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SIGNING BILLS OF LADING – PROBLEMS AND SOLUTIONS

Chris AdamsSteamship Insurance Management Services Limited

A Typical Problem

The m.v. “Problematic” is chartered to “Unscrupulos Maritime” under an NYPE form to

load a full cargo of bulk grain at a loadport in China for discharge in Rotterdam. Loading is

by means of bags that are lifted aboard the ship and then opened on a grating that is

placed over the hatch square. The grating is intended to catch foreign matter as the grain

is bled from the bags into the holds. However, the Master continually interrupts the loading

because he says that the cargo being loaded shows traces of fungus, and is infested withinsects. He also tells the shippers that he will not be able to issue clean mate’s receipts.

The charterparty authorises the charterers to issue bills of lading on the Master’s behalf,

always provided that they are in conformity with the mate’s receipts.

The shippers protest against the Master’s intention to issue claused mate’s receipts, and

say that there is nothing wrong with the cargo which fully complies with the specification in

the sale contract. A letter of indemnity is offered, either by the shippers, charterers, or

both, in consideration of the Master issuing unclaused mate’s receipts. The Master

contacts his owner for advice, by which time loading is completed and the surface of the

cargo in all of the holds reveals no apparent problem with the cargo. What is to be done

to protect the owner’s interests?

The Issuance of Bills of Lading – General Principles

The Functions of the Bill of Lading

The bill of lading is an extremely important document that has a number of functions:-

i. It serves as a receipt for the cargo and describes the apparent order and condition of

the goods on shipment. The bill of lading also makes reference to the quantity and

weight of the goods.

ii. It is evidence of the contract of carriage.



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iii. Except when stated to be non-negotiable, the bill of lading is a negotiable document

of title.

In its function as a document of title, the bill of lading represents the goods and makes it

possible for the buyer to deal with those goods at sea. The holder of the bill of lading is

entitled to demand delivery of the goods from the carrier when the vessel arrives at the

port of discharge.

This paper will be examining issues that are related to functions (i) and (iii) above.

The Information Contained Within the Bill of Lading

After the carrier has received the goods, Article III, rule (3) of the Hague and the Hague-

Visby Rules requires that on the demand of the shipper, the carrier must issue a bill of

lading showing:-

(a) The leading marks, as furnished in writing by the shipper, that are necessary for the

identification of the goods.

(b) Either the number of packages or pieces, or the quantity, or weight as furnished in

writing by the shipper

(c) The “apparent order and condition” of the goods

However, there is no obligation on either the carrier, his agent, or the master, to show in

the bill of lading any marks, number, quantity or weight if they have reasonable grounds

for suspecting that such details do not accurately represent the goods actually received,

or if they have had no reasonable means of checking such particulars.

Most of the problems arising out of the issuance of bills of lading concern points (b) and(c) above.

Mate’s Receipts

When cargo is received on board, a mate’s receipt will be issued to acknowledge receipt

of the goods. The description of the cargo contained within the mate’s receipt will in due

course be transferred into the bill of lading. Any deficiencies in the condition of the cargo

should therefore be recorded in the mate’s receipt. This is particularly important when thevessel is on time charter when the charterparty may authorise the charterers to issue bills



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of lading on the Master’s behalf, but always in conformity with the mate’s receipts. If the

owner is to ensure that the bills of lading accurately reflect the condition of the cargo when

loaded, assuming of course no breach by the charterers of their obligations under the

charterparty concerning the issuance of the bills, it is imperative that the mate’s receipts

accurately record the description and the apparent order and condition of the cargo.

Apparent Order and Condition

Statements in bills of lading as to the apparent order and condition of the goods that they

represent are vitally important in relation to the sale of those goods, and claims for loss or

damage that may be evident at the time of discharge or delivery. When goods are sold by

documentary credit transactions, the bill of lading assumes an extremely important role in

representing the condition of those goods. It is therefore imperative that it does so

accurately. Article III rule (4) of the Hague-Visby Rules provides that that the carrier is

estopped from denying the accuracy of the information contained in the bill of lading when

it has been transferred to a third party acting in good faith. This therefore emphasises the

need to ensure that the representations about the cargo that are contained in the bill of

lading are as accurate as possible.

Most forms of bills of lading contain words acknowledging that the cargo has been

received on board the vessel in “apparent good order and condition”. This is not an

acknowledgement by the carrier that the cargo was in good order and condition on

shipment, only that it appeared so. What is apparent about the condition of the goods is

something that has to be determined only by reasonable inspection by either the carrier or

his Master. Furthermore, the apparent condition refers to what is visible, and not the

internal condition of the goods, and condition is not synonymous with quality. The Master

must make up his own mind whether the cargo that is shipped satisfies the description of

its order and condition in the mate’s receipts or bills of lading that have been presented forsignature. The law does not require him to be an expert on the particular cargo. Neither

does it require him to have any greater knowledge or experience of the cargo than any

other reasonably prudent Master.

It follows that if the goods are not in apparent good order and condition, this statement

should be deleted, or qualified by clausing the mates’ receipt or bill of lading to describe

the actual order and condition of the goods as is apparent to the carrier or the vessel’s

Master.



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Quantity or Weight

It has already been mentioned that under Article III rule (3b) of the Hague/Hague-Visby

Rules, the carrier has to issue on the demand of the shipper, a bill of lading that shows

either the number of packages or pieces, or the quantity or weight, as the case may be, as

furnished in writing by the shippers. With regard to the quantity statement it appears that

the carrier is only required to state either the number of packages, or the quantity, or the

weight. Therefore, whilst a statement as to one of these measures is obligatory, it follows

that the others may be qualified. Most forms of bill of lading contain a printed clause to the

effect that:-

“Weight, measure, quality, quantity, condition, contents and value unknown”

Is the carrier allowed to incorporate such standard reservation clauses, or would such a

clause amount to a derogation of liability as envisaged under Article III rule (8) of the

Hague/Hague-Visby rules, and therefore be null and void?

Descriptions such as:-

50,000 bags of sugar in 50kg bags, said to weigh 2,500 MT

are commonly encountered. The English courts have given full effect to clauses such as

“weight unknown” or “quantity unknown” or “said to be/weigh”. It has been held that when

such clauses are included in the bill of lading it is not even prima facie evidence of such

weight or quantity. In order to sustain a claim for shortage, it is necessary for the claimant

to produce other evidence to prove that the stated quantity/weight of cargo was shipped

on board.

Sale of Goods by Documentary Credit

The function of a bill of lading as a document of title, enables it to facilitate the

international sale of goods by documentary credit. The financing of these transactions is

by letter of credit. In the same way that any individual who is making a face to face

purchase would wish to satisfy himself about the condition of the goods he is buying

before parting with his money, so similar precautions are applied to sales under

documentary credit. Through the mechanism of the letter of credit that the purchaserestablishes through his bank, a “check” is made on the condition of the cargo before the



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purchase price is remitted to the seller. This is not a check made by physical examination

of the goods, but a documentary check. The purchaser stipulates to his bank that before

parting with any money, the bank must satisfy itself that the bill of lading that is presented

by the shipper to support his claim for payment, must show that the goods were loaded to

the vessel in apparent good order and condition. In common parlance, the letter of credit

stipulates that the bill of lading is issued “clean” or “clean on board”.

A “clean” transport document is defined under the Uniform Customs and Practices for

Documentary Credits (UCP 500, Art 32) as one which bears no clausing or notation that

expressly declares a defective condition of the goods and/or the packaging. Consequently

it is immediately apparent that statements in the bill of lading concerning the apparent

order and condition of the goods represented by that document are of fundamental

importance in the contract of sale. If the bill of lading is not “clean”, the purchaser’s bank

will refuse to make payment under the letter of credit, the shipper will not then be paid,

and considerable commercial inconvenience to the shipper may well result. Of course

such inconvenience will be entirely self inflicted if the condition of the goods on shipment

was such that the Master was entitled to clause the bill to reflect those shortcomings. No

one can have sympathy with any trader who seeks to pass off damaged goods for sound

and thereby take a commercial advantage of an innocent purchaser. Equally, if it is

apparent that the cargo when loaded is not in apparent good order and condition, the

issuing of a “clean” bill of lading will have the effect of causing the purchasers to pay for

the goods on the basis of a document that seriously misrepresents their condition. The

issuance of claused bills of lading that should have been clean, and clean bills of lading

that should have been claused will have serious consequences which will be discussed in

more detail later in this paper.

The requirement for a “clean on board” bill of lading in the terms of a letter of credit can

often create unnecessary problems. The banks that handle these documentary credittransactions, are not on the whole well known for their flexibility. If the letter of credit

stipulates that the bill of lading must be issued “clean on board” the clerk handling the

transaction may be reluctant to accept that this requirement is satisfied by a bill of lading

that simply bears no clausing to qualify the apparent good order and condition of the

goods. There is often a need on the part of the bank to see the words “clean on board”

written on the bill of lading. There seems to be a lack of understanding that this

requirement for “clean on board” bills of lading arises from two separate UCP

requirements for “clean” and “on board” bills of lading. In other words, the goods must bein apparent good order and condition, and they must actually be on board the carrying



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ship in order to trigger payment under the letter of credit. The shipped onboard

endorsement generally arises in those cases where the goods are received by the carrier

at the terminal “for shipment” – for example containerised cargo. A “received for shipment”

bill of lading would be issued to act as a receipt, and then endorsed “shipped on board”

after the goods were actually loaded. There is a very respectable view that a “clean on

board” endorsement is totally unnecessary, and adds nothing to the statement made in

the bill as to the apparent order and condition of the cargo. However, there is possibly a

need for some caution. If a bill describes goods as being in apparent good order and

condition but they are not, and this could not be detected on reasonable inspection by the

Master, is there a danger in some less sophisticated jurisdictions that the “clean on board

“ endorsement might be taken as qualifying the statement as to the apparent order and

condition, and taken as meaning that the goods were in fact in good order and condition

on loading. In view of the potential for this sort of interpretation to expose carriers to

unjustified liability, they should be slow to endorse bills of lading “clean on board” simply in

order to satisfy the bureaucratic requirements of the intermediary banks.

Issuance of Bills of Lading – the Problems

Clean and Claused Bills of Lading

It goes without saying that bills of lading should only be issued “clean” if in fact the cargo

on shipment was in apparent good order and condition. If it is not, the Master should

ensure that the bills of lading are claused to reflect the apparent order and condition of the

goods. If bills of lading are not claused when they ought to be, the carrier will be exposed

to liability for the loss and damage to the cargo that is represented by the remarks omitted

from the bill. The carrier is thus incurring liability for loss and damage that has occurred

before the goods came into his custody.

If it should be apparent to the Master during the course of loading the cargo that it is not in

apparent good order and condition, he should clause the bills of lading to reflect his

observations. For the Master to clause the bills it is sufficient that he should be of the

honest belief that the cargo is not in apparent good order and condition, and that that view

could properly be held by a reasonably observant Master, even if all Masters would not

necessarily agree. The terms in which the bills of lading should be claused, are also a

matter for the judgement of the Master. He should use terms that reflect the actual

condition that is apparent, and care should be taken to ensure that the reservations arenot overstated.



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This solution of course works well when the vessel is trading for the owner’s account, and

the Master or the owner’s agent is responsible for issuing the bills of lading. In this

situation, there is a high degree of control over the issuance of documents. However,

when the vessel is on charter, it is often a term of the charterparty that the charterers or

their agents are to be authorised to issue bills of lading, provided that they are in

conformity with the mate’s receipts. In this situation, the Master or Chief Officer must

record any remarks as to the apparent order and condition of the cargo on the mate’s

receipts, and hope that the charterers will comply with their obligation under the

charterparty to transfer those same reservations to the bills of lading.

This loss of control over the process for issuing the bills of lading can result in serious

consequences for the shipowner. Often, for commercial reasons, the charterer may

decide to ignore the reservations in the mate’s receipts, and issue the bills of lading clean.

It is frequently the case that although the charterer’s form of bill of lading has been issued,

the shipowner is nonetheless the carrier, and it is the shipowner who is then exposed to

the liabilities that result from the failure to clause the bills. Whilst a remedy will exist

against the charterers for the consequences of their breach, enforcing that remedy may

be extremely difficult, particularly if the charterer has limited means. Even if it should be a

term of the charterparty that the charterer has insurance to cover his liabilities, the

benefits of that will be illusory in the event of a failure to transfer remarks from the mate’s

receipts. The conduct of the charterers that is associated with this breach, will generally

be sufficient to prejudice any insurance cover that they may have arranged.

When it is the owner who is issuing the documents, failing to issue bills of lading that

correctly reflect the apparent order and condition of the cargo on loading can have very

serious consequences. Quite apart from the inevitable exposure to liability for damage

that should have been described in the bills, there can also be the added complication of aloss of insurance protection for the liabilities thereby arising.

The P&I Clubs cover their Members for liabilities costs and expenses as defined in the

Club’s Rules and the vessel’s Certificate of Entry. In connection with liability for cargo loss

and damage, the Steamship Mutual’s Rules, in common with those of all other

International Group Clubs, provide as follows:-



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“Unless the Directors shall in their absolute discretion otherwise determine, there

shall be no recovery ……. in respect of the Member’s liability or expenses arising

out of:

(iv) a Bill of Lading, Way Bill or other document containing or evidencing a contract

of carriage issued with the knowledge of the Member or his Master with incorrect

description of the cargo or the condition or quantity thereof.”

Consequently, where the Member or his Master knowingly issues a bill of lading that does

not accurately record the apparent order and condition, or quantity of the cargo, Club

cover for the resulting liabilities will only be available at the discretion of the Club’s Board

of Directors. The shipowner could then be exposed to a substantial uncovered liability,

and the difficulty and expense of arranging a guarantee to release his vessel if it should

be arrested by the claimants in order to obtain security for their claim.

Where offending bills of lading are issued by charterers without the knowledge of the

Member of the vessel’s Master, these adverse consequences will not necessarily apply.

Club cover should be available for the resulting cargo liabilities, and to support the cost of

seeking a recovery from the charterers. However, this will not be the case if the Member,

or the Maser knew that the charterers had not properly claused the bills.

Sometimes there may be a bona fide difference of opinion between the shipper and the

carrier concerning the condition of the cargo. In such situations it is probably sufficient as

a matter of English law for the Master to endorse the bill with general words of

reservation, although it is preferable that the bills are claused specifically to reflect his

assessment of the cargo’s condition.

Clean Bills of Lading and Letters of Indemnity

The most frequent problem experienced by owners is where the cargo that has been

loaded is not in apparent good order and condition, but in order to avoid the documents

being rejected under the terms of the letter of credit, the shipper or charterer demands a

clean bill of lading. In many such cases, the owner will be offered a letter of indemnity in

exchange for the Master agreeing to issue a clean bill of lading. In most jurisdictions such

letters of indemnity may be unenforceable because the act of issuing a clean bill in such a

situation amounts to a fraudulent misrepresentation of the condition of the cargo to theultimate purchasers.



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The case of Brown Jenkinson v. Percy Dalton – 1957 2 QB 621 concerned a shipment of

barrels of orange juice. The barrels were old, frail and leaking, and the shipper was told

that the carrier intended to clause the bill of lading. A letter of idemnity was offered,

accepted, and a clean bill was issued. The receiver successfully claimed against the

carrier on the basis of the clean bill, and the carrier then sought to claim under the letter of

indemnity but was denied a remedy. The court was anxious to eliminate the lax practice of

resorting to letters of indemnity when goods were known to be damaged. The carrier

argued that he had not intended to defraud the receiver because he knew that he could be

sued because of the clean bills. The court however ruled that this did not matter. The

lessons to be learned from this decision are that if there is a bona fide difference of

opinion about whether the cargo is damaged or not, or if the defect is minor, a letter of

indemnity should be enforceable. However, if it is obvious that the goods are in fact

damaged, an indemnity becomes of limited value.

Even where the shipper or charterers may be content to honour the indemnity, problems

may nonetheless be encountered because of arguments that the damage found on

discharge was not the same, or was more extensive than that noted at the time of loading.

In addition, the carrier will always have the problem in such situations of a lack of Club

cover for the liabilities to which he is exposed.

In circumstances where the bills of lading are to be issued by the charterer, the

acceptance of a letter of indemnity is likely to prejudice the remedy that would otherwise

exist under the charterparty for the charters failure to issue claused bills. If the letter of

indemnity is also unenforceable, the owner will potentially be left in a much worse position

than if he had simply relied upon his remedy under the charter.

Unnecessary or Excessive Clausing of the Bills of Lading

Whilst it is most usually the case that claims arise because of allegations that the Master

issued clean bills, when the condition of the cargo justified clausing, problems can equally

well occur in circumstances where the bills are claused when there is no basis for doing

so. This was highlighted in a recent decision of the English Admiralty Court concerning a

vessel called the “David Agmashenbeli” . During the loading of a cargo of urea, the Master

observed that it contained contaminants and was of a dirty colour. The mate’s receipt was

claused with the wording “Cargo discoloured also foreign materials e.g. plastic, rust,rubber, stone, black particles found in cargo”. The Master refused to sign bills of lading



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without the same clausing, whilst the shippers insisted on receiving clean bills of lading to

satisfy the letter of credit requirements, because their surveyor disputed that the cargo

was not in apparent good order and condition. Impasse resulted. The vessel proceeded

on her voyage without bills of lading being issued. Consequently the shippers could not

obtain payment under the letter of credit. Freight under the sub charter was not paid, and

charter hire was withheld under the time charter. Eventually the shippers agreed to accept

claused bills under protest, but when these were presented to the bank they were not

accepted because they were not clean. This gave the receivers the opportunity to

negotiate to receive the cargo at a reduced price, because of both the clausing, and the

fact that the market value of urea had fallen since the cargo was loaded. The shippers

sought to claim their losses from the owners.

The shippers argued that the statement in the bill of lading as to the apparent order and

condition of the cargo had to be objectively accurate. They said that it was not sufficient

for the Master to simply state what he honestly believed to be the apparent order and

condition. The court rejected the shippers’ arguments, and held that a Master is entitled to

clause the bill if he honestly takes the view that the cargo is not in apparent good order

and condition.

The terms in which the Master chooses to clause the documents are also a matter for his

own judgement, but the terms used should reflect reasonably closely the actual apparent

order and condition of the cargo and the extent of any defects that are exhibited.

Factual and expert evidence in the “David Agmashenbeli” led to the judge concluding that

there had been some contamination of the cargo, but the extent of this was so slight that

no reasonably observant Master would have seen fit to refer to it in the mate’s receipt. It

was also found that there had been some discolouration of the cargo. The shippers had

described the cargo as “white”. This fact and the extent of the discolouration evident onloading led the court to conclude that a reasonable Master ought to refer to such

discolouration in the documents. However, it was also held that the Master’s description of

the cargo as “discoloured” was misleading because there was no indication that he was

only referring to about 1% of the cargo. A reasonable Master would have qualified the

statement to avoid creating a misleading impression. Consequently it was held that the

carriers were in breach of their duty under Article III, rule (3) of the Hague-Visby Rules to

issue a bill of lading stating the apparent order and condition of the cargo.



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One might feel that having found in favour of the shippers, a judgment in their favour was

likely to follow. Notwithstanding this breach of duty, the court then had to consider if the

shippers had suffered a loss as a result of this breach. The court concluded that the

Master would have been acting reasonably if he had claused the bills in such a way that

made the extent of the discolouration clear. In such circumstances, the shippers would still

not have received a clean bill to present to the bank, and since the market price had

already fallen they would have been compelled to reach a settlement with the receivers

similar to that which eventually resulted. Consequently on the particular facts of this case,

the shippers failed to show that the Master’s actions had caused them any loss. However

it is perfectly conceivable that over zealous action on the part of a Master in different

factual circumstances could well expose the carrier to liability.

Cargo Damaged after Loading

It is not uncommon for cargo to become damaged, or to suffer a casualty during or after

loading on the vessel, but before the bill of lading is issued. Should the bill of lading be

issued clean or claused?

If the goods were in apparent good order and condition after being received into the

charge of the carrier, the Master or his agent (Article III, rule 3), a clean bill of lading

should be issued.

In the case of “”The Galatia” – 1979 2 LLR 450 a cargo of bagged sugar suffered damage

by fire and extinguishing water at the port of loading. The damaged goods were

discharged. A separate bill of lading that was issued for the damaged goods

acknowledged that they had been shipped in apparent good order and condition, but the

bill was claused as follows:

“Cargo covered by this bill of lading has been discharged Kandla view damaged by

fire and/or water used to extinguish for which general average declared.”

The Court of Appeal held that the bill of lading was clean. The clausing did not render it

unclean because it related to damage after shipment. Predictably, the bill had been

rejected by the banks involved in the sale transaction because of the clausing.



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Ante-dated bills of lading

Letters of credit under which cargoes are purchased are opened for a specific period of

validity. In order for the bank to make payment, it must be satisfied that the goods were

shipped onboard the vessel within the period of validity of the letter of credit. The date of

the bill of lading is a representation that the goods were on board the vessel on that

particular date.

There may be delays in the vessel’s approach voyage to the load port, or delays on the

part of the shippers in delivering their cargo to the port. If the result of these delays is that

the cargo will not be loaded on the vessel before the date of expiry of the letter of credit,

the shipper will encounter a number of difficulties. He will not be able to obtain payment

without an extension of the letter of credit being agreed. That may or may not be possible.

Even if an extension is possible, the buyer might wish to exploit this difficulty to negotiate

a better price for the goods, particularly if the market for the commodity has fallen in the

intervening period.

Rather than face these problems, a shipper might instead ask the carrier to back date the

bills of lading to indicate that the goods had been loaded some time earlier than was

actually the case. There are no justifiable grounds for ante-dating bills of lading no matter

what might be said by the shipper, and any such request should be declined. Letters of

indemnity also offer no solution, for the same reasons as apply in relation to clean bills of

lading that should have been claused. A carrier who issues an ante-dated bill of lading is

acting to deceive the ultimate purchasers of that cargo, and is exposed to very serious

consequences. There should be no temptation to give in to the blandishments of shippers

where the period of ante-dating is only a day or so. The degree of ante-dating is irrelevant,

and the consequences no different whether the bills are ante-dated by one day or onemonth.

Quite apart from being exposed to liability towards the purchasers of the cargo because of

the ante-dating, the carrier will also find that he has no insurance coverage for that

liability.

The Steamship Mutual’s Rules, in common with those of all other International Group

Clubs, provide as follows:



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“Unless the Directors shall in their absolute discretion otherwise determine, there

shall be no recovery ……. In respect of the Member’s liability or expenses arising

out of:

(iii) the issue of an ante dated or post dated Bill of Lading, Way Bill or other

document containing or evidencing the contract of carriage.”

Ante-dating is therefore something that is to be completely avoided.

Steel cargoes

A great number of the requests for guidance and assistance that a P&I Club receives in

relation to issuing of bills of lading concern steel cargoes. It is usually extremely difficult

for Masters to accurately describe the condition of various types of steel product on

shipment. For this reason many Club Certificates of Entry contain clauses requiring the

Member to have a pre-loading survey in the event the vessel carries steel. In this way the

Member and his Master can have the reassurance that the cargo is being inspected prior

to loading by a surveyor who is an expert in the commodity and who will know precisely

how to describe the conditions it exhibits. A steel pre-loading survey will often contain

extensive remarks on individual items of the cargo, and the surveyor’s list of exceptions

should be referred to in, and appended to, the mate’s receipts and the bills of lading.

Sometimes a carrier might be asked to desist from incorporating the surveyor’s remarks in

the bills, and to use a so-called “Retla” clause instead. This clause derives its name from

the case Tokio Marine & Fire Insurance Company Limited v. Retla Steamship Company –

1970 2 LLR 91 .

Steel pipes were carried from Japan to the United States. At the time of loading the cargoshowed visible signs of rusting and wetness, and remarks such as “heavy rust”, “white

rust”, and “rusty” appeared on the tally documents and the mate’s receipts. The bill of

lading showed that the cargo had been received in “apparent good order and condition,

unless otherwise mentioned in this bill of lading”. The detailed remarks were not shown.

Instead next to the signature box was a “rust” clause. These clauses typically read as

follows:



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“ IRON OR STEEL

The terms “apparent good order and condition” when used on this Bill of Lading

with reference to iron, steel, or metal products does not mean that the Goods,

when received, were free of visible rust or moisture. If the Merchant so requests a

substitute Bill of Lading will be issued omitting the above definition and setting

forth any notations as to rust or moisture which may appear on the mate’s or tally

clerk’s receipts.”

A replacement bill of lading was not requested. Had it been, the evidence was that the bill

would have been issued incorporating all the remarks in the mate’s receipts. On

completion of the voyage a claim was made for the damages that were evident on

shipment. The court found that the bill of lading was qualified by the clause, and paid

particular attention to the location of the clause – immediately below the apparent good

order and condition statement. It was also found that the fact the shipper did not demand

a replacement bill was evidence that a demand had not been made of the carrier to issue

a bill of lading showing apparent order and condition as per Article II rule (3) of the Hague

/Hague-Visby Rules.

The use of a Retla clause to avoid more conventional clausing of the bills of lading should

be approached with considerable caution. The option to substitute the bill of lading for one

containing more detailed reservations is strongly suggestive of collusion between the

shipper and the carrier to the detriment of the eventual purchaser of the cargo. For

obvious reasons, the shipper wants to have a bill of lading that is as clean as possible.

The purchaser might assume, with some justification, that the fact that a substitute bill was

not issued meant that there were no significant remarks. The preferred course from the

Club’s perspective would be to insist upon conventional clausing.

Liquid Cargoes

Liquid cargoes present their own particular problems associated both with the description

that is to be given to the cargo, and the quantity that is loaded to the vessel. It is

impossible for the Master to see the cargo in the conventional sense, other than through

the use of samples, and the measurement of the quantity loaded to the vessel is often

fraught with difficulty and ship’s figures rarely agree with those of the terminal. The subject

of liquid measurement and shortage claims is a topic in its own right that goes beyond thescope of this paper.



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Most problems at the port of loading arise because the Master disputes the shore figures

that the shipper wishes to be inserted into the bill of lading. It should always be

remembered that under Article III of the Hague/Hague-Visby Rules, no carrier or Master is

bound to show in the bill of lading any quantity or weight which he has reasonable

grounds for suspecting not accurately to represent the goods actually received, or which

he has no reasonable means of checking.

In the “Boukadora” – 1989 1LLR 393 the Master had been presented with a bill of lading

for signature that stated “a cargo said to be and described as [fuel oil]”. The shore loading

figures were then shown. The Master wanted to insert a reference to the ship’s figures

which were different, and delay resulted. The charterers argued that there was no need

for the Master to include the ship’s figures since there was no representation in the bill as

to quantity because of the “said to be” qualification. The court commented:

“There is an appreciable risk that merely identifying the figure as a shore

measurement would not necessarily be sufficient to prevent a representation from

arising, and the position in other jurisdictions may be even less favourable for the

shipowner or the Master”.

The Solution to the Typical Problem

Hopefully the contents of this paper will be of some assistance in appreciating the

difficulties and the pitfalls that need to be avoided. As always, the owner i s strongly

recommended to contact his P&I Club for advice.