BILL OF LADING

DEFINITION

• A bill of lading is a receipt for goods placed on board or to be placed on board a vessel, signed by the person who contracts to carry them or his agent, and is the written evidence of the terms on which the goods are to be carried for a specified freight.

• when the goods are delivered into the custody of the carrier, the first receipt usually given is the dock receipt (if the goods are received alongside in ship), or the mate’s receipt (when the goods are actually loaded on board.

• This receipt establishes the rough data and is surrendered in exchange for the more formal receipt i.e. the bill of lading.

Barclays v Customs (1963) 1 Ll. Rep at 88

“The contract for the carriage of goods by sea, which is evidenced by a bill of lading, is a combined contract of bailment and transportation under which the shipowner undertakes to accept possession of the goods from the shipper, to carry them to their contractual destination and there to surrender possession of them to the person who, under the terms of the contract, is entitled to obtain possession of them from the shipowners. Such a contract is not discharged by performance until the shipowner has actually surrendered possession (that is, has divested himself of all powers to control any physical dealing in the goods) to the person entitled under the terms of the contract to obtain possession of them.

So long as the contract is not discharged, the bill of lading in my view, remains a document of title by indorsement and delivery of which the rights of property in the goods can be transferred.”

TYPES OF B/L1. A ”Straight” Bill of Lading A “straight” bill of lading is one which is made out to a

named consignee. It is a non-negotiable and non-transferable document.

It can be transferred from the shipper to the consignee but it is not freely transferable between subsequent holders by endorsement in the same way as the traditional form of bill of lading.

2. The Sea Waybill

Sea waybills offer a non-negotiable alternative to the bill of lading. It is not used as a means of transferring title to goods.

They are useful for companies that trade internationally with themselves between geographical areas where payment for exports is not a problem.

e.g. shipment from Tesco UK to Tesco Malaysia

It does not have to be produced to obtain the goods. A freight forwarder might use them to control groupage cargo.

The sea waybill can thus be sent forward with the goods allowing the consignee to take immediate delivery.

3. Negotiable B/L

Goods shipped under a B/L may be made delivearble to a named person or to a name left blank or ‘to order’E.g. “TO ORDER” or “TO ORDER OF SHIPPER” or “TO ORDER OF XYZ BANK”

A negotiable bill of lading allows title to goods to be transferred by endorsement and delivery.

This facility gives one or other parties to the transaction control over title to the goods.

It can be used as a negotiable instrument for payments

Bills of lading for specific purposes

There are various ways in which the B/L is termed, for the purpose of identifying the carrier’s responsibility for the carriage.

1. Port to port B/L (also known as Ocean Bill of Lading):The carrier’s responsibility begins at the port of loading and ends at the port of discharge.

2. Through B/L The "through" bill of lading concept allows door-to-door

shipments to be covered by a bill of lading. This became necessary following the development of

containerisation.

Thus, this type of bill may cover ocean shipment, plus inland transport by other modes, with the ocean carrier subcontracting these other elements.

It is suitable where the ocean carrier is remote from the place

of origin and/or a place of destination so that the cargo has to be ‘fed’ to or from the loading/discharging port of the ocean carrier, usually by a coaster or short-sea vessel.

• The difference between through B/L and combined B/L: in through B/L, ocean carrier acts as agent for the pre/on carrier(s). He undertakes to make arrangements and charges a single through rate but his liability is only for the ocean voyage. Claims arising through problems during pre/on carriage have to be made to those parties

3. Combined Transport B/L• Similar to a through bill of lading, the combined transport bill of

lading allows for the contract of carriage to be covered by a single document.

• It clearly defines single set of conditions of carriage to include the use of road and/or rail shipment at either end of the sea leg.

• This document will, when issued, extend the carrier's liability as set out in the combined transport bill of lading to the other transport modes.

• Freight forwarders operating as non-vessel owning carriers (NVOCS) will most usually issue this type of document

4. Stale bills of lading • Bills of lading are said to be "stale" when they are presented

late to a consignee, for example after the goods have arrived at the port of destination and have been unloaded from the carrying vessel.

• Faced with the possibility of paying storage charges in quay rent, the consignee may reject the bills of lading on the basis that they are "stale".

5. A "clean" bill of lading

• A B/L in which no notation is shown on the document relating to cargo having been received by the line or shipped in any other than good condition and correct quantity.

• Thus, standard printed bills of lading usually bear the wording "Shipped (or received for shipment) in apparent good order and condition"

6. Claused B/L

• In the case where the cargo is noted to be wet, damaged or in doubtful condition or quantity, bills of lading will be issued "claused" (or "dirty"), showing the defect in the cargo.

• If goods are shipped under a claused bill, consignees may reject them or, alternatively, banks may not accept such bills of lading for payment purposes.

FUNCTIONS OF B/L

1. Receipt for the Goods Shipped

• The bill of lading records the quantity and condition of the cargo at the moment of receipt by the carrier.– A “shipped on board” B/L records the

quantity/condition of the cargo at the moment that it is received on board.

– A “received for shipment” B/L records the quantity/condition at the moment the goods are received into the carrier’s charge if this occurs before actual shipment.

Hague/Visby Rules Art III r 33. After receiving the goods into his charge, the carrier, or the master or agentof the carrier, shall, on demand of the shipper, issue to the shipper a bill oflading showing among other things—(a) the leading marks necessary for identification of the goods as thesame are furnished in writing by the shipper before the loading ofsuch goods starts, provided such marks are stamped or otherwiseshown clearly upon the goods if uncovered, or on the cases orcoverings in which such goods are contained, in such a manner asshould ordinarily remain legible until the end of the voyage;(b) either the number of packages or prices, or the quantity, or weight,as the case may be, as furnished in writing by the shipper;(c) the apparent order and condition of the goods:Provided that no carrier, master or agent of the carrier, shall bebound to state or show in the bill of lading any marks, number,quantity, or weight which he has reasonable ground for suspectingnot accurately to represent the goods actually received, or which hehas had no reasonable means of checking.

4. Such a bill of lading shall be prima facie evidence of the receipt by the carrier of the goods as therein described in accordance with paragraphs 3(a), (b) and (c).

1. Statement as to quantityIn the case of non-containerised cargo, this will usually state the number of tonnes and/or the volume in cubic metres also any identfying marks or numbers

2. Statement as to condition. In most B/L, there is a printed phrase “ in apparent good order and condition”

“If the cargo is received in apparent good order and condition the ship must issue a clean B/L even if the goods are damaged very shortly thereafter since the B/L “speaks from the ship’s rail.”

“Galatia” (1980) 1 Ll. Rep 453

• It is also important to remember in the context of the sale of the goods that the bill of lading merely records the condition, quantity etc on shipment (i.e. loading) since that is the moment when the risk normally passes from the seller to the buyer.

• The date of the B/L should be that when the full quantity stated on the B/L has been received by the carrier.

• The date is important either to satisfy cargo sale contract requirements or because the price may be affected by the bill of lading date.

“Wilomi Tanana” (1973) 2 Ll. Rep. 41

• A B/L which is dated before or after the full quantity has been received (i.e. an “ante-dated” or “post-dated” B/L) is a misrepresentation and possibly a fraud.

The importance of the data

Purchasers of goods and their financers and insurers rely on the accuracy of the data.

Therefore, the master has a duty of care to such parties to ensure that the data is accurate.

Inaccurate description of the data can make the carrier liable for misrepresentation.

Whilst the bill of lading remains in the hands of the shipper it is only prima facie (i.e. rebuttable) evidence of the data which can be rebutted by other evidence such as tallies etc.

However! Once the bill has been transferred to a third party it

becomes conclusive evidence of the data recorded on it even if it is not in fact a true record.

2. As an evidence of a contract of carriage• In the hands of the shipper a bill of lading serves as

evidence of the contract of carriage though it contains the terms of carriage.

• The contract with the shipper is likely to have been concluded orally long before the issue of the bill of lading. The document may vary some of the agreed terms or contains terms that have not been agreed to by the parties

3. As a document of title.• Transfer of the bill of lading by the seller to the buyer is

deemed to be symbolic delivery of the goods to the buyer and the buyer, on the ship’s arrival could demand delivery of the goods.

• The buyer can sell the goods on while they are at sea to the third party by simply endorsing the bill of lading and delivering it to the third party. The third party, by becoming the holder, can demand delivery of the goods on arrival.

• Not all bills of lading, however, are transferable. To impart transferability to a bill of lading, it must be drafted as order bills

• The carrier is under an obligation to deliver the cargo only against the original bill of lading if not, then he will be liable in contract as well as in tort to the bill of lading holder.