What is the Carmack Amendment
The Carmack Amendment is a revision to the to the Interstate Commerce Act of 1877, which regulates the relationship between shipping companies and the owners of goods under shipment. The Carmack Amendment limits liabilities of these shipping companies, known as carriers, to loss or damage of the property itself. The Carmack Amendment, sometimes only referred to as Carmack, was enacted in 1906, and applies to insurance coverage for cargo.
BREAKING DOWN Carmack Amendment
Before the Carmack Amendment, companies involved in the transportation of goods across state borders were subject to state laws regulating the liabilities of shipping companies to their clients. The Carmack Amendment was an important step in the harmonization regulations applied to interstate shippers and interstate carriers from claims made by companies in excess of the value of the goods.
One of the most important features of Carmack is that it does not require the shipper to provide proof of negligence, only that the goods were damaged. This makes the carrier liable for the damage, regardless of how the damage was caused. The shipper is required to make sure that the items being shipped are in good condition when they were picked up by the carrier, that the goods were damaged after they were received and that the amount of damages can be quantified. The carrier may be exempt from damage claims under special circumstances, such as damage caused by an Act of God, like a tornado or earthquake, the government, burglars or inherent vice, meaning that there is something inherently unstable about the product, like it is highly flammable.
The Carmack Amendment is important for shipping companies to understand, because it outlines the nature of their liability to their customers. Because of the various exceptions outlined in the law, it behooves shipping companies to keep careful documentation of the nature and state of goods under their care.
The Carmack Amendment and the U.S. Constitution
Prior to the Great Depression, Congress adopted a very strict interpretation of the Commerce Clause, which allows it to regulate interstate commerce. Interstate shipping clearly falls into the category of interstate commerce, and so Congress was long active in promulgating regulations related to shipping companies. In an effort to fight the Great Depression, Congress began enacting laws that didn’t strictly relate to interstate commerce, like regulation of the securities industry. The Supreme Court at first resisted this new role, but eventually expanded its definition of what regulation of interstate commerce meant to include these new activities.