Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

What document is commonly used to establish the liabilities of common carriers?

1. Insurance policy

2. Freight invoice

3. Bill of lading

4. Delivery receipt

The correct answer is: Bill of lading

The bill of lading is a vital document used in the shipping and transportation industries that serves multiple purposes, one of the primary ones being to establish the liabilities of common carriers. This legal document acts as a contract between the carrier and the shipper and contains essential details about the goods being transported, such as their type, quantity, and destination. In terms of liability, the bill of lading outlines the carrier's responsibilities during the transit of goods. It details the agreed terms for handling, transporting, and delivering the items, which helps in defining the liability of the carrier in case of loss, damage, or delay. It also provides evidence of the agreement between the parties involved, which can be crucial in disputes related to the shipping process. While an insurance policy can cover risks associated with the transit of goods and might indicate liability in some cases, it does not inherently establish the terms of liability pertaining to the transportation contract. A freight invoice is used for billing and records the financial transaction but does not clarify the liability terms. A delivery receipt confirms the delivery of goods but typically does not elaborate on the liabilities of the carriers during transit. Therefore, the bill of lading is essential for establishing and understanding the liabilities of common carriers, making it the correct