## Facts

- Berisford Metals Corp. purchased 50 metric tons of grade A tin ingots from a Brazilian seller for shipment from Santos, Brazil to New York, on F.O.B. vessel terms.
- The shipment comprised 100 bundles, each bundle consisting of 30 tin ingots strapped to wooden pallets.
- The carrier’s agent containerized the bundles into four containers and they were later loaded aboard the S/S Salvador.
- The carrier issued a clean on-board, negotiable bill of lading stating that 100 bundles were received and loaded for shipment.
- The seller presented the bill of lading with a draft, and Berisford paid $662,938.50 in reliance on the bill’s on-board representation.
- On arrival in New York, two of the four containers (allegedly containing 70 bundles) were empty, with no signs of tampering.
- The missing 70 bundles were valued at approximately $483,214.90.

## Issues

1. Whether a carrier that issues a clean on-board bill of lading incorrectly stating that cargo is on board may invoke COGSA § 4(5)’s $500-per-package limitation for the resulting loss.
2. Whether the action should be dismissed based on challenges to Berisford’s right to sue as holder/consignee of the bill of lading and related theories.

## Decision

- The court held the carrier could not invoke COGSA § 4(5)’s $500-per-package limitation because the bill of lading’s false on-board representation constituted a fundamental breach comparable to deviation.
- The court reversed the judgment to the extent it limited damages to $35,000 and remanded with instructions to enter judgment for the full value of the lost cargo.
- The court affirmed the denial of defendants’ motion to dismiss, holding Berisford was a proper party to sue as holder/consignee who paid against the negotiable on-board bill of lading.

## Legal Principles

- Under COGSA § 4(5), a carrier’s liability is generally limited to $500 per package (or customary freight unit) unless the shipper declares a higher value and inserts it in the bill of lading.
- A carrier that issues a bill of lading containing a materially false “on board” representation about cargo may be deprived of statutory and contractual limits on liability, even absent proof of fraud.
- The commercial function of a clean on-board, negotiable bill of lading requires reliability; misstatements that induce payment against documents justify full liability outside COGSA’s limitation scheme.
- A consignee/holder who takes up a negotiable on-board bill of lading and pays against it has standing to pursue cargo-loss claims under the contract of carriage.

## Conclusion

The Second Circuit required full recovery for the missing tin ingots because the carrier’s false clean on-board bill of lading was treated as a fundamental breach that eliminated COGSA’s $500-per-package limitation, and it also confirmed that the bill’s holder-consignee could maintain the action.


Berisford Metals Corp. v. S/S Salvador, 779 F.2d 841 (2d Cir. 1985)