The shipper, Unimac Co Inc (Unimac), was a manufacturer and seller of washing machines. CF Ocean Service Inc (CFOS) was a non-vessel operating common carrier (NVOCC), engaged in the business of shipping goods from the US to foreign destinations. At the time of the events in question, CFOS had a valid tariff on file with the Federal Maritime Commission.

On 13 November 1989, Unimac delivered a locked and sealed container to CFOS in Savannah, Georgia, USA, for shipment to its customer, Algec Equipment (Algec), in Brisbane, Australia. On 16 November 1989, Unimac sent CFOS a letter of instruction directing CFOS to 'handle this shipment on a "sight draft" basis', explaining that 'Algec must pay the bank [USD 30,650.67] for the equipment before obtaining it from the steamship line'. Enclosed with the letter was the original invoice between Unimac and Algec, as well as the inland bill of lading. CFOS did not object to the terms set forth in Unimac's letter.

On 30 January 1990, Unimac again delivered cargo to CFOS for shipment to Algec in Australia. On that day, Unimac sent CFOS a letter identical to the earlier letter, directing CFOS that the amount of the sight draft for this shipment was USD 30,411.94. CFOS did not object to the terms set forth in this letter either.

CFOS issued ocean bills of lading for the shipments, and sent them to Unimac. Although the cargoes were loaded onto separate ships, CFOS prepared each bill of lading using its standard form. The bills of lading were mailed after each of the ships had sailed, but prior to the ships' arrival in Australia. The reverse side of each bill of lading set forth provisions governing the contract of carriage: (1) Section 2(a) was a clause paramount, expressly incorporating US COGSA into the contract of carriage; (2) Section 2(e) limited the carrier's liability to USD 500 per package; (3) Section 2(d) provided that 'All Risk' insurance could be obtained if the shipper gave written notice to CFOS declaring the value of the cargo and paid for the insurance; (4) Section 20(b) discharged CFOS of all liability for suits not brought within one year of the date the goods were delivered or should have been delivered; and (5) Section 12(c) incorporated the provisions of CFOS's tariff into the contract of carriage. Rule 12(b) of CFOS's tariff provided:

If the Shipper desires to be covered for a valuation in excess of that allowed by the Carrier's regular Bill of Lading form [USD 500 per package], the Shipper must so stipulate in Carrier's Bill of Lading covering such shipments and such additional liability only will be assumed by the Carrier at the request of the Shipper and upon payment of an additional charge based on the total declared valuation in addition to the stipulated rates....

Rule 12(c) set the ad valorem rate at 3.75% 'of the value declared in excess of the said Bill of Lading limit of value and ... in addition to the base rate'.

Unimac did not object to the terms set forth in the bills of lading, contact CFOS in order to obtain the extra insurance protection, or pay the additional ad valorem rate for insurance.

Despite Algec's failure to pay Unimac for any merchandise it received from these shipments, CFOS delivered the first shipment to Algec in Australia on 6 February 1990, and the second shipment on 16 March 1990.

After unsuccessfully demanding payment from CFOS for the delivered merchandise, Unimac sued CFOS on 19 February 1991, seeking damages for breach of contract and misdelivery of goods. Unimac sought USD 61,062.61 in damages, the full value of the first and second shipments. The parties entered into a joint pretrial stipulation and agreed that the case could be resolved on summary judgment. CFOS filed a motion to dismiss. The District Court granted in part and denied in part each party's motion for summary judgment and denied CFOS's motion to dismiss: Unimac Co v CF Ocean Service 1993 US Dist LEXIS 21852, 1993 WL 766955, No 91-50032-LAC (ND Fla, 5 May 1993).

The District Court held that Unimac's claim for the first shipment was time barred by the one-year statute of limitations set out in the US Carriage of Goods by Sea Act (COGSA), 46 USC ss 1300 ff. As to the second shipment, the Court found that Unimac's letter of instruction directing CFOS to obtain a sight draft prior to delivery was part of the contract of carriage. However, the Court held that pursuant to COGSA, recovery for the second shipment was limited to USD 500 for each of the seven packages delivered in the second shipment, and thus entered judgment in favour of Unimac for USD 3,500. Unimac appealed.

The central issue was whether a carrier's misdelivery of goods constituted a deviation such that the one-year statute of limitations and USD 500 per package limit on liability set forth in COGSA did not apply.

CFOS argued that the District Court correctly concluded that COGSA barred recovery for the first shipment and limited liability for the second shipment to USD 500 per package. 46 USC s 1303(6) provides, in pertinent part, that

… the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered. …

Because the first shipment was delivered on 6 February 1990 and Unimac did not file suit until 19 February 1991, CFOS argued that Unimac's claim for the first shipment was time-barred.

Additionally, COGSA limits the carrier's liability to USD 500 per package 'unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading': 46 USC s 1304(5). CFOS argued that the District Court, pursuant to this provision, correctly limited Unimac's recovery for damages stemming from the second shipment to USD 3,500.

CFOS did not appeal the District Court's finding that Unimac's letters of instructions concerning delivery on a sight draft basis constituted part of the contract of carriage.

Unimac argued that CFOS's failure to ensure that Algec had paid for the goods prior to releasing them, as instructed in Unimac's letters, constituted a deviation of the contract of carriage: CA La Seguridad v Delta Steamship Lines 721 F 2d 322, 324 (11th Cir 1983). Unimac argued that the doctrine of deviation renders both the USD 500 limit on liability and the one-year statute of limitations unavailable to CFOS.

In addition, Unimac argued that it did not have a fair opportunity to set forth a higher value for the second shipment, because it did not receive the bill of lading until after the ship had sailed, and therefore could not comply with COGSA s 1304's requirement that it declare a higher value for its cargo in the bill of lading. Unimac also argued that because its letter of instruction stated the value of the cargo, it sufficed to satisfy the requirements for stating excess value.

Held: Judgment affirmed.

COGSA is a comprehensive statute intended to limit the liability of carriers engaged in international shipping. It applies to 'all contracts for carriage of goods by sea to or from ports of the United States in foreign trade': 46 USC s 1312. COGSA defines 'foreign trade' as 'the transportation of goods between the ports of the United States and ports of foreign countries': ibid. Because the dispute between Unimac and CFOS stems from a contract for the shipment of goods from Savannah, Georgia, USA, to Australia, COGSA governs this transaction.

CFOS's failure to deliver the goods on a sight draft basis was a misdelivery. The First, Second, and Ninth Circuits have all labelled a carrier's failure to secure proper documentation upon delivery a 'misdelivery'. See Barretto Peat Inc v Luis Ayala Colon Sucrs Inc 896 F 2d 656, 660 (1st Cir 1990); BMA Industries Ltd v Nigerian Star Line Ltd 786 F 2d 90, 91-92 (2d Cir 1986) (CMI1622); C-ART Ltd v Hong Kong Islands Line America SA 940 F 2d 530, 533 (9th Cir 1991).

The doctrine of deviation developed prior to COGSA as a means of protecting shippers from contractual limits on liability. In the post-COGSA era, the doctrine provides that when a carrier deviates markedly from the contract of carriage, COGSA does not apply because the bill of lading, which acts as the contract of carriage, is nullified. Since the passage of COGSA, courts have applied the doctrine of deviation sparingly, generally only for geographical departures and unauthorised on-deck stowage. See BMA 91; SPM Corp v M/V Ming Moon 965 F 2d 1297, 1304 (3d Cir 1992) (CMI1849); Rockwell International Corp v M/V Incotrans Spirit 998 F 2d 316, 319 (5th Cir 1993).

Although the Court of Appeals for the Eleventh Circuit has yet to decide whether a misdelivery is a deviation, a non-delivery has been held to be not a deviation. See CA La Seguridad 325; see also CA Articulos Nacionales de Goma Gomaven v M/V Aragua 756 F 2d 1156, 1161 (5th Cir 1985); Italia Di Navigazione SPA v MV Hermes I 724 F 2d 21, 22-23 (2d Cir 1983).

The circuits that have addressed this issue have held that a misdelivery is not a deviation. The Second Circuit, in a case factually similar to the instant case, held that a carrier's failure to release the shipper's cargo only upon presentation of an original, endorsed bill of lading, as agreed, was a misdelivery which did not constitute a deviation: BMA 91-92. See also Barretto 660.

Given that a non-delivery is not a deviation, and the general reluctance of courts to interpret the doctrine of deviation expansively, a misdelivery is not a deviation. Accordingly, the defences set forth in COGSA apply in this instant case.

Because misdelivery is not a deviation, there is no need to decide whether a deviation would strip a carrier of both the USD 500 limitation on liability and the statute of limitations, or as the Fifth Circuit has held, merely of the liability limitation, and not of the one-year statute of limitations. See Bunge Edible Oil Corp v M/VS' Torm Rask & Fort Steele 949 F 2d 786, 788 (5th Cir 1992).

Furthermore, even assuming that CFOS's failure to deliver the goods to Algec on a sight draft basis breached the contract of carriage, not every breach of contract is a deviation.

Next, the Court addressed Unimac's argument that COGSA's USD 500 limit per package should not apply because it did not receive the bill of lading until after the ship had sailed, and thus did not have a fair opportunity to declare a higher value for the goods.

Under COGSA, a carrier has limited liability provided that the carrier gives the shipper adequate notice of the USD 500 limitation by including a clause paramount in the bill of lading and the carrier gives the shipper a fair opportunity to avoid COGSA's limitation by declaring excess value: Insurance Co of North America v M/V Ocean Lynx 901 F 2d 934, 939 (11th Cir 1990) (CMI1438).

With respect to notice, CFOS's bill of lading not only contained a clause paramount, expressly incorporating COGSA, but it also contained separate provisions setting forth the liability limitation of USD 500 per package and detailing the steps that the shipper needs to take to obtain 'All Risk' insurance. Unimac did not receive the bill of lading until after the ship had sailed; nevertheless the ship had yet to reach Australia when Unimac received the document. Thus, upon receipt of the bill of lading, Unimac had notice of the limited liability.

It was also clear that Unimac had ample opportunity to declare excess value and to pay the cost of insurance. It has been held that '[e]ither a clause paramount in the bill of lading or a valid tariff filed with the Federal Maritime Commission that includes an opportunity to declare excess value ... is sufficient to afford the shipper an opportunity to declare excess value': M/V Ocean Lynx 939.

The bill of lading contained a clause paramount. Further, CFOS's tariff, on file with the Federal Maritime Commission, states in Rule 12(b) & (c) that if the 'Shipper desires to be covered for a valuation in excess of [USD 500 per package], it must so stipulate in Carrier's Bill of Lading', and pay an additional ad valorem rate of 3.75%. Therefore, both the bill of lading and the tariff afforded Unimac notice and a fair opportunity to declare a higher value for its cargo and pay for insurance, an opportunity which Unimac did not utilise.

Unimac's argument that because its letter of instruction stated the value of the cargo, the requirements for stating excess value was satisfied, is unmeritorious. First, CFOS's bills of lading and tariff, as well as COGSA itself, provide that the declaration of excess value must be in the bill of lading. Second, and more importantly, in addition to declaring the excess value, a shipper must pay an additional charge to secure the excess insurance. Unimac failed to do so and may not now look to the courts for relief which, if granted, would give Unimac the benefit of insurance for which it did not pay.