In a setback for the rail industry, Canadian railways will unlikely be able to strike confidential agreements to ship goods that excludes liability or limits it to trivial amounts if damage or loss is sustained, following a recent Quebec Court of Appeal ruling.

In a ruling that examines the apportionment of liability under the Canada Transportation Act (Act), the Court of Appeal decision appears at first glance to undercut the commercial freedom of parties to negotiate their own terms in a deal, and confirms the principle that there is a presumption of liability by the railway carrier for the loss or damage to goods in its possession or control, according to transportation lawyers.

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