Cargo Shortage and the Hague-Visby Package Limitation

The starting point is the bill of lading, which describes the cargo as 600 cartons. Where a bill states the number of packages, that number is the package count, and the carrier cannot rely on a lower count achieved by consolidating the goods onto pallets. The pallets here are a loading device, not the contractual unit, so the relevant packages are the cartons. The limitation figure is the higher of the per-package amount and the per-kilogram amount. Under Hague-Visby the per-package limit is 666.67 units of account and the per-kilogram limit is 2 units of account. For 130 affected cartons at 12 kg each, the weight is 1,560 kg. The package calculation is 130 multiplied by 666.67, and the weight calculation is 1,560 multiplied by 2, giving 3,120. The package figure is plainly the higher, so limitation is by package. The carrier's exposure is therefore capped at 130 times 666.67 units of account, converted to dollars at the applicable rate on the relevant date. The cargo's actual loss is 130 cartons at $180, or $23,400, which exceeds the cap, so the cap governs. Note that the carrier loses the benefit of limitation only if it is proved the damage resulted from an act or omission done with intent to cause damage or recklessly and with knowledge that damage would probably result; nothing in the facts supports that.

The latent defect exception is narrow and does not assist a carrier who cannot show due diligence. The carrier bears the burden of proving that the defect was latent, meaning not discoverable by reasonable inspection, and that it exercised due diligence to make the vessel seaworthy at the beginning of the voyage. A hatch cover that admits water is a classic seaworthiness issue, and the carrier's inability to show due diligence to prevent the leak defeats the exception. Even if the defect were genuinely latent, the carrier must still establish that it took reasonable steps, including inspection and maintenance regimes, to make the vessel fit to carry the cargo. The facts state the carrier cannot show due diligence, so the defence fails. The carrier remains liable for the water damage and may rely on the package limitation, but not on the exception. The cargo interest should press for disclosure of the inspection and maintenance records, because those records will determine whether the carrier can even raise the issue.

If the bill had described the cargo as 20 pallets, the package count for limitation purposes would ordinarily be 20, because the bill's description fixes the contractual unit. The per-package calculation would then be 20 times 666.67, a far smaller figure than the weight calculation of 1,560 kg times 2, or 3,120. Limitation would then operate by weight, and the carrier's exposure would be capped at 3,120 units of account. The practical effect is that the cargo interest recovers less than under the carton description, because the weight limit becomes the operative ceiling. This illustrates why the bill's description matters so much in containerized trade: a carrier that records only the number of pallets or containers obtains a lower package count, while a shipper who insists on the number of cartons preserves a higher count. The cargo interest should also check whether the bill records the gross weight, since the weight limit is calculated on the gross weight of the goods, and any discrepancy between the declared and actual weight will affect the calculation.