How the Limitation of Liability Act Could Affect Your Claim for Compensation Following a Maritime Accident
Maritime law is very complex, and some of the laws go back centuries. One such law is the Limitation of Liability Act, which is a federal law enacted in 1851 to protect American ship owners. If a family member or you was injured or killed in a maritime accident, you need to understand the Limitation of Liability Act and how a ship owner could use it to limit its responsibility to compensate you for your injuries.
What Is the Limitations of Liability Act?
The Limitations of Liability Act allows vessel owners to limit their liability after a maritime incident or casualty to the post-casualty value of the vessel and its cargo. The incident must happen in United States waters for the law to be used. The Act applies to many ships including:
- Seagoing vessels.
- Vessels on lakes, rivers, and in inland navigation.
- Canal boats.
- Barges.
- Lighters.
- Recreational crafts, such as house boats and jet skis.
Both ship owners and a leaseholder that obtains the possession, control, and command of a vessel can obtain protections under the Act. It applies to claims for cargo damage, collisions, injuries, and some deaths. However, there is an exception to when a vessel owner can escape liability through the use of the Limitation of Liability Act. Owners cannot avoid responsibility when the injury occurred due to the owner’s privity or knowledge. This can be established by showing that the owner knew or should have known of the acts of negligence or unseaworthiness that caused the accident.
How Does a Vessel Owner Assert His Rights Under the Limitation of Liability Act?
Owners of vessels can assert their right to limit their liability in one of two fashions. They can take the following actions:
- The owner can file a complaint in federal district court to obtain a decision as to whether the Act applies. As part of the lawsuit, the owner would sue the victim of the accident. The owner is allowed to consolidate the claims of all injured victims in this lawsuit, and this is one of the benefits of filing suit in federal court.
- The owner can raise the Limitation of Liability Act as a defense if he is sued by a victim of an accident.
Having a boat owner raise the Limitations of Liability Act can be devastating to victims of a maritime accident who may find themselves unable to receive full compensation for their injuries due to the owner’s limited liability. In addition, it can seem extremely unfair to be the victim but be the party is being sued instead of the one suing the owner. However, this does not mean that victims cannot defend against the Act’s applicability or raise all their claims.
Contact Attorney Steve Lee Today
If you were injured in a maritime or other boating accident, you need the help of an experienced maritime attorney who understands the Limitation of Liability Act and other laws that could apply to your claim. It can be extremely complicated to determine the value of the vessel and its cargo and whether an exception to applicability of the Act to your case can be raised. You cannot expect to do this successfully on your own.
Let our experienced legal team take over the burden of pursing your claim for compensation following a maritime accident. Fill out our convenient online form to schedule your free consultation.
FAQs
The Limitations of Liability Act allows vessel owners to limit their liability after a maritime incident or casualty to the post-casualty value of the vessel and its cargo. The incident must happen in United States waters for the law to be used. The Act applies to many ships including: Seagoing vessels.
What is the Limitation of Liability Act and what does it do? ›
Under the Limitation of Liability Act, a shipowner would be able to limit their total financial liability to the value of their ship.
What are the exceptions to the Limitation of Liability Act of 1851? ›
Exceptions to the Limitation of Liability Act of 1851
If the vessel and cargo were lost completely, the value of the vessel cannot be calculated in the owner's assets, making much less available to injury victims.
Why did Congress pass the Limitation of Liability Act? ›
The Act was passed by Congress on March 3, 1851 to protect the maritime shipping industry; at the time, shipowners were subject to loss from events beyond their control such as storms and pirates, so the Act was designed to limit the shipowners' liability to the value of the vessel.
What are the limitation of liability terms and conditions? ›
A limitation of liability clause in the Website's terms and conditions could limit the liability of the website owner (ie the user can only recoup up to a certain amount).
How does limitation of liability work? ›
A limitation of liability clause in a contract limits the amount of money or damages that one party can recover from another party for breaches or performance failures. In other words, the clause can put a cap on the number of damages the organization will have to pay under certain circ*mstances.
Are limitation of liability clauses always enforceable? ›
Generally, these clauses are enforceable. Parties can generally exclude their liability for certain acts or types of damages, as Linda explained.
What is a waiver of limitation of liability? ›
Similar to a covenant not to sue, a waiver by a party surrenders their claim against another party after a wrong. If a party is benefiting from another party's waiver, a limitation of liability clause may not be necessary although a waiver is more likely narrower in its scope.
Should courts always uphold limitation of liability clauses? ›
Courts should always uphold limitation-of-liability clauses, whether or not the two parties to the contract had equal bargaining power. One of the reasons that imitation-of-liability clauses are included in contracts is to allow sellers to predict the extent of their liabilities should something go wrong.
What is the limitation of liability clause drafting? ›
Except in connection with each Party's indemnification obligations hereunder, neither Party shall be liable to the other Party for any indirect or consequential damages, including, but not limited to, lost time, lost money, lost profits or good-will, whether in contract, tort, strict liability or otherwise, and whether ...
Purpose and Summary H.R. 5503, the Securing Protections for the Injured from Limitations on Liability Act, will revise outdated laws regarding liability in certain civil actions arising from maritime incidents, to ensure fair and just compensation to the injured and their families.
Why is limitation of liability clause capitalized? ›
Since limitations of liability and warranty disclaimers limit user rights and can result in liability if they are not conspicuous, All-Caps is the prudent choice. Users are used to important language being capitalized and businesses do it because it works for communication and holds up against legal challenges.
What is the limitation of liability to the extent? ›
It is a contractual provision that caps or limits the extent of a party's financial liability for breaches, negligence, or other issues arising out of the performance or non-performance of the contract.
How much is limitation of liability? ›
Limitation of Liability Clauses Can Reduce Financial Responsibility Up to 90%.
What is the US limitation of liability? ›
In the case of a collision, to limit its liability, Owner has the burden of proving that the cause of the collision was outside its "privity or knowledge." Thus, Owner has the burden of proving the cause of the collision and that the cause was outside its "privity or knowledge." As a general proposition, if a collision ...
What are the limitations of liability direct damages? ›
Types of Damages Liability Limitation
Direct damages may include payments for unpaid fees under an agreement, medical expenses (if a party is injured), monetary payments to replace damaged property, or similar direct results of a legal claim.
What is a limitation of liability in property insurance? ›
Limit of liability refers to the max amount of money your insurer is on the hook for if something bad happens to you, your stuff, or your property.
What is limitation of liability in accounting? ›
The most common approach is to limit a firm's liability in the engagement letter to a fixed amount (often described as a 'cap' on liability). Caps can be negotiated or non-negotiated, and may apply as aggregate limits upon liability, or may cap the amount of each separate breach or claim.
What is exoneration from or limitation of liability? ›
Many seamen may be unaware that ship owners often seek exoneration from or limitation of liability to mitigate their financial obligations. The exoneration and limitation of liability rule permits ship owners to restrict their liability to the value of the vessel and its post-voyage freight.
What is a Lola action? ›
The boat owner's right to hale your injured client into federal court and to seek to limit its liability stems from an antiquated law originating in 1851. (The Limitation of Liability Act (“LOLA”) 46 U.S.C.
