Legal Dimension : When the goods are in transit from the exporter to the importer, they are, at different stages, in the custody of different agencies and authorities including the clearing and forwarding agents, carriers, port and customs authorities, etc. If there is any loss or damage to the goods, while in their custody, the concerned intermediary may be held liable to pay damages to the cargo owners.

The nature and extent of liabilities of various intermediaries have been identified in the respective laws enacted by the government all over the world. According to these law3, the intermediaries cannot be held liable for loss to the cargo, if it was caused by reasons or events beyond their control. For example, if the loss is due to natural disasters or war or strike, the intermediaries will not be liable to pay for the loss. Further, if the loss has occurred even after the concerned intermediary has exercised reasonable care in keeping the goods, it is legally exempted from the liability. In such situation, the cargo owners who suffer the loss cannot recover it from the intermediaries and they have no other option but to obtain appropriate insurance cover.

The laws also state that where the carriers or other intermediaries are liable for loss or damage, the maximum amount of recovery is limited to the sun1 stipulated in the respective laws. For example for goods carried by the Indian shipping companies, the maximum liability of the ship owner is $ 100 per package. Thus, where the lost cargo is more valuable than the maximum recoverable amount, the cargo owners will have to bear some of the loss themselves.