Amdahl Corp (the plaintiff) contracted the services of Lep Profit International (Lep) to carry a laser wire bonder from Sunnyvale, California, to Dublin, Ireland. The contract was in the form of a shipper's letter of instruction which expressly authorised Lep to sign and accept in the plaintiff's name any documents related to the shipment and to forward the bonder in accordance with the conditions of carriage and tariff of the carrier employed. The document also stated that Led's liability was limited to USD 20 per kg. Lep arranged with Atlas Consolidated Container Inc (Atlas) to carry the cargo from New York to Dublin, Ireland. Atlas' bill of lading stated a limitation of liability to USD 500 per package and specifically listed New York and Dublin as ports of call. Atlas transhipped the cargo onto another vessel in Antwerp, Belgium. When the bonder arrived in Dublin, it had sustained over USD 100,000 damage. The plaintiff brought suit against Lep and Atlas.

Lep and Atlas applied for partial summary judgment, alleging that the Carriage of Goods by Sea Act (COGSA), 46 USC § 1304(5), limited their liability to USD 500 per package. The District Court granted the summary judgment. The plaintiff appealed to the Court of Appeals, Ninth Circuit.

Held: The Court affirmed the decision regarding Atlas, reversed the decision regarding Lep, and remanded the case for further consideration.

COGSA limits the carrier's liability to USD 500 per package unless the nature and value of the goods are declared by the shipper and inserted in the bill of lading: 46 USC § 1304(5). If Lep recited § 1304(5) or used language to the same effect in its letter of instructions to the plaintiff, Lep would have made a prima facie case of having given a fair opportunity to the plaintiff to choose a different liability clause, and thus the USD 500 limitation should have applied: Mori Seiki USA Inc v MV Alligator Triumph 990 F 2d 444, 448-49 (9th Cir 1993). However, the bill of lading between Lep and the plaintiff does not recite § 1304(5), but para 4 limits Lep's liability to USD 20 per kg, so this clause, not COGSA's default limitation, applies to the claim. If a specific liability provision overrides a reference to the COGSA limitation when an agreement recites both, then a specific liability provision also governs when the agreement does not refer to COGSA: see SPM Corp v M/V Ming Moon 965 F 2d 1297 (3d Cir 1992) (CMI1849).

Lep attempted to benefit from the US 500 COGSA limitation stated in Atlas' bill of lading, arguing that the plaintiff authorised Lep to forward the cargo under the carrier's conditions. Such conditions, alleged Lep, were expressly incorporated into the contract with the plaintiff. The Court rejected this argument because the letter of instruction governed Lep's liability to the plaintiff. This contract indeed granted authority to Lep to act as its agent in forwarding the shipment, but the contract limited the scope of Lep's agency. Paragraph 2 of the contract stated that '[n]o agent, servant, or representative of the Forwarder has authority to alter, modify or waive any provision of the contract'. Lep had the power to impose terms on the plaintiff, but not to impose a liability rule conflicting with the provisions established in that contract. Lep stated a USD 20 per kg limitation, and cannot benefit from the lower COGSA provision. Therefore, the District Court erred in granting partial summary judgment for Lep.

Regarding Atlas' liability, the plaintiff argued that the statutory exception of unreasonable deviation deprived Atlas of the benefit of limitation (46 USC § 1304(4)). Deviation is a serious departure from the contract of carriage that exposes the cargo to unanticipated and additional risks: Nemeth v General SS Corp 694 F 2d 609 613 (9th Cir 1982). The bill of lading did not state that the cargo was going to pass through Antwerp. This, the plaintiff argued, constituted a prima facie case of deviation that shifted the burden to Atlas to demonstrate that the deviation was reasonable: see P & E Shipping Corp v Empresa Cubana Exportadora 335 F 2d 678, 680 (1st Cir 1964). The Court held that restowing the cargo at an intermediate port is a customary conduct in the maritime trade; it is not a deviation because, in the shipping contract, it is ordinarily presumed that the carrier will practise that custom. As the transhipment of cargo is customary, and the carrier followed a customary trade route, no deviation occurred, even if the bill of lading only expressly referred to the location of terminal ports. See SPM 1299, also General Elec Co Int’l v SS Nancy Lykes 706 F2d 80, 84 (2d Cir), cert denied 464 US 849, 104 S Ct 157, 78 L Ed 2d 145 (1983).