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What are Damages and Who is Responsible
Who is responsible for damages?
If goods are shipped FOB Destination (standing Penn freight terms), the party at the origin is
responsible for damages that occur in transit, title and responsibility for the goods transfer when
the goods reach the destination. That means that in a sale of goods situation, the supplier is
responsible for submitting the claims for any damages, making repairs, scheduling inspections and
If goods are shipped FOB Origin or Shipping Point, the party at the destination is responsible for
damages that occur in transit, title and responsibility for the goods transfer as soon as the goods
are ready to ship from the origin dock. That means that in a sale of goods situation, the
requisitioner is responsible for submitting the claims for any damages, making repairs, scheduling
inspections and returns.
What are damages?
There are two types of damages, visible and concealed. Both must be jointly inspected by the receiver
and the carrier and the type of loss or damage identified in the claim as "Visible or Noted
Loss or Damage". This is loss or damage that is apparent at the time of delivery and noted
on the delivery receipt and freight bill. Carefully check for any visible signs of damage to the
carton, containers, or items and record all the damage on the freight documents. Immediately contact
Purchasing Services for assistance in working with the supplier or filing a claim. In most cases, the
carrier is not responsible for visible damage that is not documented on the delivery paperwork.
Note: To Return Visible or Noted Losses or Damage Goods, refer to section on
Return of Goods.
Concealed Loss or Damage
This is loss or damage that is not discoverable during routine inspection for visible damage to the
carton. Concealed loss or damage is usually discovered after the freight carrier has received a clear
receipt on the freight bill copy and the customer later closely inspects or attempts to use the goods.
The National Motor Freight classification describes
the parties' legal obligations in this complex problem.
Significant points of these regulations are:
If a concealed loss or damage is discovered after the freight carrier has been given a clear delivery
- The requisitioner must notify the freight carrier within fifteen (15) days of discovery or at
the latest, nine months after the delivery of the property.
- The requisitioner must keep the goods and any shipping containers and packing materials.
- Schedule an inspection by the freight carrier. The freight carrier will inspect the freight
within five (5) working days of notification of the concealed loss or damage and will give Penn a
copy of the inspection report when filing a claim.
Note: The carrier may choose to waive the inspection based on the value of the shipment. If the
carrier waives the inspection, make a note of the time, date and name of the person waiving the
inspection and document this information in the claim records.
- The carrier will complete a report on the claim and retain a copy for your records.
- If the freight carrier fails to make the inspection, then Penn must inspect and record all
relevant facts about the loss or damage. This information should then be included when filing a
- The carrier will then complete the following steps when processing a claim:
- Acknowledge the receipt of the claim in writing within 30 days and assign it a claim
- Pay, refuse payment, or make a firm compromise offer within 120 days after receipt of the
- If the claim cannot be concluded within the 120 day period, notify recipient then, and at
each 60 day period thereafter, while the claim remains pending, of the reason that freight
carrier cannot conclude the claim.
- Document the relevant facts about the loss or damage for Penn records.
Note: Refer to the Return of Goods section for information on how
to return the goods.