Sellers often face difficulties when attempting to bring a claim against a carrier for loss of or damage to goods in transit after the bills of lading have been transferred to buyers.

The issue often arises under sale contracts where quantity and/or quality are to be assessed on an “outturn” basis, i.e. on discharge.

On indorsement of the bills of lading and delivery of the bills to the buyer, the rights of suit under the bills are transferred to the buyer (s. 2(1) of COGSA 1992). The seller does not retain any rights to bring a claim against the carrier for loss of or damage to goods. In these circumstances, the seller is left in the unfortunate position of (a) facing a potential quantity and/or quality claim from a buyer under the contract of sale and (b) having no right to recover its losses from the carrier.

In contrast, the buyer as the holder of the bills of lading has title to sue the carrier but has a more straightforward claim against the seller under the sale contract for the seller’s failure to deliver goods of contractual quantity/quality.

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