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The $500 COGSA Package Limitation Explained: How Much Can You Recover for Damaged Cargo?

Container ships carrying ocean cargo — COGSA $500 package limitation

The $500 COGSA Package Limitation Explained

When cargo is lost or damaged during international ocean transportation, the ocean carrier may claim that its liability is limited to $500 per package, even when the cargo is worth substantially more.

This limitation arises under the Carriage of Goods by Sea Act (COGSA). However, determining what constitutes a package and whether the limitation applies can be a significant issue in maritime cargo disputes.

What Is the $500 COGSA Limitation?

Under COGSA § 4(5), an ocean carrier’s liability may generally be limited to $500 per package, or per customary freight unit for goods not shipped in packages, unless the cargo’s nature and value were declared and inserted in the bill of lading or a higher limit was otherwise agreed.

The limitation is not necessarily calculated by treating an entire shipping container as one package.

What Qualifies as a Package?

Consider a container holding 100 cartons of electronic equipment that are damaged during transportation.

Depending on the applicable law and shipping documents, the limitation could potentially be calculated as:

  • $500 if the entire container qualifies as one package.
  • $50,000 if each of the 100 cartons qualifies as a separate package.

The bill of lading’s description of the cargo, its packaging, and the applicable judicial authority are critical to this determination.

Why the Bill of Lading Matters

Courts may examine:

  • The number and description of packages.
  • Whether cartons, pallets, or containers are separately identified.
  • Whether the shipper declared a higher cargo value.
  • Whether the shipper had a fair opportunity to obtain a higher liability limit.

The interpretation of these provisions can vary by jurisdiction. A container is not automatically considered one COGSA package.

Does the Limitation Always Apply?

Not necessarily. The governing contract, the parties involved, the circumstances of the loss, and the applicable law may affect the availability and calculation of the limitation.

Different legal rules may also govern claims against inland carriers, freight forwarders, and other transportation participants.

What Should Cargo Owners Do?

When cargo is damaged or missing, preserve the bill of lading, packing lists, invoices, cargo surveys, loading and discharge photographs, and relevant correspondence.

Review applicable notice requirements and filing deadlines promptly, as some maritime cargo claims are subject to short time limits.

Maritime Cargo Claims — Jahani Law P.C.

Jahani Law P.C. assists businesses and cargo interests with maritime cargo claims and transportation disputes involving the ports of Los Angeles, Long Beach, and San Diego.

Before accepting a carrier’s $500 liability limitation, review the bill of lading and the applicable law. The proper package calculation may substantially affect the potential recovery.

Learn more about our Maritime Cargo Claims and Disputes practice.

Disclaimer: This article is for general information only and does not constitute legal advice. Liability and recoverable damages depend on the facts and applicable law. Reading this article or contacting the firm does not establish an attorney-client relationship; representation requires a written engagement agreement. No outcome is guaranteed.