUCH STORAGE AGREEMENT OR WITHIN A RESONABLE TIME AFTER RECEIPT OF THE WAREHOUSE RECEIPT BE INCREASED ON PART OR ALL OF THE GOODS THEREUNDER
Revised Article 7
Goodwill Payment Waiver Estoppel
Customer Contact Issues Standard of Care Provision: Warehouseman shall be liable for and agrees to indemnify customer from all loss or damage to product which warehouseman accepts for storage. Notwithstanding the above, the warehouseman shall not be liable for such losses or damages which are directly attributable to the negligent acts or omissions of customer.
Customer Contact Issues (continued) Storage Agreement The Warehouseman shall perform all services in accordance with and shall follow the instructions and procedures specified in that document supplied to the Warehouseman entitled Operating and Documentation Requirements for Warehousing Facilities, which is incorporated herein by reference Superiority Provision
Liens Specific Lien General Lien
General Lien COMPANY shall have a lien against the GOODS and on the proceeds thereof for all charges for storage, handling, transportation (including demurrage and terminal charges), insurance, labor and other charges present or future with respect to the GOODS, ADVANCES or loans by COMPANY in relation to the GOODS and for expenses necessary for preservation of the GOODS or reasonably incurred in their sale pursuant to law. COMPANY further claims a lien on the GOODS for all such charges, ADVANCES and expenses in respect to any other property stored by STORER in any warehouse owned or operated by COMPANY or its subsidiaries wherever located and whenever deposited and without regard to whether or not said other property is still in storage.
Insurance Coverage First Party Property Policy Expensive Many normal bailee exposures not covered Warehouse Legal Liability Policy Must provide bailee coverage Warehouse receipts required by many insurers Premises definition can limit coverage Processing exclusion Warehouse E & O Policy Commercial General Liability Policy Care, custody and control exclusion Completed operations coverage Contractual liability coverage
Questions?