Missouri Court Holds for Forwarder in $50 Liability Limit Test
A Missouri Circuit Court has rebuffed a challenge to the $50 liability limit that a customs broker and freight forwarder included in its standard contract terms.
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Customer Had Agreed to Forwarder's Standard Terms Limiting Damages to $50 per Incident
The customer, Muzaffar Shaikh, doing business as MS Trading, engaged the Kansas City brokerage and forwarding firm Held & Associates to transport exports of whey powder from the U.S. to Pakistan on 11 occasions beginning in July of 2006. Shaikh signed a standard Power of Attorney appointing Held as its customs broker and freight forwarder. The Power of Attorney permitted the customer to obtain additional liability coverage but otherwise limited the forwarder's liability to $50.00 per shipment or transaction. Also, the back of each shipment invoice for Shaikh's exports listed "Terms and Conditions of Service" with the same $50.00 recovery limitation.
Plaintiff Challenged Liability Limits
In claiming damages, Shaikh sought to escape the $50 limit by arguing that it was an unconscionable "contract of adhesion," or one-sided condition imposed by a stronger party on a take-it-or-leave it basis. Shaikh further argued that he had not read the terms, that they were in fine print, that they were illegible, and that the $50 limit they included was unexpected.
Plaintiff's Case Unsupported
The court found that the shipper failed to provide any supporting affidavits or evidence, and that under Missouri law he could not avoid the terms of a contract by claiming he did not know what he had signed.
The contract was not the result of a one-sided negotiation, the court ruled, since the customer was a sophisticated international shipper. Furthermore, the court found, there was no evidence that all customs brokers and freight forwarders imposed the liability limit in question, or that the term was either non-negotiable or unexpected. Shaikh could have tried to negotiate the liability terms, sought out other brokers, or obtained additional insurance, the court determined.
Contract Terms Were Not Unconscionable, Unreadable or Deceptive
The court also ruled that the $50 liability limit was not unconscionable, and that the printed shipping terms were neither unreadable nor deceptive. Finally, the court held that since the plaintiff's negligence claim arose out of a contractual agreement, it could not form the basis of a tort, and granted partial summary judgment to the freight forwarder Held & Associates.
(See ITT's Online Archives or 11/04/09 news, 09110440, for BP summary of pending U.S. Supreme Court trial addressing carrier liability on domestic portions of international shipments, Kawasaki Kisen Kaisha v. Regal-Beloit Corp. (Docket 08-1553).)
Missouri Circuit Court decision, Muzaffar Shaikh v. Held & Associates (dated January 8, 2010), available by emailing documents@brokerpower.com