Bill of Lading functions

I) The Bill of Lading (B/L) is a unique type of document which has three distinct
but overlapping functions. These are usually expressed as :-

a) A receipt for goods loaded on board the vessel;

b) A document of title through which property in the goods may be passed from
one party to another; and

c) A contract (or evidence of a contract) governing the receipt, carriage and

delivery of these goods.

II) From this, three important consequences arise for the Owners and the
Masters as their employee :-

a) When he signs the B/L, the Master does so, not on behalf of the Charterers
or Shippers, but on behalf of the Owners. The B/L is an Owner’s document, and it
is the Master’s responsibility to ensure to the best of his ability that it is properly
prepared and signed. This applies whether the ship is employed on a Voyage or
Time Charter.

b) If the B/L contains inaccurate or misleading statements about the quality or

quantity of the cargo it covers, then Owners will be liable for the consequences, at
least in the first instance. The Master’s main concern must be, to see that this
cannot happen. Therefore it is essential that the Master clauses directly on the
bills the correct condition of the quality and quantity of cargo if these two items
have not be properly described in the document presented to him for signing. If
he wants assistance with the wording to be used in the clausing, he should call the
commercial office who may engage the local P & I representative for advice.

c) If an incorrect B/L is issued, for whatever reason, the situation is not

necessarily wholly beyond repair, but speed of action is essential, since once a
third party takes up the B/L relying on what is says, it is too late to make any
correction. The Master must therefore notify the Owners and Charterers
immediately of any apparent irregularity in any B/L which he has issued (or which
he knows or believes has been issued by the ship’s agents).

III) As the B/L is an Owners’ document, third parties such as Charterers and
Shippers have limited powers to interfere with the Master signing it. However it is
not unusual for a charterparty to provide for the Charterers or their agents the
authority to sign B/L’s for and on behalf of the Master. In such cases the Master
must issue the agent with the authority to sign B/L’s on his behalf in writing, such
authority is to include any additional remarks the Master expressly requires
included in the B/L’s.

IV) Under normal circumstances, the B/L is the principal evidence of the receipt
of the cargo which it describes. However, it is not the only evidence, and it
remains open to the Owners to avoid a claim by showing that what the B/L states
is in fact incorrect.

For example, apart from paying great attention to the contents of the B/L itself, the
Master must also take all practical steps which may subsequently assist Owners to
resist any short delivery claim by proving that no cargo has been physically lost
(e.g. by draught survey, by written protest as to any doubt or discrepancy in
determining of weights or volumes. Charterers’ surveyors or inspectors must
justify any statement which they may make as to the condition of the cargo or
‘pumpability’ of oil residues, and also by keeping properly consistent records of
bilge pumping with wet cargoes such as ore concentrates).

V) In some circumstances, shippers/agents may offer to give the Master a letter

of indemnity in return for the Master signing clean Bills of Lading. The Master
must not accept such a letter without first checking/obtaining authorisation from
the Company. A Letter of Indemnity is strictly not enforceable in law. Only the
Company can decide if such a letter is acceptable on commercial grounds.