BILL OF LADING

BILL OF LADING
• 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.
TYPES OF B/L
1. 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 containerization.

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.
1. Statement as to quantity
In 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.”

• 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.

• 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.