Business Law - Law of Carriage of Goods

The globalization of various markets, international economic integration, removal of barriers in business & trade and increased competition has significantly increased the dependency of business on transportation. Transportation these days has become one of the crucial game changers in the field of business.

Proper transportation helps in stepping ahead in competitive positioning. Goods need to be transferred from one place to another. A contract of carriage must be entered in order to transport goods from one place to another. The association or organizations that carry out the job of transportations are termed as transporters.

Goods may be transported either by land or by water or by air transportation system. The transportation of a cargo using two or more modes of transportation is termed as multimodal transportation.

There are four modes of carriage transportation in India −

  • Roadways
  • Railways
  • Sea
  • Airlines

Carriage of Goods by Land

The carriage of goods by land is governed by two laws — the Carriage by Road Act, 2007 and the Railways Act, 1890. According to the Carriage by Road Act, a common carrier can either be an individual, person or an organization, which carries out the trade of transportation over the land or inland waterways for the purpose of raising money.

  • A private carrier is defined as an entity which carries its own goods or the goods of selected persons.

  • Private carriers are governed by the Indian Contract Act rather than the Carriage by Road Act, 2007.

  • The Carriage by Road Act, 2007 was passed to revise the then obsolete Carriers Act, 1865.

  • The act deals with the regulation of common carriers, limiting their liability and declaration of value of goods delivered to them to determine their liability for loss or damage to such goods due to the negligence or criminal acts carried out by themselves, their servants or agents.

  • Except Jammu and Kashmir, the act applies to the whole of India.

Carriage of Goods by Rail

The Railways Act, 1989, governs the carriage by railways. Some of the important aspects of the act are as follows −

According to section 61 of the act, every railway administration must maintain rate books, which contain the rate authorized for the carriage of goods from one station to another and make them available for the reference of any person during all reasonable hours without making demands for any fees.

  • According to section 63, if the goods are entrusted to a railway administration for the carriage, then such type of carriages shall be at railway risk rate, except where owner’s risk rate is applicable in respect of such goods. The goods shall be deemed to have been entrusted at the owner’s risk rate, if no rate is opted.

  • According to Section 64, a forwarding note should be executed by each and every person entrusting any goods to a railway administration for carriage in the form as specified by the Central Government. The correctness of the forwarding note in assured by the cosigner of the note. He shall be held responsible and shall be subjected to compensation for losses caused due to incorrectness or incompleteness of the forwarding note.

  • According to section 65, a railway receipt shall be issued by the railway administration, as specified by the Central Government, in case the goods are to be loaded by a person or on the acceptance of the goods. The weight and the number of packages should be stated in the railway receipt.

  • According to section 67, dangerous and offensive carriage should not be carried by any person unless the danger involved and offensiveness of the carriage is approved by the railway administration as a response to a notice containing the risks involved in the transportation of the carriage submitted by the person who is transporting the carriage or the dangerous and offensive nature of the carriage is distinctly marked on the package of the carriage.