On 2 March 1971, PPG Industries Inc (PPG) entered into a contract with Ashland Oil Co (Ashland) to transport a quantity of anti-freeze liquid belonging to PPG from Beaumont, Texas, to St Paul, Minnesota. The Ashland-PPG transportation agreement stated that the carrier (Ashland) would be entitled to the benefits of COGSA, including the Act's one-year statute of limitations. Ashland subsequently towed the REB 1602, which contained the anti-freeze liquid, to Baton Rouge, Louisiana, and on 11 March 1971, without PPG's knowledge, entered into a separate towing contract with Canal Barge Co (Canal), whereby Canal agreed to tow the barge from Baton Rouge to St Paul.

The Ashland-Canal towing contract made no reference to COGSA or to the Ashland-PPG transportation agreement, and explicitly provided that Canal was entitled to the benefits of s 3 of the Harter Act: 46 USC s 192. Somewhere between Beaumont and St Paul, the anti-freeze liquid was contaminated by river water. On 1 November 1972, more than six months after the one-year COGSA statute of limitations had run out, PPG commenced this action against Ashland. PPG subsequently amended its complaint and asserted a claim for damages against Canal, as an additional defendant. Ashland had previously joined Canal as a third-party defendant. Both Canal and Ashland raised, as a defence, the one-year COGSA statute of limitations referred to in the Ashland-PPG transportation agreement. After a jury trial on the limited question of whether Ashland was barred from raising the statute of limitations defence by reason of its conduct during the 18 months preceding filing of this suit (PPG relied heavily on communications from Ashland's Vice President referring to 'friendly litigation' as a means of dispute resolution), the District Court directed a verdict in favour of both Canal and Ashland.

Held: The part of the judgment against PPG and in favour of Ashland is affirmed; the part of the judgment entered against PPG and in favour of Canal is reversed, and the case is remanded for further proceedings.

PPG's contentions on this appeal are two-fold. First, PPG asserted that the District Court erroneously directed a verdict in favour of Ashland because Ashland: (1) waived the statute of limitations defence; (2) entered into a binding contract not to raise the defence; or (3) should have been estopped from raising the one-year limitation statute. Second, PPG contended that even if its action against Ashland was untimely, Canal was not entitled to raise the one-year COGSA statute of limitations incorporated into the Ashland-PPG transportation agreement since it was not a party to that contract. There is no merit in PPG's contention against Ashland. The record does not support the contention that Ashland ever 'offered' or 'promised', in any legal or practical sense, to forego reliance on any valid defence, including the statute of limitations. Also, there was no evidence that Ashland knowingly waived any rights to rely on the applicable one-year limitation period.

The District Court accepted that Canal had the status of a carrier engaged in the carriage of goods as defined in 46 USC s 1301(e). Specifically, Canal urged that: (1) PPG and Ashland intended COGSA to apply 'from the period when the cargo was loaded aboard the barge until the time it was discharged at the end of the trip'; (2) COGSA was therefore applicable 'to the entire transportation of the cargo by whomever the cargo was physically being handled at the time'; and (3) Canal was therefore entitled to claim the benefit of the COGSA statute of limitations because Canal was a carrier engaged in the 'carriage of goods' and performing Ashland's work under the contract.

The Harter Act, 46 USC ss 190-194, applies to all shipments by water from one port of the United States to another. The limitation of liability section of the Harter Act, 46 USC s 192, contains no statute of limitations. Therefore, the general law on limitations governs. Since the transportation in this case was between two domestic ports and was not 'in foreign trade', neither COGSA nor its one-year statute of limitations governed the PPG-Canal relationship: see eg Globe Solvents Co v The California 167 F 2d 859 (3d Cir 1948). In addition, the PPG-Canal relationship was not covered by a 'contract of carriage' as defined by COGSA, since it was not 'covered by a bill of lading or any similar document of title': 46 USC s 1301(b).

Also, the Ashland-PPG transportation agreement did not contain a sufficiently 'express statement that it shall be subject to the provisions of COGSA' to make that Act applicable to this case by operation of 46 USC s 1312. That section states 'any bill of lading or similar document of title which is evidence of a contract for the carriage of goods by sea between such ports, containing an express statement that it shall be subject to the provisions of this chapter, shall be subjected hereto as fully as if subject hereto by the express provisions of this chapter'. It is clear that the transportation agreement is not a bill of lading, and a 'similar document of title' refers to a warehouse receipt type of document but not to such an agreement: see Johnson v McCrackin-Sturman Ford 527 F 2d 257 (3d Cir 1975).

Nothing in the Ashland-PPG contract manifested an intent to give Canal or any third party, not a subsidiary of Ashland, the benefits of COGSA. As defined in the contract, the term 'carrier' referred to Ashland. Thus, the release clause in para 21 could be read as manifesting an intent to give Canal the benefit of COGSA only if it was concluded that: (a) Canal was a person employed by the carrier; and (b) the release clause meant to cover those employed by the carrier. Read in context, it was apparent that the term 'persons employed by carrier' was intended to refer to individual employees of Ashland and not to 'independent contractors' such as Canal. This conclusion was buttressed by the undisputed fact that PPG was unaware that Canal would be engaged to tow the REB 1602. Thus, while it appeared that PPG and Ashland intended COGSA to govern their rights and liabilities, the argument that Canal was entitled to the benefits of COGSA, or that the parties intended COGSA to govern 'the entire transportation of the cargo, by whomever the cargo was being handled', is not accepted. Canal's argument that it was entitled to application of the COGSA limitation period because it was performing some of Ashland's duties under the contract was foreclosed by Herd Co v Krawill Machinery Corp 359 US 297, 79 S Ct 766 (1959).

Canal asserted that Herd was distinguishable because it involved an attempt to extend COGSA's limitation of liability to a third party which was not engaged in the carriage of goods. This was rejected. Canal's status as a carrier engaged in the carriage of goods could not have had any relevance until it was first determined that COGSA was intended to apply to Canal. Canal's argument missed the critical point that COGSA applied to its case only as a matter of contract, and only to the extent that the parties manifested an intent that it should apply: see Pannell v United States Lines 263 F 2d 497 (2d Cir 1959) (CMI1799).

There was no incongruity or unfairness in holding that Ashland was entitled to a one-year statute of limitations, while Canal, although engaged in the same work, was not. Private parties had the power to make COGSA applicable to domestic contracts of carriage. However, in its contract with Ashland, Canal not only did not bargain for the one-year COGSA statute but specifically provided that Canal, 'although not a common carrier, shall be entitled to the same limitation of liability as common carriers receive under Section 3 of the Harter Act 46 USC § 192'. In the absence of language in the Ashland-PPG contract extending COGSA to Canal, there was no reason to justify an extension.