Breakage

What does Breakage mean in American Law?

The definition of Breakage in the law of the United States, as defined by the lexicographer Arthur Leff in his legal dictionary is:

Damage done to chattels, especially during shipment. Some manufacturers make a precomputed allowance to customers to cover breakage during shipment, thereby avoiding the costs of having to receive back and pass upon broken items. In some bills of lading, the carrier is exempted from responsibility for breakage (not caused by its negligence), though the provision has been held not to cover living animals. Breakage also refers to fractional sums in financial computations, “odd pennies,” which may for simplicity be ignored as trivial, e.g., in computing interest or the betting pay-off at a horse race. When many transactions are involved, however, who gets the “breakage” is not a trivial question, e.g., banks computing interest to be paid to depositors ordinarily cannot just keep breakage, though they may keep all under, and pay a full cent for all over, half a cent.