Carriage of Goods by Sea Act

The Carriage of Goods by Sea Act ("COGSA") is a United States statute governing the rights and responsibilities between of cargo and ship-owners regarding ocean shipments to and from the United States. It is the U.S. enactment of the International Convention Regarding Bills of Lading, commonly known as the "Hague Rules". It was found in Title 46 Appendix of the United States Code, starting at Section 1301, but has been moved to a note in 46 United States Code 30701.

The United States Congress, concerned that the Hague Rules did not offer shippers enough protection against damage to cargo by shipowners, amended the Hague Rules in a number of minor, but important, ways. It increased the amount that shipowners would have to pay cargo owners for damage in transit from GBP 100 per package to USD 500 per package or, for goods not shipped in packages, per customary freight unit. This "package limitation" has become one of the most contentious and litigious areas in the field of cargo damage, particularly as it relates to the transportation of goods by ocean shipping containers.

At the time of the passage of COGSA most cargo was shipped in boxes, crates, and bags. Shortly after its passage, cargo owners determined that cargo could be handled more efficiently if placed on pallets, a process that results in numerous boxes or bags of cargo being consolidated on a single pallet. Shipowners, seeing an opportunity to reduce their liability for cargo damage, argued to the courts that the pallets were now "packages" and that they were entitled to limit their liability to $500 per pallet. Some courts agreed.

Later, shipowners began offering cargo owners the opportunity to ship their cargoes in large ocean shipping containers. The containers came in two sizes — 8 feet (2.4 m) high x 8 feet (2.4 m) wide x 20 feet (6.1 m) long (2.4 m x 2.4 m x 6 m) or 8 x 8 x 40 feet (12 m) long. The term "Twenty-foot equivalent unit" or TEU derived from this size - a TEU was a space aboard a ship that was 8 feet (2.4 m) wide by 8 feet (2.4 m) high by 20 feet (6.1 m) long.

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