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The Bill of Lading - Itbt
The Bill of Lading - Itbt
The Bill of Lading - Itbt
Article 1 (7) of the Hamburg Rules of 1978, which are a set of rules governing
the international shipment of goods define a bill of lading as’ a document
which evidences a contract of carriage by sea and the taking over or loading
of the goods by the carrier, and by which the carrier undertakes to deliver the
goods against surrender of the document. A provision in the document that
the goods are to be delivered to the order of a named person, or to order, or to
bearer, constitutes such an undertaking.’
1
(1794) 5 TR 683
THE INTERNATIONAL RULES RELATING TO BILLS OF LADING
On the initiative of the International Law Association, The Hague Rules 1924
relating to bills of lading were formulated and diplomatic conferences held in
Brussels recommended their international adoption. The Hague rules were
revised by the Brussels Protocol of 1968. The revised rules were known as the
Hague-Visby Rules. The Hague-Visby Rules were fundamentally revised by the
United Nations Convention on the Carriage of Goods by Sea 1978 which
accepted the so-called Hamburg Rules. They were prepared by UNCITRAL and
adopted by a UN Conference at Hamburg on March 30, 1978. They have not
been ratified or acceded to by some countries. The major alteration proposed by
the Hamburg Rules are:
1. The Hamburg Rules apply to all contracts for the carriage of goods by sea
between two different states. Article 2(1) provides that :
1. The provisions of this Convention are applicable to all contracts
of carriage by sea between two different States, if:
(a) the port of loading as provided for in the contract of carriage
by sea is located in a Contracting State, or
(b) the port of discharge as provided for in the contract of carriage
by sea is located in a Contracting State, or
(c) one of the optional ports of discharge provided for in the
contract of carriage by sea is the actual port of discharge and such
port is located in a Contracting State, or
(d) the bill of lading or other document evidencing the contract of
carriage by sea is issued in a Contracting State, or
(e) the bill of lading or other document evidencing the contract of
carriage by sea provides that the provisions of this Convention or
the legislation of any State giving effect to them are to govern the
contract.
2. The Hamburg Rules do not apply to charter parties even if the carriage is not
carried out under a bill of lading. Article 2 (3) reads thus:
‘1. The responsibility of the carrier for the goods under this Convention covers
the period during which the carrier is in charge of the goods at the port of
loading, during the carriage and at the port of discharge.
2. For the purpose of paragraph 1 of this article, the carrier is deemed to be in
charge of the goods
(a) from the time he has taken over the goods from:
(i) the shipper, or a person acting on his behalf; or
(ii) an authority or other third party to whom, pursuant to law or regulations
applicable at the port of loading, the goods must be handed over for shipment;
(b) until the time he has delivered the goods:
(i) by handing over the goods to the consignee; or
(ii) in cases where the consignee does not receive the goods from the carrier, by
placing them at the disposal of the consignee in accordance with the contract or
with the law or with the usage of the particular trade, applicable at the port of
discharge; or
(iii) by handing over the goods to an authority or other third party to whom,
pursuant to law or regulations applicable at the port of discharge, the goods
must be handed over.
5. A distinction is also drawn between the carrier and the actual carrier under
article 1. Article 1(1) defines a carrier as ‘any person by whom or in whose
name a contract of carriage of goods by sea has been concluded with a
shipper.’
‘1. Where the performance of the carriage or part thereof has been
entrusted to an actual carrier, whether or not in pursuance of a liberty
under the contract of carriage by sea to do so, the carrier nevertheless
remains responsible for the entire carriage according to the provisions of
this Convention. The carrier is responsible, in relation to the carriage
performed by the actual carrier, for the acts and omissions of the actual
carrier and of his servants and agents acting within the scope of their
employment.
4. Where and to the extent that both the carrier and the actual carrier are
liable, their liability is joint and several.
5. The aggregate of the amounts recoverable from the carrier, the actual
carrier and their servants and agents shall not exceed the limits of
liability provided for in this Convention.
The Hague Visby Rules do not lay down a basis of liability for the carrier
but rather rely on the requirement of seaworthiness [at the beginning of the
voyage] and a number of different and overlapping exceptions. The Hague
Visby Rules were not designed to apply to modern methods of transport
and the rules are weighed too much in favour of the carrier.
The Hamburg Rules on the other hand distinguish the ‘Carrier’ and the
‘Actual Carrier’. The carrier is a party who makes a contract of carriage with
the shipper and the actual carrier is any party entrusted with the performance
of any part or the entire contract of carriage.
The Hague Visby Rules apply only to export voyages from contracting
state’s ports or bills issued in contracting States. However under the
Hamburg rules, the parties can apply both inward and outward voyages. It
can also be described as an improvement on the Hague Visby Rules.
The carrier under the Hamburg Rules must provide a seaworthy ship the
whole period of the carriage. So he must take all necessary measures to
prevent the damage or loss and its consequences. However under the Hague
Visby Rules, this duty of the carrier is limited. His duty only to exercise due
diligence, but at the same time he is required to look after the goods
carefully through-out the carriage.
The bill of lading, which represents the contract of carriage, is usually issued
after the goods have been loaded onto the vessel. The bill of lading is
important in three aspects namely:
A bill of lading is as valid as the source it comes from is. While a bill of lading
is a statement of the commodity being shipped, its quantity, volume, and other
particulars which is or should be present during shipment, it is in no way a
guarantee that mistakes cannot be made during loading nor does it absolve
parties for any shortages, or damages that may happen during loading.
Where a ship owner issues a shipped bill, he acknowledges that the goods are
loaded on board the ship. Where he issues a received for shipment bill, he
confirms only that the goods are delivered into his custody, in this case the
2
Hamburg Rules art. IV [1]
goods must be stored in a ship or warehouse under his control. The received bill
is thus less valuable than the shipped bill because it does not confirm that the
shipment has already begun.
In The Marlborough Hill3it was decided that a received bill and a shipped bill
were in principle no different. In Ishaq v Allied Bank International 4 the Privy
Council acknowledged a general trade practice of recognizing received bills as
documents of title. The Court observed that under Letter of Credit specifically
calls for a shipped bill or a received bill is inconsistent with some other
provision of the credit itself. In some areas where the bill of lading remains
paramount, received bill is usually a much less effective document than a
document than a shipped bill. The reasons for this include:
Article 14 requires the carrier or the actual carrier who takes the goods in his
charge, to on demand of the shipper, issue to the shipper a bill of lading. The
bill of lading may be signed by the carrier or a person having authority from the
carrier.6 A bill of lading signed by the master of the ship carrying the goods is
deemed to have been signed on behalf of the carrier. The signature on the bill of
lading may be in handwriting, printed in facsimile, perforated, stamped, in
symbols, or made by any other mechanical or electronic means, if not
inconsistent with the law of the country where the bill of lading is issued.7
1. The bill of lading must include, inter alia, the following particulars:
3
(1921) 1AC 444
4
(1981) 1 LIR 92
5
(1952) 1 LIR 183
6
Article 14 (2)
7
Article 14(3)
(a) the general nature of the goods, the leading marks necessary for
identification of the goods, an express statement, if applicable, as to the
dangerous character of the goods, the number of packages or pieces, and the
weight of the goods or their quantity otherwise expressed, all such particulars
as furnished by the shipper;
2. After the goods have been loaded on board, if the shipper so demands, the
carrier must issue to the shipper a "shipped" bill of lading which, in addition to
the particulars required under paragraph 1 of this article, must state that the
goods are on board a named ship or ships, and the date or dates of loading. If
the carrier has previously issued to the shipper a bill of lading or other
document of title with respect to any of such goods, on request of the carrier,
the shipper must surrender such document in exchange for a "shipped" bill of
lading. The carrier may amend any previously issued document in order to meet
the shipper's demand for a "shipped" bill of lading if, as amended, such
document includes all the information required to be contained in a "shipped"
bill of lading.
3. The absence in the bill of lading of one or more particulars referred to in this
article does not affect the legal character of the document as a bill of lading
provided that it nevertheless meets the requirements set out in paragraph 7 of
article 1.
2. Where the shipper hands over dangerous goods to the carrier or an actual
carrier, as the case may be, the shipper must inform him of the dangerous
character of the goods and, if necessary, of the precautions to be taken. If
the shipper fails to do so and such carrier or actual carrier does not otherwise
have knowledge of their dangerous character:
(a) the shipper is liable to the carrier and any actual carrier for the loss resulting
from the shipment of such goods, and
(b) the goods may at any time be unloaded, destroyed or rendered innocuous, as
the circumstances may require, without payment of compensation.
8
[1959] 1 EA 289 (CAD)
3. The terms of the bill of lading which distinguished between ‘the
company’ and ‘ the owners were consistent with the company
being managers or agents and, taken in conjunction with the
uncontroverted evidence that there were three owners of whom the
company was one and the appellant another, and the signature on
the bill by the appellant as Captain, without more led to a prima
facie inference that the appellant was signing for the owners.
4. In the circumstances, the appellant as part owner was a party to the
contract of carriage and entitled to the protection of rule 2 (a) of
article IV of the schedule to the carriage of Goods by Sea
Ordinance. The Appeal was allowed.
In E Clemens Horst Co. v Biddell Bros9 the buyer under a CIF contract was
offered a bill of lading but refused to pay until the goods themselves were
delivered. It was held that since possession of the bill of lading announced in
law to equate to the possession of the goods, the seller was entitled to perform
his part of the contract by handing over the document.
There is no common law definition of ‘document of title, but its essence would
seem to be that, by merchantile custom, dealing in the documents, for instance,
their sale or pledge are regarded as dealing in the goods which those documents
symbolically represent. In the absence of a provision in the contract, the CIF
buyer is entitled to a bill of lading which enables him to deal freely with the
goods, in other words, one which possesses the common law quality of
transferability. In Soproma v Marine & Animal By-Product Corporation 10 the
rejection of a straight consigned bill (i.e. one specifying delivery to a named
party with no provision for transferability) was held to be justified. The Court
9
(1912) AC 18
10
(1966) 1 LIR 367
further noted that by the shipping documents, the buyer to whom property
passes under the bill of lading is given contractual rights against the ship owner,
which rights he can by endorsement transfer to a subsequent purchaser.
Under the straight consigned bill of lading, delivery must be made only to the
party entitled under the bill. In Sze Hai Tong Bank v Rambler Cycle Co Ltd 12
it was held that the ship owner ‘who delivers without the production of the
bill of lading does so at his peril.’ The Privy Council noted that the object is
the delivery of the goods against the bill of lading. The bill of lading holder was
therefore entitled to damages for mis-delivery.
A negotiable bill of lading is the bill which instructs the carrier to deliver goods
to anyone in possession of the original endorsed negotiable bill, which itself
represents title to and control of the goods. The carrier will not release the
goods unless at least one original copy of the bill of lading is presented. A non-
negotiable bill of lading sets out a specific consignee to whom the goods are to
be shipped, and does not itself represent ownership of the goods and as such is
not a document of title. In fact a non-negotiable bill is more of a sea way bill
11
(1873) LR 5 PC 253
12
(1959) AC 576
13
(1883) 11 QBD 327
and not a bill of lading in the traditional sense. Goods are usually released upon
presentment or confirmation of identity.
Copies of the bill could be issued to dispose of the cargo away from the buyer
either before or after he had accepted and paid against the original. It is usual
practice however to issue the bill of lading in several copies. In Glynn Mills &
Co. v East & West India Dock Co14 it was held that a carrier who delivered the
goods to someone in possession of a copy of a bill will not be sued by the buyer
who held the original and whose goods they are.
The carrier or his agent will issue the bill of lading after the goods have been
placed on board. It will contain contractual terms but will not necessarily be a
contract of carriage; which in normal circumstances will have been concluded
between shipper and carrier before the bill of lading is issued. The terms printed
on the bill of lading may well have been incorporated into the carriage by use of
some such phrase as “ subject to the exceptions of our bills of lading” or have
been implied into the contract by the parties previous dealing on the bill of
lading. The bill of lading, at least as between the carrier and the original
shipper, amounts only to evidence of the contract of carriage.
NOTE ALSO THAT a bill of lading in its usual form is a receipt for goods
shipped, or to be shipped whether or not on a particular vessel, signed on behalf
of the carrier.
In Leduc v Ward16 the court held that when the terms of contract of carriage are
reduced to writing, in the form of the bill of lading, the parole [oral] evidence
rule applies to prevent introduction of extraneous terms.
Article 16 provides:
2. If the carrier or other person issuing the bill of lading on his behalf
fails to note on the bill of lading the apparent condition of the goods, he
is deemed to have noted on the bill of lading that the goods were in
apparent good condition.
16
(1880) 20 QBD 475
(a) the bill of lading is prima facie evidence of the taking over or, where
a "shipped" bill of lading is issued, loading, by the carrier of the goods
as described in the bill of lading; and
(b) proof to the contrary by the carrier is not admissible if the bill of
lading has been transferred to a third party, including a consignee, who
in good faith has acted in reliance on the description of the goods
therein.’
At common law, the carrier need not state any quantity. If the bill of
lading to which the common law applies does not state a quantity without
qualification, it will be merely a prima facie evidence in the hands of the
shipper and the endorsee who will have only such protection.
Held: The bill of lading was a clean bill and the defendant was estopped
from alleging any defect in packing. ( Silver v. Ocean Steamship Co;
Dominion Sugar Co. v Canadian National Steamship(West Indies)
4. Improper packing can only be relied upon on proof that the loss or
damage resulted from improper packing.
Judgement for the plaintiff.
The article provides that ‘If the carrier or other person issuing the bill of
lading on his behalf fails to note on the bill of lading the apparent condition
of the goods, he is deemed to have noted on the bill of lading that the goods
were in apparent good condition’. It is therefore incumbent on the carrier or his
agent or anybody issuing the bill on his behalf to clearly indicate the nature and
condition of the goods received. Where he fails to indicate this on the bill, he is
precluded from denying any defect subsequently found in the goods. In
17
[1974] 1 EA 436 (HCK)
Compania Naviera Vascingada v. Churchill and Sim 18 timber was stained with
oil when shipped but a ‘clean bill’ of lading was nonetheless issued to the
shipper who indorsed it to a third party. The endorsee sued the carrier in respect
of the damage. The carrier was estopped, by the statement in the bill of lading
from denying that the timber was in good condition when loaded and was thus
held liable to the endorsee for the damage.
DELIVERY ORDERS:
In Krohn & Co v Thegra NV 19 it was held that the seller may tender either a
shipped bill of lading or a ship’s delivery order in negotiable and transferable
form.
LIMITATION OF ACTION:
Article 20 (1) provides the time limit for instituting actions or submitting to
arbitral proceedings under the Convention to two years. Thus an actions
brought after two years under the convention is time barred. The limitation
period starts on the day on which the carrier has delivered the goods or part of
the goods or in cases where no goods have been delivered, on the last day on
which the goods should have been delivered.21
18
(1904) 1KB 237
19
(1975) 1LIR 146
20
(1877) 5 Ch. D 205
21
Article 20(2) Hamburg Rules.
However, article 20(5) allows an action for indemnity by a person held liable to
be instituted even after the expiration of the limitation period, if it is instituted
within the time allowed by the law of the State where the proceedings are
instituted. However the time allowed shall not be less than 90 days commencing
from the day when the person instituting such action for indemnity has settled
the claim or has been served with process in the action against himself.
JURISDICTION:
a. The principal place of business or, in the absence thereof, the habitual
residence of the defendant or;
b. The place where the contract was made, provided that the defendant
has there a place of business, branch or agency through which the
contract was made; or
c. The port of loading or the port of discharge; or
d. Any additional place designated for that purpose in the contract of
carriage by sea.
ARBITRATION:
(b) any place designated for that purpose in the arbitration clause or
agreement.22
22
Article 22 (3)
4. The arbitrator or arbitration tribunal shall apply the rules of this Convention.
The correct dating of the bill of lading is critical and a matter of great
importance. The correct date of a shipped bill is the date when the goods
are taken on board. The correct date for a ‘received for shipment bill is the
date when the goods are taken into the charge of the carrier.
The shipper is entitled to demand that the bill of lading be correctly dated.
Where the master or another agent of the carrier negligently misdates the
bill, the carrier as principal is liable in damages, provided that the shipper
can prove that he has suffered a loss as a result of the misdating, because
23
Read the rest of the article.
there is an implied obligation that due care should be exercised in the dating
of the bill. See The Saudi Crown24
The date of the bill of lading may also be relevant in the contract of sale. In
The Almak25 it was agreed that the purchase price of the goods- gas oil-
should be the price ruling at the date of the bill of lading. The goods were
loaded on June 27 but the bill bore the date of June 22, and the Master
signed it without noticing that it was incorrectly dated. The price was
calculated by reference to June 22 instead of June 27. The market fell by £7
between these two dates with the result that the buyer paid the seller more
than he would have done if the bill had been correctly dated. The action of
the buyer against the despondent owner of the ship failed because the
inclusion of the wrong date in the bill was due to want of care on his part as
he- the buyer had tendered the [inadvertently] incorrectly dated bill to the
master for signature.
When payment is arranged under a letter of credit, the credit often states a
date of shipment of the goods, in addition to the expiry date which every
credit contains. An issuer of the bill of lading who deliberately backdates it
in order to bring it within the shipment time in credit, acts fraudulently.
1. The appellant was not a party to the bill of lading and was not therefore
entitled to take advantage of any exemption from liability contained
therein as against the consignee;
24
(1986) 1 LR 261
25
(1985) 1 LIR 557
26
[1955]1 EA 690 (CAN)
2. Even if the appellant has possession of the goods as a bailee, such
bailment was not under any implied contract between the appellant and
the consignee and contained no exemption;
3. There was no evidence to support the submission that the terms of the bill
of lading had been incorporated in to the contract of carriage from ship to
shore;
4. Even if the appellant was a party to the contract in the bill, that contract
and any exemption in it by its terms came to an end when the goods were
discharged over the ship’s rails.
i) either what was the cause of the accident and show all the
possible causes, one or the other of which produced the effect
and;
ii) Must further show with regard to every one of these possible
causes that the result could not have been avoided.
In this case, the defendant gave a plausible explanation of the causes and
effect of the accident.
A common carrier has a common law liability arising from the nature of the
business and is said to warrant or insure the safe delivery of the goods
entrusted to him. However his promise is defeasible [annulled] upon the
occurrence of certain expected risks for example ‘Act of God’ and the
King’s enemies and injuries arising from defects inherent in the goods
carried. This qualification is implied in every contract made with a common
carrier and the occurrence of the risks exonerates the common carrier from
liability. It was not the respondent’s case neither was any evidence adduced
to show that the appellant acted as a common carrier when it undertook to
clear and forward the vehicle to the respondent. [it therefore means that for
an entity to be held liable, it must be proved that he acted as a common
carrier. Mere clearing and forwarding may not suffice.]
Where it is not apparent from the terms of the contract that damages for
breach were to be awarded in a currency specified for the satisfaction of the
obligations under the contract, then damages were to be awarded in the
currency which most truly expressed the plaintiff’s loss.