Commencement and Termination of Liability

Commencement and Termination of Liability is a core term in international trade and transportation contracts, referring to the starting and ending points in time when a carrier, insurer, or multimodal transport operator bears legal liability for goods. Its definition directly affects the attribution of cargo damage liability, the limitation period for claims, and the allocation of risk. It is commonly used in bill of lading clauses, insurance policies, charter parties, and international sales contracts. Precautions include: under different trade terms (such as FOB and CIF), the points of commencement and termination of liability differ; for example, under CIF the seller's liability ends when the goods pass the ship's rail or are on board at the port of shipment, while under DDP it extends to the destination; the Hague Rules generally adopt the 'tackle-to-tackle' principle, while the Hamburg Rules extend it to 'port-to-port'. Unlike 'transfer of risk', commencement and termination of liability emphasizes the duration of legal liability rather than the transfer of physical risk of the goods. Foreign trade practitioners need to specify it clearly in contracts to avoid disputes caused by ambiguity regarding when liability begins and ends.