Also known as: privity · knowledge
Written by attorneys · grounded in primary & secondary sources — see below
A condition that bars a shipowner from limiting liability under the Limitation of Liability Act when the owner had personal involvement in or awareness of the negligent acts or unseaworthiness that caused the loss. The owner bears the burden of proving the absence of privity or knowledge after the claimant identifies the causative fault. Corporate owners are charged with what management-level personnel knew or should have known through due care.
Captain-owner Owen Reed was at the helm when his tug struck a reef. Reed had ignored repeated warnings about the charted hazard. The court denied limitation because Reed's presence and awareness established privity or knowledge of the unseaworthiness.
President Quinn of Apex Shipping received crew reports of leaking hatches yet ordered no repairs. After cargo damage, claimants proved Quinn's knowledge. The court held Apex could not limit liability because privity or knowledge was shown at the management level.
Owner Nora Vale hired an agent to ready her yacht but never verified safety gear. The agent skipped inspections. When a passenger drowned, the court imputed the agent's knowledge to Vale under the due-care standard and denied limitation of liability.
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Owner Marco Soto approved the captain's plan to overload the barge despite known stability risks. After capsizing, claimants showed Soto's direct involvement. The court found privity or knowledge and refused to limit the owner's liability.
Fleet manager Lee Voss at Tidewater Corp. reviewed logs showing engine faults but took no action. A collision followed. The court charged the corporation with Voss's knowledge and denied limitation because privity or knowledge existed at the policy level.
Owner Dana Holt left the vessel in the hands of an untrained crew and never checked qualifications. A grounding occurred. The court held that Holt's lack of oversight constituted privity or knowledge and barred limitation of liability.
The shipowner must first identify the acts of negligence or unseaworthiness that caused the loss and then prove those acts occurred without the owner's privity or knowledge. Corporate owners are held to what management should have known through ordinary care.
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Ordinary negligence concerns the underlying fault that caused the casualty. Privity or knowledge concerns the shipowner's personal connection to that fault, either through direct participation or through what the owner should have discovered with due care.
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When the owner is personally operating the vessel at the time of the casualty, privity or knowledge is presumed. The owner must then rebut the presumption with evidence that the fault occurred outside the owner's awareness or control.
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…who owes nothing, and has done none of the acts mentioned in the statute, may be deprived of his estate, without any actual knowledge of the process by which it has been taken from him. If we hold, as we must in order to sustain this legislation, that the Constitution does not positively require personal notice in order…