## Facts

- An artist created two original watercolor paintings for a limited-edition luxury book; his printer was authorized to ship the paintings from Philadelphia to a New York publisher.
- The printer arranged shipment through an air carrier and requested that the courier provide necessary documentation and packaging materials.
- The paintings were wrapped in paper and masonite.
- When the courier arrived, he stated he was in a hurry and would not wait for the shipper to complete paperwork or repackage into the carrier’s materials.
- The shipper agreed to let the courier complete the airbill and provided shipping information on a separate piece of paper; the courier said he would handle the documentation.
- The shipper requested a receipt and received only a blank shipper’s copy of an airbill with the date and the courier’s employee number.
- The carrier’s retained airbill contained boilerplate terms limiting liability to $100 unless a higher value was declared (up to $500) on the airbill.
- The package was lost in transit, and the carrier confirmed the loss.
- The plaintiffs sought recovery of the full value of the unique paintings.

## Issues

1. Whether the carrier’s airbill liability-limitation clause was enforceable under federal common law given that the courier completed the airbill and the shipper did not receive the terms or an opportunity to declare higher value.
2. Whether plaintiffs could pursue recovery beyond breach of the contract of carriage, or whether non-contract causes of action should be dismissed.

## Decision

- The court held the airbill liability limitation was not enforceable because it was not the product of a fair, open, just, and reasonable agreement.
- The court granted the shipper’s motion for summary judgment on the breach-of-contract-of-carriage claim, holding the carrier liable for the full value of the paintings (damages to be determined).
- The court denied the carrier’s motion to cap liability at $500.
- The court dismissed the remaining causes of action, leaving contract as the sole theory of recovery, and referred valuation/damages for further proceedings.

## Legal Principles

- Federal common law governs the enforceability of liability-limitation clauses for loss of cargo transported by an air carrier.
- A carrier may enforce a liability limitation only if the limitation results from a “fair, open, just and reasonable” agreement.
- Enforceability requires reasonable notice of the limitation and a fair opportunity for the shipper to avoid the cap by declaring a higher value and paying any required additional charge.
- A limitation is not enforceable when the carrier’s conduct deprives the shipper of meaningful access to the airbill terms and a practical chance to declare value (e.g., courier rushes the transaction and unilaterally completes documentation while providing only a blank or incomplete copy).
- A shipper’s limited prior use of a carrier, particularly not for high-value goods, may weigh against inferring knowledge or assent to standard liability caps.

## Conclusion

The court refused to enforce the carrier’s boilerplate liability cap because the shipper lacked reasonable notice and a fair chance to declare higher value, granted summary judgment for plaintiffs on the contract-of-carriage claim for full-value liability (with damages to be set later), and dismissed non-contract claims.


Welliver v. Federal Express Corp., 737 F. Supp. 205 (S.D.N.Y. 1990)