Three containers of equipment purchased by Bombardier Inc. in Japan arrived in Vancouver.Bombardier entered into a contract of carriage, using the standard bill of lading, with Canadian Pacific Ltd. (CP) to ship the containers by rail to Montreal.The contract contained a clause limiting CP's liability to $40,000 per container for any damage cause to the containers and their contents by CP's negligence while in transit.

The train carrying the containers derailed en route, but the accident was not caused by negligence of CP.Two of the three containers were damaged due to the derailment, but not seriously.However, during salvage operations, CP's employees negligently set the two damaged containers on fire, causing much greater damage to their contents.

CP offered to pay $120,000 for the damage to the equipment in the two containers pursuant to the terms of the bill of lading.Bombardier rejected the payment and sued CP for $250,000, claiming that the damage done during the salvage operations was outside the contract of carriage; it argued that once the containers were thrown off the tails and were lying on the ground they were no longer "in transit".CP replied that the salvage operations are an inherent part of a contract of carriage in case of accident and that the clause limiting liability still applied.

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Q1.What are the legal issues involved in this case? (10 Marks)

Q2.Evaluate the arguments of both sides - Bombardier and CP. Cite any relevant cases.(10 Marks)

Q3.What do you think the court's decision will be and why (10 Marks)

Q4.What are some lessons business professionals can learn from this case? (10 Marks)