Liability for deliveries: who pays when a parcel is lost

Service page: Consumer claims and class actions lawyer.

A parcel that was lost or arrived damaged raises two questions: who is liable for the damage, and up to what amount. The answer depends on the body that sent it, the type of shipment and the terms of the contract.

A parcel lost or damaged: when you are entitled to compensation

In Israel, courier companies and Israel Post have limited liability for shipments. The legal framework rests on the terms of the agreement with the delivery company, the Bailees Law, 5727-1967, and the Standard Contracts Law, 5743-1982. With Israel Post, it rests on the Postal Law, 5746-1986. In addition, the Consumer Protection Law, 5741-1981 applies.

The basic principle: the delivery company took on responsibility for keeping the parcel safe from the moment it received it until delivery. If the parcel was lost, stolen or damaged during that time, as a rule it is liable (section 2(b) of the Bailees Law). A person who holds property for payment (a “paid bailee”) is liable for its loss or damage. The exception is circumstances that the bailee could not have foreseen and whose results it could not have prevented. And if the safekeeping was secondary to the main purpose of holding the property, the bailee is exempt when the damage was not caused by its negligence.

And what if you are the recipient, for example after buying online? Against Israel Post, the sender is the person entitled to claim compensation under section 77. The sender may transfer this right to another person (section 80 of the Postal Law). Against the seller, the Sale Law, 5728-1968 (חוק המכר, התשכ״ח-1968) applies. If the item sold was lost or spoiled before you received it, you are released from your obligations (section 22(a)). There is an exception: it happened for a reason the seller is not responsible for, after the seller did what it had to do to deliver it, and you breached your duty to accept it. Suppose transport was agreed, and the seller handed the item to the transport company, which is liable to you under the transport contract. Then delivery takes place already when the item is handed to that company. A loss that happened after that, for a reason the seller is not responsible for, does not release you (sections 8(c) and 22(b)). All this is subject to a special law and to the agreement between you (section 4(b)).

How much liability does the delivery company actually bear?

Liability is limited. Many courier companies include a compensation cap per parcel in their terms of service. If you sent an item worth NIS 3,000 and did not insure it, you may receive only partial compensation.

Additional insurance: the company may offer insurance or a declaration of value for the shipment. If you did not use them, it may rely on the cap in the contract.

What companies cannot easily do: exempt themselves from liability under the law. A term in a standard-form contract may exempt the supplier, fully or partly, from liability it would have had under the law. Such a term is presumed to be unfair. A court that finds it unfair will cancel it or change it (sections 4(1) and 19 of the Standard Contracts Law).

What is the difference between Israel Post and a private courier company?

Israel Post is subject to the Postal Law, 5746-1986. For domestic mail, it is liable for damage, theft or loss only on three conditions (section 77(a)). The postal item was handed over for sending against a receipt, and its delivery requires confirmation (such as registered mail). The damage was reported to the postal clerk on delivery or as soon as it became known. And it was not caused by defective packing. Compensation is up to the value of the damage, and no more than the amount the Minister set for that type of postal item (section 81). It is not liable for damage caused by late delivery or by wrong delivery of a postal item (section 78). There is no liability for an ordinary postal item, sent without a receipt and confirmation of delivery. The exception is when the sender proves that the postal clerk handled it negligently when accepting it for sending (section 77(b)). For international mail, the terms under the Universal Postal Convention apply (sections 82–83).

Private companies (DHL, FedEx, UPS, Speed Post and the like) are subject to the terms of the agreement you signed. They are also subject to the Consumer Protection Law, the Bailees Law and the Standard Contracts Law. Their contracts also usually set a compensation cap.

When you will not get compensation, even if you are in the right

There are situations in which the company will reject the claim even if the damage is real:

Was the packaging not adequate (fragile items packed carelessly, without enough padding)? Then the company will argue that defective packing caused the damage, not the company.

If you reported too late: a delay in reporting, especially beyond the time window in the contract, allows the company to reject the claim.

If you did not insure an expensive item, the company will rely on the contractual cap. You can argue that the cap is unfair and ask for it to be canceled (sections 4(1) and 19 of the Standard Contracts Law). But the outcome depends on the circumstances.

When the damage is bigger than the cap: what can you do?

Is the damage above the compensation cap, and do you feel you are entitled to more? There are two routes. One is the Small Claims Court (up to NIS 39,900, section 60(a)(1) of the Courts Law, without a lawyer). The other is a claim in the Magistrates' Court. In both, the court will examine the terms of the contract alongside the liability under the law. A private company, as a “paid bailee”, is liable for loss or damage, unless the circumstances exempt it under section 2(b) of the Bailees Law. Against Israel Post, the plaintiff must show that the damage happened during the postal services, subject to the presumptions in section 79 of the Postal Law.

A tool worth using: filing a complaint with the Consumer Protection and Fair Trade Authority.

Have you decided to sue the delivery company? You can read about consumer, personal and class action claims on the Class actions and consumer claims page.