Cargo lost in transit? A primer on contracts of carriage and carrier liability in Ontario
October 1, 2026
No Comments
Read More »
Cargo Lost in Transit? A primer on contracts of carriage and carrier liability in Ontario
When cargo is lost, damaged, or stolen in transit, one of the first legal questions is often deceptively simple: what exactly is the contract of carriage? The answer can have significant consequences for determining a carrier’s liability and the value of any resulting claim.
In Ontario, contracts of carriage are governed by the Carriage of Goods Regulation (O. Reg. 643/05), which establishes mandatory requirements for agreements involving the transportation of goods by road. While bills of lading remain an important part of the transportation industry, Ontario courts have repeatedly recognized that determining what constitutes a contract of carriage and in turn, the carrier’s liability, requires a broader examination of the parties’ relationship and communications.
The Statutory Framework
Section 4 of Ontario’s Carriage of Goods Regulation prescribes the information that must be included in a contract of carriage. Among other things, the contract must identify the consignor and consignee, the origin and destination of the shipment, particulars of the goods, and provide a space for the declared value of the shipment. The contract must also acknowledge receipt of the goods and include an undertaking by the carrier to transport them for delivery.
An important feature of the Regulation, is that it establishes a default limitation on a carrier’s liability for lost or damaged cargo. Under Schedule I of the regulation, a carrier’s liability is generally limited to the lesser of (a) the value of the goods at the place and time of shipment, including freight and other charges if paid, and (b) $4.41 per kilogram based on the total weight of the shipment (or $2/lb).
This limitation is not absolute. The Regulation allows a shipper to declare a higher value for the shipment on the contract of carriage. Where a value is properly declared, the carrier’s liability may increase up to that declared amount.
As a result, disputes frequently arise over whether a value was effectively declared and what documents form part of the contract of carriage.
Is a Bill of Lading the Contract of Carriage?
A common misconception is that the bill of lading is synonymous with the contract of carriage.
Bills of Lading were once a legal requirement, legislated by the Truck Transportation Act, R.S.O., 1990, c. T.22.[1]. However, this Act and its related regulations were repealed on January 1, 2006. The current Carriage of Goods Regulation does not explicitly equate contracts of carriage with bills of lading.
While bills of lading are often the primary document evidencing the transportation arrangement, case law suggests that bills of lading are not in themselves considered the contract of carriage. Rather, a bill of lading may be evidence of the contract’s terms, alongside other documents and communications.
Looking Beyond the Bill of Lading
Because the bill of lading is not always determinative, courts may consider the broader factual matrix when identifying the terms of a contract of carriage.
The key question is often whether the carrier was adequately informed of the value of the shipment and whether the parties intended certain documents or communications to form part of their agreement. Courts have considered a variety of evidence, including:
The analysis is highly fact-specific and depends on the circumstances of each shipment.
The Ontario Superior Court’s decision in A&A Trading Ltd. v. DIL’s Trucking Inc., 2015 ONSC 1887, illustrates the flexible approach courts may take. In that case, goods valued at approximately $250,000 were stolen during transport from Toronto to Calgary. Before the shipment, the shipper advised the carrier by telephone of the value of the goods, and the carrier confirmed that it had sufficient insurance. Although the bill of lading itself did not contain a declared value, a commercial invoice attached to it did. The court concluded that the invoice formed part of the contract of carriage and that the value of the goods had therefore been properly declared. As a result, the carrier was exposed to liability for the full value of the shipment.
A different result was reached by the Ontario Court of Appeal in National Refrigeration & Air Conditioning v. Celadon Group, 2016 ONCA 339. There, copper tubing being transported from Mexico to Canada was hijacked in transit. The bill of lading contained a specific space for the declaration of value, but that space was left blank. Although a commercial invoice identifying the value of the shipment had been provided to the carrier, the Court of Appeal held that the invoice did not form part of the contract of carriage. Because the bill of lading complied with the requirements of the Ontario regulation and the declared-value space had not been completed, the carrier was entitled to rely on the statutory limitation of liability. The Court also refused to enforce additional liability limitations contained only on the carrier’s website because those terms had not been sufficiently brought to the shipper’s attention.
Ontario courts have also considered whether oral communications form part of the contract of carriage. In Phoenix BioTech v. Day & Ross Inc., 2003 CarswellOnt 3512, the court held that telephone discussions did not create a new contract of carriage that superseded the existing written arrangement. However, that decision was influenced by legislation that was in force at the time and has since been repealed.
By contrast, in Gamlane Group v. Marco Enterprise, 2007 CarswellOnt 2009, the court recognized that a contract of carriage was formed when the carrier agreed by telephone to haul the loads, even though written documents also existed between the parties.
Practical Takeaways
Ontario’s regulatory framework places significant importance on the contents of the contract of carriage, particularly the declaration of value. Where a bill of lading clearly complies with the regulation, courts may be reluctant to look beyond it. In other cases, invoices, emails, negotiations, and other surrounding circumstances may become critical in determining the parties’ rights and obligations.
Contracts of Carriage Beyond Road Transportation
The Ontario road carriage regime is somewhat unique in that the Carriage of Goods Regulation prescribes both mandatory contract terms and default limits of liability based on shipment weight, unless a higher value is declared. By comparison, marine carriers typically rely on liability regimes established through maritime legislation and international conventions, where contractual terms contained in the bill of lading often assume greater significance. In both contexts, however, the shipper’s declaration of value and the contractual allocation of risk remain critical considerations when determining the extent of a carrier’s liability.
Despite the differences between marine and road transportation, the underlying objective remains the same: determining the parties’ intentions regarding the carriage of goods and allocating responsibility when cargo is lost, damaged, or stolen in transit.
Footnotes:
[1] Section 19(1) of the former TTA stated: “except as otherwise provided in the regulations, every licensee shall issue a bill of lading to the person delivering or releasing goods to the licensee for carriage for compensation”.
