Description
A bill of lading is a standard-form document that is transferable by endorsement (or by lawful transfer of possession). Most shipments by sea are covered by the Hague Rules, the Hague-Visby Rules or the Hamburg Rules, which require the carrier to issue the shipper a bill of lading identifying the nature, quantity, quality and leading marks (identification marks and numbers) of the goods. In theHistory
While there is evidence of the existence of receipts for goods loaded aboard merchant vessels stretching back as far as Roman times, and the practice of recording cargo aboard ship in the ship's log is almost as long-lived as shipping itself, the modern bill of lading only came into use with the growth of international trade in the medieval world. The growth of mercantilism (which produced other financial innovations such as theEtymology
The word "lading" means "loading", both words being derived from the Old English word ''hladan''. "Lading" specifically refers to the loading of cargo aboard a ship. The Dutch word "lading" has exactly the same meaning (freight, cargo, an amount of transportable goods) as it has in the English "bill of lading", but is not restricted to shipping. Under English law, the Carriage of Goods by Sea Act 1992 provides that the term "bill of lading" includes a "received-for-shipment" bill of lading issued by, say, a freight forwarder or a storage depot/warehouse. A "combined bill of lading" may be issued by a carrier who, say, collects goods from a factory for subsequent delivery to a ship viaRoles and purposes of bill of lading
As cargo receipt
The principal use of the bill of lading is as a receipt issued by the carrier once the goods have been loaded onto the vessel. This receipt can be used as proof of shipment for customs and insurance purposes, and also as commercial proof of completing a contractual obligation, especially under INCOTERMS such as CFR (cost and freight) and FOB (free on board). Although the Hague-Visby Rules provide that a bill of lading is only ''prima facie'' evidence of receipt, the Carriage of Goods by Sea Act 1992 s.4 declares a BoL "conclusive evidence of receipt". * A "clean bill of lading" (aka "on-board bill of lading") is used when there is full compliance with no discrepancies between the description filed by the shipper and the actual goods shipped. A clean bill of lading indicates that the goods have been properly loaded onboard the carrier's ship in accordance with the contract. * A "dirty bill of lading" (aka "claused bill of lading") will be issued if the goods to be shipped differ in quality or quantity from the contract description. The buyer's bank is entitled to reject a dirty bill of lading, but will often accept it after an agreed reduction in price. For examples, cargo could be leaking, or package could be damaged where the carrier has the right to issue a clause BL. * "STC": if the cargo cannot be effectively examined, such as goods in a sealed container), the carrier will issue a bill of lading describing the goods as "container (identified by number) said to contain" the contracted cargo. The carrier or the agent mentions "STC" in BLs to safeguard themselves from shipper declaring wrong information on BL. Even this term is more favourable to the carrier in FCL shipping and there are instances where the carrier become at least partially liable in LCL shipping even after mentioning "STC" under cargo description. This is due to the carrier or agent do the stuffings of cargo for the shipper's LCL shipment. If the cargo within the container does not comply with the description, the consignee will take action against the seller, and the carrier will not be involved.As evidence of the contract of carriage
The bill of lading from the carrier to the shipper can be used as evidence of the contract of carriage by the fact that the carrier has received the goods and upon the receipt, the carrier would deliver the goods. In this case, the bill of lading would be used as evidence of contract of carriage. In this case, the bill of lading can be used if the shipper does not properly ship the goods then the shipper cannot receive the bill of lading from the carrier. Eventually, the shipper would have to deliver the bill of lading to the seller. In this case, the bill of lading is used as evidence of contract of carriage between seller and carrier. However, when the bill of lading is negotiated to aAs title
When the bill of lading is used as a document of title, it is particularly related to the case of the buyer. When the buyer is entitled to receive goods from the carrier, the bill of lading in this case performs as a document of title for the goods. In simple words, the function of BL as a document of title shows who owns the cargo. Whoever has the duly endorsed BL is the rightful owner of the cargo described in the BL. Carrier becomes responsible before the law if they issue cargo to a party who is not the authorised person to claim the goods under this function. Further, if the BL is a "Seaway BL" document of title function will not be applicable. Simply, the bill of lading confers ''prima facie'' title over the goods to the named consignee or lawful holder. Under the "''nemo dat quod non habet"'' rule ("no one gives what he doesn't have"), a seller cannot pass better title than he himself has; so if the goods are subject to an encumbrance (such as a mortgage, charge or hypothec), or even stolen, the bill of lading will not grant full title to the holder.Types of bills of lading
Bills of lading may take various forms, such as on-board and received-for-shipment. * An on-board bill of lading denotes that merchandise has been physically loaded onto a shipping vessel, such as a freighter or cargo plane. * A received-for-shipment bill of lading denotes that merchandise has been received, but is not guaranteed to have already been loaded onto a shipping vessel.(Typically, it will be issued by a freight-forwarder at a port or depot). Such bills can be converted upon being loaded. The received for shipment BLs are used to deliver documents to the consignee faster. Yet these BLs are not accepted if the payment method is LC (Letter of Credit). * A straight bill of lading is used when payment has been made in advance of shipment and requires a carrier to deliver the merchandise to the appropriate party. * An order bill of lading is used when shipping merchandise prior to payment, requiring a carrier to deliver the merchandise to the importer, and at the endorsement of the exporter the carrier may transfer title to the importer. Endorsed order bills of lading can be traded as aBills of lading and charterparties compared
A charterparty is the contract governing the relationship between the shipowner and the charterer. The bill of lading governs the relationship between the shipper and the carrier (who will be either a shipowner or a demise charterer). If the exporter (the shipper) is shipping a small amount of cargo, he will arrange for a carrier to carry the goods for him, using a bill of lading. If the exporter needs the whole (or a very substantial part) of the ship's cargo capacity, the exporter may need to charter the vessel, and he will enter into a charterparty agreement with the shipowner. If the charter party is a time or voyage charterparty, the shipowner will still have control of the ship and its crew. If there is a demise (or "bareboat") charterparty, the charterer will effectively have a long lease and will have full control of the vessel. When the master (captain) issues a B/L to a shipper, he will be acting as an agent for the carrier, who will be either the shipowner (time or voyage) or the charterer (demise). In a time-charterparty or voyage-charterparty, if the charterer is shipping his own cargo (rather than the cargo of a third party) he will receive a bill of lading from the master, acting as agent of the shipowner; but that B/L will serve solely as a receipt and document of title, and its terms will (subject to contrary intent) be secondary to the terms of the charterparty, which remains the dominant contract.Sea waybills and electronic data interchange (EDI)
Under Art. III of the Hague-Visby Rules, a carrier must, on demand, provide the shipper with a bill of lading; but if the shipper agrees, a lesser document such as a " sea waybill" may be issued instead. In recent years, the use of bills of lading has declined, and they have tended to be replaced with the sea waybill. (If a so-called bill of lading is declared to be "non-negotiable", then it is not a true B/L, and instead will be treated as a sea waybill.) The main difference between these two documents is that the waybill gives the bearer the right to possession of the cargo, but does not confer title in the goods. As a result, there is no need for the physical document to be presented for the goods to be released. The carrier will automatically release the goods to the consignee once the import formalities have been completed. This results in a much smoother flow of trade, and has allowed shipping lines to move towards electronic data interchange which may greatly ease the flow of global trade. For some time, it has been the case that the cargo may arrive at the destination before the bill of lading; and a practice has arisen for the shipper (having sent the bill of lading to the banks for checking) to send to the consignee a letter of indemnity (LOI) which can be presented to the carrier in exchange for the cargo. The LOI indemnifies the carrier against any cargo claim, but the document is not transferable and has no established legal status. For letter of credit andElectronic bills of lading
For many years, the industry has sought a solution to the difficulties, costs and inefficiencies associated with paper bills of lading. One answer is to make the bill an electronic document. An electronic bill of lading (or eB/L) is the legal and functional equivalent of a paper bill of lading. An electronic bill of lading must replicate the core functions of a paper bill of lading, namely its functions as a receipt, as evidence of or containing the contract of carriage and as a document of title. TheSee also
* Law of Carriage of Goods by Sea *Footnotes
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