BILLS OF LADING AND RELATED DOCUMENTS
Outline of bill of lading functionsA bill of lading -- is a
receipt for goods either received (before shipment) or shipped on
board .- is good evidence of the existence and terms of a contract
between the shipper and carrier (A contract of carriage may exist
without issue of a bill of lading, however.) A bill of lading is
not a true contract, since it is usually signed by only one of the
parties.- is a document of title, signifying that the holder has
the legal right to possession of the goods it describes (The right
to possession should not be confused with the right to ownership,
which will usually be determined by the terms of the sales
contract.)- may, depending on how it is made out, be negotiable,
i.e. transferable to a third party so as to effect transfer of
title to the goods it describes.The bill of lading as a receipt for
goods* The bill of ladings prime function is as a receipt issued
for: goods received for shipment either by a carrier or a freight
forwarder, etc. pending shipment on a vessel; or goods shipped on
board the carrying vessel, - depending on the wording or
endorsements on the bill. * A bill of lading states the quantity
and apparent order and condition of the goods when received into
the carriers care and is normally printed with wording such as
Received in good order and condition unless otherwise stated... or
shipped in good order and condition unless otherwise stated..... If
this statement is not true, appropriate remarks should be made on
the face of the bill of lading. Any shortage or damage to the goods
occurring before acceptance by the carrier should therefore be
stated on the face of the bill of lading. * If there is no clausing
of the bill of lading showing a defective condition or quantity of
the goods on receipt by the carrier, the consignee may reasonably
expect to receive his goods in good order and condition. Any loss
or damage found on delivery will be assumed to be caused by the
carriers negligence unless he can prove it to be attributable to
one of the excepted perils listed in his contract of carriage (e.g.
Act of God, inherent vice, etc.). * Where a mates receipt is
issued, the bill of ladings description of the quantity/condition
of the goods is copied from the description in the mates receipt.
It is most important, therefore, that the mates receipt states the
actual quantity/condition of the goods at the time of loading where
this is other than in good order or condition or differs in
quantity from that stated in the shipping note.
The problem of the clean bill of lading
A clean bill of lading is a bill of lading bearing no
superimposed clauses stating a defective condition or shortage of
the goods. It states that the goods have been received in apparent
good order and condition..., without further remarks as to their
condition. * A dirty bill of lading, also known as a claused or
foul bill, is one claused with remarks such as torn bags, rusty
drums, three (3) more c/s in dispute - if on board to be delivered,
etc. * A full set of clean on board bills of lading is normally
demanded as a condition of a banks letter of credit, and if not
issued will prevent early payment of the exporter by the bank.
Pressure may therefore be exerted by a shipper for clean bills to
be issued, even where these would not be justified by the actual
condition or quantity of the goods. * A Letter of Indemnity (or
back letter) may be offered by the shipper, promising to indemnify
the master or carrier against any loss or liability as a
consequence of signing a clean bill of lading. However, acceptance
of a Letter of Indemnity of this type in return for clean bills
makes the master a party to an act of deception or fraud on banks,
consignee/buyer, and insurers, since it is an attempt to obtain
payment for goods knowing them to beunsound. There may be personal
criminal liability for fraud on the part of the carrier and the
master, and a heavy financial liability on the shipowner. This type
of Letter of Indemnity has no legal standing in English law and
cannot be sued on if the shipper goes back on his promise of
indemnity. A master should consult his owners and their P&I
clubs correspondent if he is in any doubt, but should never accept
a Letter of Indemnity of this sort without the written orders of
his owners.
The bill of lading in the hands of a third party * At common
law, a bill of lading is only prima facie evidence as to the
quantity, weight and condition of goods shipped, i.e. if a bill is
signed for a greater quantity of cargo than is actually shipped, it
may be possible, provided the bill is not endorsed to a third
party, for the carrier to refute the statements on it. Once the
bill is endorsed to a third party, however, it becomes conclusive
evidence of the shipment, i.e. the carrier will be bound by the
bill of ladings terms and conditions, whether the goods were
shipped or not. (Since liner bills of lading are usually made out
in a shore office and not on board, it is quite possible for bills
to be issued for cargo that was not shipped for some reason.) A
Conclusive Evidence Clause is inserted in some bills of lading
stating that the contents of the bill will beconclusive evidence
against the contracting parties. It is very important, therefore,
for the master to ensure, before signing a bill containing such a
clause, that an accurate tally has been made of the goods received
on board. (If there has been fraud on the part of the shipper,
however, the clause will not be binding on the carrier.)
The bill of lading as a receipt for freight If the bill of
lading is endorsed with words such as FREIGHT PAID or FREIGHT
PREPAID, then once it is signed it becomes prima facie a receipt
for the freight. If the freight has not actually been paid, but the
receipted bill of lading is endorsed to a third party, the carrier
will probably lose his right to recover the freight, i.e. the
statement becomes conclusive evidence that freight has been paid.
It is important, therefore, to verify before signing such a bill of
lading that freight has in fact been paid. (In practice the agent
will normally do this.)The bill of lading as evidence of a
contract* The conditions on which goods are accepted for shipment
constitute the terms of the contract of carriage between the
shipper and the carrier, except when the shipper is also a
charterer. Three cases arise: where there is no charter party;
where there is a charter party and the charterer is also the
shipper; and where there is a charter party but the charterer is
not the shipper.
* Where there is no charter party, e.g. where containerised
cargo is loaded on a container vessel in the shipowners own liner
service, the shipowner is the legal carrier and issues to the
shipper its own bill of lading containing the companys terms and
conditions of carriage. (Some liner operators issue a booking note
containing their contract terms which, when signed by both parties,
becomes the contract of carriage.)* Where there is a charter party
and the charterer is also the shipper. The charterer is shipper of
his own goods. The contract of carriage in this case is contained
in the charter party. If the charter party requires the ship to
issue a bill of lading on shipment of the cargo, the charterer is
in effect issuing himself with a bill of lading. Therefore the bill
of lading serves only as a receipt for the goods shipped and as a
document of title should the charterer/shipper decide to sell the
cargo by endorsement and transfer of the bill of lading. Because it
does not contain the contract terms, the bill of lading in this
case will usually be a short form bill, bearing only a few
important printed clauses such as a Clause Paramount, Both-to-Blame
Collision Clause and New Jason Clause. Since the bill of lading may
be transferred to a third party, there should be a statement that
all terms and conditions of the Charter party (dated as shown) are
deemed to be contained herein. Any terms on the bill of lading must
be consistent with those in the charter party unless there is an
express provision to the contrary in the charter party.* Where the
charterer is not the shipper, e.g. where a carrier is
time-chartering a vessel and operating her in his own liner
services. The contract of hire between the carrier and the
shipowner is contained in the time charter party. The contract of
carriage between the carrier and a shipper is evidenced by the bill
of lading issued to the shipper. If the bill of lading contains no
reference to the existence of a charter party, the shippers
contract of carriage will be with the shipowner. But if bill of
lading contains a reference to a charter party, the shippers
contract will be with the time charterer.The bill of lading as a
document of title* Title, in the context of carriage of goods,
means the right to possession, as distinct from the right to
ownership. * A document of title is a document embodying the
undertaking of a person holding goods (who is called abailee) to
hold the goods for whoever is the current holder of the document
and to deliver them to that person in exchange for the document.*
Possession of an original bill of lading is equivalent in law to
the right to possession of the goods described in the bill, i.e. it
gives title or constructive possession to the goods it represents.
In other words, an original bill of lading, being a bearer
document, is good evidence that its holder is the rightful
possessor of the goods. This enables any holder to obtain delivery
of the goods at the discharge port by production of an original
bill of lading.* Title to the goods may be transferred after
shipment to a third party, such as a bank under a Letter of
Creditarrangement, by negotiation (i.e. transfer) of the full set
of original bills of lading by the shipper, subject to the bills
being made out in a way that permits this in law. A bill of lading
made out so as to enable its negotiation is a negotiable document
of title. Bills which are not made out in a way that permits
negotiation are termed nonnegotiable, and are often endorsed to
clearly indicate this.* To make the original bills of lading
negotiable they must either be made out with the words to order in
thespace allocated for the consignees name, or to (XYZ CONSIGNEE
LTD.) or his order in the same space,which allows the original
consignee to transfer title to a third party, such as another buyer
of the goods, if required. * Transfer of title from the shipper may
be made by any one of three methods, as follows: By means of a
blank endorsement, whereby the shipper stamps the back of each
original bill with his companys stamp and adds his signature, but
without inserting any transferees name, before passing the set of
bills to the transferee. A blank-endorsed order bill of lading
(i.e. one made out to order) is a bearer document, like a postal
order or a cheque made out to Cash, and the carrier must deliver
the goods to whoever presents any one of the originals (unless he
has reason to suspect fraud). Like a bearer cheque, a
blank-endorsed bill of lading is a dangerous document but due to
the requirements of banks which are asked by international traders
to advance money against documents it is commonly used. By specific
endorsement on the back of the bill of lading, e.g. deliver to ABC
Receivers Ltd, with the stamp and signature of the shipper. The
person to whom title is thus transferred may be termed the
endorsee. By attaching authorised delivery instructions on the
shippers stationery, e.g. a Delivery Order from the shipper to the
consignee.
* Once a bill of lading has been negotiated, the endorsee or
transferee becomes subject to the same liabilities and has the same
rights against the carrier as if the contract of carriage had
originally been made with the endorsee. This means that if freight
or demurrage is payable before delivery of the cargo, the endorsee
may be liable for the payment. To protect the endorsee the contract
terms must be clear and unambiguous, and where some term in the
original contract is not included in the bill of lading terms, it
will not be binding on the endorsee.* The reason for making out a
set of original bills of lading is that, if a single bill of lading
were to be lost, the consignment of goods would have to be
warehoused, a duplicate obtained (which would cause delay), or an
indemnity given to the carrier, before the goods could be released.
Since this would be time-consuming and costly, bills of lading are
normally issued in sets of two or more originals, the most common
number of originals being three17.* It is unwise to enclose a full
set of bills of lading in one envelope, because of the danger of
all the bills being losttogether. Banks will therefore split a set
into two envelopes, one being posted immediately and the second
being held for 2, 3 or 4 days and then posted, to avoid the
possibility of both envelopes being in transit in the same bag.*
Several non-negotiable, copy bills of lading will normally be made
for filing and other purposes, and one of them is usually marked
CAPTAINS COPY and travels on the ship in the masters custody.Types
of bill of lading* Bill of lading forms are produced in many styles
by shipping companies, shippers, charterers, freight forwarders and
organisations such as BIMCO. Several types are used for different
purposes.* A long-form bill of lading has spaces or boxes on its
front for typed details and numerous printed conditions of carriage
on its back. Most liner shipping companies print their own
long-form bills of lading with their company conditions of carriage
on the back.* A short form bill of lading has only a few standard
terms printed on it, avoiding the need for shippers to hold stocks
of bills of lading for every carrier they use, so that they can
prepare the bill of lading with the required details before
presentation for signature. A short form bill of lading made out
for cargo loaded aboard a voyage-chartered ship will usually
indicate that the terms and conditions of the relevant charter
party are deemed to be incorporated in the bill of lading. This
allows any party to whom the bill of lading is transferred to see
where the contract of carriage actually is.* A direct bill of
lading is issued when the goods are for carriage from one port to
another. Transshipment is not anticipated although there may be a
clause giving the carrier liberty to transship (in which case the
goods may lie at the merchants risk whilst in the transshipment
port). This type of bill of lading has printed clauses on the
reverse and is used in liner services.* A combined transport bill
of lading covers carriage from door-to-door by several modes of
transport, which is common in many liner services. The combined
transport operator (CTO) takes responsibility for the goods
throughout the entire journey and issues the CT bill of lading at
its start.* A through bill of lading is issued when the carriage
will involve both sea and other transport modes, butdifferent
carriers will be involved at each stage, e.g. a railway company, a
shipping company, a road haulier. The bill of lading is issued by
the sea carrier but he states on it that he only accepts
responsibility for the goods during the sea passage.A received for
shipment bill of lading or received bill of lading is issued for
goods received at a freight depot or some other place before
loading on the ship. This type of bill of lading may be issued by a
freight forwarder and covers the goods while they are in his care.
When the goods are eventually shipped the received bill of lading
must be replaced by a shipped bill of lading.* A shipped bill of
lading or on board bill of lading is one that is issued by the
carrier after the goods are loaded on the carrying ship.* A
straight bill of lading is an American term for a non-negotiable
bill of lading.Contents of bills of lading* Long form bills of
lading, as issued by carriers operating liner services, typically
contain about 30 printed andnumbered clauses. The majority of
clauses are common to the bills of most major carriers, although
the wordingmay differ. Additional clauses are added by carriers to
address the special features of their particular trades. * A long
form liner bill of lading will usually, when issued, contain the
following details: a reference number; name and address of the
shipper or his agent; name and address of the consignee, or to
order, or to the order of (consignees name inserted); name and
address of any notify party (e.g. a receiver taking delivery of the
goods for the consignee); ports of loading and discharge; name of
the carrying vessel; any leading marks for identification of the
goods (as stated by the shipper); the number and kind of packages
or pieces (as stated by the shipper); description of the goods (as
stated by the shipper); gross weight or measurement (as stated by
the shipper); the order and condition of the goods if not in
apparent good order and condition on receipt; the place where
freight is payable, if freight has not been paid; the number of
original bills of lading forming the set (so that the consignee or
any transferee, such as a bank, can determine whether all original
documents in the set have been delivered, in case of fraud or
mistake); the date of receipt of the goods for shipment or, on a
shipped bill of lading, the date of shipment; the place and date of
issue; the signature of the carrier, master or carriers agent; and
the carriers standard terms and conditions (on the back).* P&O
Nedlloyds bill of lading includes clauses numbered and named as
follows: 1. Definitions; 2. Carriers tariff;3. Warranty; 4.
Sub-contracting and indemnity; 5. Carriers responsibility
port-to-port shipment; 6. Carriersresponsibility combined
transport; 7. Sundry liability provisions; 8. Shipper-packed
containers; 9. Inspection of goods; 10. Carriage affected by
condition of goods; 11. Description of goods; 12.
Shippers/merchants responsibilities; 13. Freight; 14. Lien; 15.
Optional stowage and deck cargo; 16. Live animals; 17. Methods and
routes of carriage; 18. Matters affecting performance; 19.
Dangerous goods; 20. Notification and delivery; 21. FCL multiple
bills of lading; 22. General average and salvage; 23. Variations of
the contract; 24. Law and jurisdiction; 25. Validity; 26.
Limitation of liability; 27. USA clause paramount.* A charter party
bill of lading will usually contain a clause to the effect that all
terms and conditions of the charter party identified in the bill of
lading are incorporated in the bill.* The CONGENBILL charter party
bill of lading (1994 edition) includes clauses numbered and named
as follows: 1. Unnamed (see below); 2. General Paramount Clause; 3.
General Average; 4. New Jason Clause; 5. Bothto-Blame Collision
Clause.* CONGENBILL Clause 1 states as follows: All terms and
conditions, liberties and exceptions of the Charter Party, dated as
overleaf, are herewith incorporated. The Carrier shall in no case
be responsible for loss of or damage to cargo arisen prior to
loading and after discharging.* The carriers exceptions from
liability are contained in the Hague or Hague-Visby Rules, which
are normally applied to the contract by the Clause Paramount.*
Stamped or hand-written clauses, e.g. CLEAN ON BOARD and FREIGHT
PREPAID, may be endorsed on a bill of lading, and will override any
printed clauses. A bill of lading that has been surrendered at the
discharge port may be e endorsed by the carriers agent with the
word ACCOMPLISHEDMates receipts and tallies* A mates receipt -- is
a receipt, issued and signed by the carrying ships chief mate (or
the ships agent on his behalf), for goods received on board.- may
be encountered in virtually any conventional trade (general cargo,
dry bulk or tanker), but has been replaced in the liner trades
(i.e. container and ro-ro shipping) by a more modern document, the
Standard Shipping Note .- is the document on which the details
entered on the bill of lading are based; the information on both
mates receipt and bill of lading should therefore be identical. The
mates receipt should not be copied directly from the shipping note
presented when the goods are brought alongside, but should be
compiled from a ships tally or measurement and show the actual
quantity and condition of the goods as received.- should, when the
condition or quantity of the cargo justifies it, be endorsed with
remarks such as torn bags, stained bales, rusty drums, etc.-
should, where the ships and shippers tallies disagree, be made out
for the smaller figure, with the clause X more (drums) in dispute;
if onboard to be delivered, X being the difference between the
tallies.- will normally be on the shipowners form, in a triplicate
pad or book kept on board. The original should be given to the
person delivering the goods to the ship, a copy should go to the
agent, and a second copy should be retained in the pad on the ship
for comparing with bills of lading before signature, and for use in
compiling the cargo plan.-is not a document of title to the goods
shipped and does not pass any title by its endorsement or
transfer.* In ports and trades where mates receipts are used, the
shipper must usually present the signed mates receipt to the agent
in order to be issue with the signed set of original bills of
lading before the vessel sails
Standard Shipping Note (SSN)- is a shipping document widely used
in the UK liner trades to accompany a consignment of goods from
their place of origin (e.g. a factory) to the place of loading
(e.g. an inland container depot) or the port of shipment. The
SITPRO form of SSN is most commonly used; this is a 6-part set
compiled by the shipper or freight forwarder. A copy is retained by
each party handling the goods until they are finally on board, when
a shipped bill of lading is issued after matching the details on
the documents (see F07b.4).-replaces a mates receipt in trades
where it is used.- gives full details of the exporter, customs
status, carriers booking number, consignee, freight
forwarder,international carrier, vessel, port of discharge,
shipping marks, number and type of packages, description of the
goods, special stowage requirements, gross weight, cubic
measurement of goods, container ID number, seal number,
container/vehicle size and type (e.g. 40ft open top), tare weight
and shipper preparing the note.- enables all receiving parties to
have clear, accurate and precise information on how the goods
should be handled and the applicable Customs procedures.- should
not be used where the consignment is classified as hazardous (in
which case a Dangerous Goods/Marine Pollutant Note should be
provided by the shipper).Signing bills of lading* Where a
shipmaster has to sign and issue original bills of lading, great
care must be taken to see that all potential contractual pitfalls
are covered. In such cases it would be advisable to consult the
P&I club correspondent beforehand.* Shipped bills of lading are
signed on behalf of the carrier by or for the master of the
carrying ship. A full set of original bills will be signed, then
returned (via the agent) to the shipper. Freight may be payable
before signing bills, depending on the carriers terms.* Where a
mates receipt was issued to the shipper on shipment of cargo, this
may be required to be surrendered in exchange for the shipped bills
of lading.* The master or his authorised deputy should always check
the following when signing a bill of lading:1. that the goods have
actually been shipped (which may be determined from the ships copy
of any mates receipt issued; this should be identical to the
original mates receipt issued to the shipper, which should be
presented by the shipper when requesting his bills of lading);2.
that the date of shipment is correct, i.e. as stated on the mates
receipt or standard shipping note;3. that the bill of lading is not
marked freight paid or freight prepaid if not true;4. that any
clausing of the corresponding mates receipt is also contained in
the bill of lading;5. that reference is made to the charter party
where one exists;6. that any charter party terms do not conflict
with the bill of lading terms; and7. that the number of original
bills in the set is stated.* Every original in the set must be
signed.Delivery of the goods* The carrier, carriers agent or master
is legally obliged to deliver the goods to the first person
presenting a signed original bill of lading at the discharge port,
together with proof of his identity and proof that freight and any
othercharges due have been paid. (A negotiable bill of lading is
effectively, therefore, a cloakroom ticket for cargo: whoever has
the bill of lading can collect the cargo.)* Once the goods are
released to a receiver (i.e. legally delivered), any carriers lien
for unpaid freight, etc. will be lost.* If the bill of lading has
been transferred by the original consignee, the endorsements on it
should be checked before delivery.* If the presented bill of lading
appears to be in order, the master or the agent should sign it and
date it (known as sighting the bill). It is then said to be
accomplished and is usually stamped ACCOMPLISHED. The goods can
then be released to the receiver. A delivery order may be issued by
the agent to the receiver .* Delivery may be (and in practice is
often) made without presentation of a bill of lading, but only when
certain precautions have been taken Sea waybills* A sea waybill --
is a receipt for goods shipped on board.- is good evidence of the
existence and terms of a contract between the shipper and carrier,
but is not a contract itself.- identifies the person to whom
delivery of the goods is to be made by the carrier in accordance
with the contract of carriage. In contrast with a bill of lading, a
sea waybill always bears the consignees name (and usually also his
address) in the appropriate box on its face.- is non-negotiable.
Sea waybills usually (but do not always) bear the words
NON-NEGOTIABLE on their face. The conditions of carriage may also
bear a statement such as: This Waybill is not a bill of lading and
no bill of lading will be issued, or This Waybill, which is not a
document of title to the cargo.....Bolero System* The Bolero
System, the shop front of which is the bolero.net website, is a
technological environment, owned by the worlds logistics and
banking communities, in which paper bills of lading and other trade
documentation are replaced by electronic messages sent via the
Internet. Bolero is designed for all parties in the trade process:
importers, exporters, freight forwarders, port authorities,
inspection agencies, carriers, ships agents, customs agencies and
financial institutions.* The Bolero technological environment is
supported by a legal framework based on a Bolero Rule Book
whichestablishes a contractually binding set of rules which all
users of the Bolero System are required to sign.* The backbone of
the Bolero System is the Core Messaging Platform, which enables
users to exchange electronic trade documents via the Internet. The
system is secure, is underpinned by a unique legal structure, and
is maintained by a trusted third party. All messages between users
are validated. All messages are acknowledged, and notificationsare
provided as requested. Additional messages determine whether the
recipient accepts or refuses the stated offer. Another major
feature is the Title Registry application, which allows for the
ownership of goods to be exchanged online.* Website:
www.bolero.net
