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Bills of Lading - An Introduction

Chris Hobbs

PartnerDRT3

February 2008

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Functions of the Bill of Lading

Receipt for the goods shipped

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A contract of carriageA contract of carriage

Long Form Bills

Include all relevant terms

Short Form Bills

Incorporate the terms of another document(usually carriers conditions of carriage)

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Document of title

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The Bill of Lading as a Receipt

Article III Rule 3 of The Hague-Visby Rules:

After receiving the goods into his charge, the carrier or the master or agent of the

carrier, shall, on demand of the shipper, issue to the shipper a bill of lading

showing among other things -

a) the leading marks necessary for the identification of the goods as the sameare furnished in writing by the shipper before the loading of such goods starts,

provided such marks are stamped or otherwise shown clearly upon the goods

if uncovered, or on the cases or covering in which such goods are contained,

in such manner as should ordinarily remain legible until the end of the voyage;

b) either the number of packages or pieces, or the quantity, or weight, as the

case may be, as furnished in writing by the shipper;

c) the apparent good order and condition of the goods.

Provided that no carrier, master or agent of the carrier shall be bound to state or

show in the bill of lading any mark, number, quantity or weight which he has

reasonable grounds for suspecting not accurately to represent the goods actuallyreceived, or which he has had no reasonable means of checking.

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The Bill of Lading as evidence of the

Contract of Carriage

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Is the bill the contract of carriage?

It is, I think, well settled that a bill of lading is not, in itself, the contractbetween the shipowner and the shipper of goods, though it has been

said to be excellent evidence of its terms The contract has come

into existence before the bill of lading is signed. The bill of lading is

signed by one party only and handed by him to the shipper, usuallyafter the goods have been put on board. No doubt if the shipper finds

that it contains terms with which he is not content, or that it does not

contain some term for which he has stipulated, he might, if there were

time, demand his goods back, but he is not in my opinion thereby

prevented from giving evidence that there was a contract which was

made before the bill of lading was signed and that it was different

from that which is found in the document or contained some

additional term.

Lord Goddard - The Ardennes [1951] KB 55.

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Oranges and Sugar?

The Ardennes [1951]

Deviation/Late delivery of oranges

Cho Yang Shipping v Coral [1997]

Liability for freight - sugar

Examples of cases in which oral contracts

differ from the written terms in the bill of

lading:

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When the Bill is NOT just evidence of

the contract of carriage

Where the bill is issued to the shipper who is alsothe charterer of the Vessel.

Terms of the contract of carriage are in the C/Party

Where the bill is indorsed by the shipper to a thirdparty for value.

The terms in the bill are conclusive as to thecontract of carriage

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Deviation again

It may be true that the contract of carriage is made before [thebill] is given because it would generally be made before the goods

are sent down to the ship: but when the goods are put on board

the captain has authority to reduce that contract into writing; and

then the general doctrine of law is applicable by which, where the

contract has been reduced into writing, which is intended to

constitute the contract, parol evidence to alter or qualify the effect

of such writing is not admissible, and the writing is the only

evidence of the contract. Leduc v Ward [1888]

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The Bill of Lading as evidence of the

Contract

Problems caused by incorporation

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Bills of lading as evidence of the Contract

of Carriage

If the incorporation clause makes specific reference

to a particular clause, that clause will beincorporated even if it necessitates verbalmanipulation;

If the incorporation clause makes general referenceto charter clauses, the charter will NOT beincorporated unless verbal manipulation notnecessary and clause makes sense in the context.

The Principle

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The bill of lading as a document of title

A cargo at sea while in the hands of the carrier is necessarily incapableof physical delivery. During this period of transit and voyage the bill of

lading, by the law merchant, is universally recognised as its symbol and

the indorsement and delivery of the bill of lading operates as symbolic

delivery of the cargo. Property in the goods passes by such indorsement

and delivery of the bill of lading whenever it is the intention of the parties

that the property should pass, just as under similar circumstances theproperty would pass by an actual delivery of the goods it is the key

which, in the hands of the rightful owner, is intended to unlock the

door of the warehouse, floating or fixed, in which the goods may

chance to be.

Overusing the legal metaphor.

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The bill of lading as a document of title

A bill of lading can transfer property in the goods Lickbarrow v Mason [1787]

Holding the bill gives symbolic possession of thegoods

Barber v Meyerstein [1870]

A trip down memory lane.

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Historical.

Common Law solutions

Tort/bailment

Special contracts (Dunlop v Lambert)

Implied contracts (Brandt v Liverpool) Statutory solution

Bills of Lading Act 1855

The bill of lading as a document of t itle

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COGSA 1992

Replaces old common law and Bills of Lading Act1855;

Provides lawful holderof a bill with right to suit;

Recognises other forms of shipping documents, i.e.

Bill of lading

Sea waybill

Ships delivery order Electronic documents (e.g. BOLERO)

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Rights to Suit

Two-part test to obtain right to suit:

1 Do you hold a shipping documentcovered by

COGSA 1992?2 Are you the lawful holder?

NB Part 2 of this test applies specifically to B/Ls,

although there are similarities with the tests for seawaybills and ships delivery orders.

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Bills of Lading under COGSA No positive definition under the Act;

Includes received for shipmentB/Ls

Excludes B/Ls incapable of transfer

TransferTransfer= transfer of possession of goods by= transfer of possession of goods by

endorsement or delivery;endorsement or delivery;

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Lawful Holder

MustMust obtainobtainandand holdholdpossession;possession;

Need endorsement / delivery AND acceptance

Where transferee is an agent, agent may belawful holder depending on the facts

Transfer must be in good faith

Must occur BEFORE right to possession ceasedMust occur BEFORE right to possession ceased

Rights of original party extinguishedRights of original party extinguished

Can sue for loss suffered by anotherCan sue for loss suffered by another

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Liabilities

Can pass with rights if transferee:Can pass with rights if transferee:Takes or demands delivery from carrier of any

of the goods to which bill relates

Makes a claim under contract of carriageagainst carrier in respect of goods

Is a person who, at time rights vested in him,took or demanded delivery from carrier of anyof those goods

Wording allows banks or others with only asecurity interest in the goods to avoid liabilities

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Who are the parties to the Bill as the

contract of carriage?

One party to the contract evidenced in the bill is

the SHIPPERSHIPPER but who is the other party? Who is the carrierand who cares?

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Who are the parties to the Bill as the

contract of carriage? The construction of the bill of lading?

Who signed the bill and on what authority?

Master

Shipowners local port agents

Charterer

Charterers local port agents

Is it an Owners Bill or a Charterers Bill?

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When is a bill a charterers bill?

The RewiaThe Rewia [1991] 2 Lloyds Rep 325

Bills signed for the Master or as Mastereven if signed by the charterers are ownersowners

billsbills

Exceptional CasesExceptional Cases

Elder Dempster

The Okehampton

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When is a bill a charterers bill?

The RewiaThe Rewia [1991] 2 Lloyds Rep 325

Bills signed for the Master or as Master evenif signed by the charterers are ownersowners billsbills

If the signature makes it clear the Master oragent signed on behalf of the charterers and

was authorised to do so they are chartererscharterers

billsbills

If no qualifying words but the person signinghad authority and did sign on behalf of the

charterers they are chartererscharterers billsbills

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When is a bil l a charterers bil l (cont.)

TheThe StarsinStarsin [2001] 1 Lloyds Rep 437

- Any description found in the signature box

must yield to the provisions of the bill of ladingread as whole

- The small print must be considered,particularly where it includes demise and

identity of carrier clauses

- The Court of Appeal, Rix LJ dissenting

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When is a bill a charterers bill (cont)

The Starsin [2003] UKHL 12

Where a bill of lading clearly states on its face

that it is signed for and on behalf of thecharterer, this will override any conflictingidentity clauses on the reverse of the bill

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Delivery of Cargo

Without production of a bill of ladingWithout production of a bill of lading

Letters of indemnityLetters of indemnity Charterparty clausesCharterparty clauses

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The Hague-Visby and Hamburg Rules

Incorporated expressly or by operation of lawIncorporated expressly or by operation of law

A code governing the carriage of goods and theA code governing the carriage of goods and the

shipownershipownerss liabilityliability The shipowner is under a duty to furnish aThe shipowner is under a duty to furnish a

seaworthy ship before and at the beginning ofseaworthy ship before and at the beginning of

the voyage and properly to care for the cargothe voyage and properly to care for the cargo

shipped on boardshipped on board

Limitation of liabilityLimitation of liability

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Hague-Visby Rules

Apply to every bill of lading if:Apply to every bill of lading if:

a)a) the bill of lading is issued in a Contractingthe bill of lading is issued in a Contracting

State; orState; orb)b) the carriage is from a port in a Contractingthe carriage is from a port in a Contracting

State; orState; or

c)c) the contract contained in or evidenced by thethe contract contained in or evidenced by the

bill of lading provides that the Rules or thebill of lading provides that the Rules or the

legislation of any State giving effect to themlegislation of any State giving effect to them

are incorporated in the contractare incorporated in the contract

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Disclaimers

1No individual who is a member, partner, shareholder, employee or consultant of, in or to any

constituent part of Norton Rose Group (whether or not such individual is described as a

partner) accepts or assumes responsibility, or has any liability, to any person in respect of

this publication.

2Any reference to a partner means a member of Norton Rose LLP or a consultant or

employee of Norton Rose LLP or one of its affiliates with equivalent standing and

qualifications.

3This presentation contains information confidential to Norton Rose Group. Copyright in the

materials is owned by Norton Rose Group and the materials should not be copied or

disclosed to any other person without the express authorisation of Norton Rose.

4This presentation is not intended to give legal advice and, accordingly, it should not be relied

upon. It should not be regarded as a comprehensive statement of the law and practice in this

area. Readers must take specific legal advice on any particular matter which concerns them.

If you require any advice or information, please speak to your usual contact at Norton Rose

Group.

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