Common Carrier

Freight claim

Captive Audience

Common carrier is a legal term for a company that transports goods or people and is responsible for any loss in transit. Such services are offered to the general public under license or authority provided by a regulatory body, which may create, interpret, and enforce its regulations upon the common carrier (subject to judicial review) with independence and finality, as long as it acts within the bounds of the enabling legislation.

A common carrier is distinguished from a contract carrier, which transports goods for only a certain number of clients and that can refuse to transport goods for anyone else, and from a private carrier (a company that transports only their own goods). A common carrier holds itself out to provide service to the general public without discrimination (to meet the needs of the regulator’s quasi judicial role of impartiality toward the public’s interest) for the ‘public convenience and necessity.’

A common carrier must further demonstrate to the regulator that it is ‘fit, willing, and able’ to provide those services for which it is granted authority. They typically transport according to defined and published routes, time schedules, and rate tables upon the approval of regulators. Public airlines, railroads, bus lines, taxicab companies, cruise ships, motor carriers (i.e., trucking companies), and other freight companies generally operate as common carriers. Under US law, an ocean freight forwarder cannot act as a common carrier. Although common carriers generally transport people or goods, in the United States the term may also refer to telecommunications service providers and public utilities like water, gas, and electricity. In certain States, amusement parks that operate roller coasters and comparable rides have been found to be common carriers; a famous example is Disneyland.

Contract carriers are also often subject to licensing, and must demonstrate that they are ‘fit, willing and able’ to provide service, according to standards enforced by the regulator. However, contract carriers are specifically not required to demonstrate that they will operate for the ‘public convenience and necessity.’ A contract carrier may be authorized to provide service over either fixed routes and schedules, i.e., as regular route carrier or on an ad hoc basis as an irregular route carrier. Carriers were very common in rural areas prior to motorized transport. Regular services by horse-drawn vehicles would ply to local towns, taking goods to market or bringing back purchases for the village. If space permitted, passengers could also travel.

It should be mentioned that the carrier refers only to the person (legal or physical) that enters into a contract of carriage with the shipper. The carrier does not necessarily have to own or even be in the possession of a means of transport. Unless otherwise agreed upon in the contract, the carrier may use whatever means of transport approved in its operating authority, as long as it is the most favorable from the cargo interests’ point of view. The carriers’ duty is to get the goods to the agreed destination within the agreed time or within reasonable time.

The person that is physically transporting the goods on a means of transport is referred to as the ‘actual carrier.’ When a carrier subcontracts with another provider, such as an independent contractor or a third-party carrier, the common carrier is said to be providing ‘substituted service.’ The same person may hold both common carrier and contract carrier authority. In the case of a rail line in the US, the owner of the property is said to retain a ‘residual common carrier obligation,’ unless otherwise transferred (such as in the case of a commuter rail system, where the authority operating passenger trains may acquire the property but not this obligation from the former owner), and must operate the line if service is terminated.

Telecommunications carriers were first regulated as common carriers by the Federal Communications Commission under the ‘Communications Act of 1934.’ The ‘Telecommunications Act of 1996’ made extensive revisions to the provisions regarding common carriers and repealed the judicial 1982 AT&T consent decree (often referred to as the ‘modification of final judgment’ or ‘MFJ’) that effectuated the breakup of AT&T’s Bell System. Further, The Act gives telephone companies the option of providing video programming on a common carrier basis or as a conventional cable television operator. If it chooses the former, the telephone company will face less regulation but will also have to comply with FCC regulations requiring what the Act refers to as ‘open video systems.’ The Act generally bars, with certain exceptions including most rural areas, acquisitions by telephone companies of more than a 10 percent interest in cable operators (and vice versa) and joint ventures between telephone companies and cable systems serving the same areas.

Internet networks are treated like common carriers in many respects. ISPs are largely immune from liability for third-party content. The ‘Good Samaritan’ provision of the ‘Communications Decency Act’ established immunity from liability for third party content on grounds of libel or slander, and the DMCA (Digital Millenium Copyright Act) established that ISPs that comply with the DMCA would not be liable for the copyright violations of third parties on their network.

In the United States, many oil, gas and CO2 pipelines are common carriers. The Federal Energy Regulatory Commission (FERC) regulates rates charged and other tariff terms imposed by interstate common carrier pipelines. Intrastate common carrier pipeline tariffs are often regulated by state agencies. The US and many states have delegated the power of eminent domain to common carrier gas pipelines. Many states have delegated eminent domain power to common carrier oil pipelines.

Common carriers are subject to special laws and regulations that differ depending on the means of transport used, e.g. sea carriers are often governed by quite different rules from road carriers or railway carriers. In common law jurisdictions as well as under international law, a common carrier is absolutely liable for goods carried by it, with four exceptions: an act of nature; an act of the public enemies; fault or fraud by the shipper; or an inherent defect in the goods. A sea carrier may also, according to the Hague-Visby Rules, escape liability on other grounds than the above mentioned, e.g. a sea carrier is not liable for damages to the goods if the damage is the result of a fire on board the ship or the result of a navigational error committed by the ship’s master or other crewmember. Carriers typically incorporate further exceptions into a contract of carriage, often specifically claiming not to be a common carrier.

An important legal requirement for common carrier as public provider is that it cannot discriminate, that is refuse the service unless there is some compelling reason. As of 2007, the status of Internet service providers as common carriers and their rights and responsibilities is widely discussed in the network neutrality debates.

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