Bills of lading

A bill of lading is one of the most important documents in the shipping industry. The bill of lading is a legally binding document providing the driver and the carrier all the details needed to process the freight shipment and invoice it correctly.

Purpose of Bills of Lading

A Bill of Lading has 3 basic purposes or roles:

• A bill of lading acts as a proof that the goods have been loaded on board the ship.
• It helps the exporter to send a shipment advice to the importer.
• Bills of lading is document of Title that means a person having possession of the document is entitled to receive the goods

The bill of lading is the evidence of the contract of carriage entered into between the “Carrier” and the “Shipper or Freight Owner” in order to carry out the transportation of the freight as per the contract between the buyer and the seller.

The importance of a bill of lading in international trade

International trade dates back to centuries and has often been seen as a driving force to economic, social and political stability. It significantly contributes to the gross domestic product of nations. Bill of lading is a written evidence of a contract for the carriage and delivery of goods sent by sea for certain freight. Typically, a shipper delivers goods to a carrier while the carrier or his agent issues a bill of lading. The Court in B.M.Ltd.v.WoermannLine defined a bill of Lading as “A written document signed on behalf of the owner of the ship, in which goods are embarked, acknowledging the receipt of the goods and undertaking to deliver them at the end of the voyage, subject to such conditions as may be mentioned in the bill of lading. The bill of lading is therefore a written contract between those who are expressed to be parties to it”

Contents of Bill of lading

• Name and logo of the shipping line.
• Name of the port of loading.
• Name of the port of discharge and place of delivery
• Name and the number of vessel.
• Name and address of the shipper
• Marks and container number.
• Packing and container description.
• Description of goods in terms of quantity.
• Container status and seal number.
• Gross weight in kg, and volume in terms of cubic meters.
• Total number of containers and packages.
• Amount of freight paid or payable.
• Shipping bill number and date.
• Signature and initials of the Chief Officer.

Types of Bills of Lading

Bill of Lading is of three types:

• Negotiable and Straight Bill of Lading: A bill of lading is negotiable when it is made out to the bearer and can be passed hand to hand just like cash.

• Shipped and Received for Shipment Bills: A shipped bill of lading is one which states that the goods have actually been shipped on board. The received for shipment bill of lading is usually issued when the carrier receives goods into its custody prior to shipment.

• Clean Bill of Lading and Claused Bill of Lading: A bill of lading that contains notations or remarks as to defects in the goods or packaging and also called foul or dirty bill of lading. A bill is claused when it is annotated to show that the goods carried are not in apparent good order and condition (bad condition). Where a document is claused, such document may be rejected by the buyer. A bill of lading is said to be clean when it qualifies the goods in good order and condition on receipt by the carrier.

Bill of Lading as a Receipt

A bill of lading is evidence of the fact stated in it which means that a shipped bill is evidence that such goods have been conveyed and such was shipped on the date of shipment stated on the bill. Its relevance as an evidential device becomes expedient when the carrier has not delivered what was shipped by the seller. When there is a dispute as regards the quantity of goods or condition of goods, the bill of lading, (pursuant to Article 3 rule 4) becomes a prima facie evidence that the goods where shipped in the conditions stated on the bill of lading. Such evidence becomes conclusive.

Bill of Lading as a Document of Title

A document of title is a document that allows the holder to deal with the goods like he is the owner of such goods. The concept of a bill of lading as a document of title has been well conceptualized by Sassoon. He stated that a bill of lading allows a buyer or his agent to obtain actual delivery of the goods at the designated port. A lawful holder of a bill of lading can be said to have constructive possession of the goods. While goods are in transit, the owner of such goods can sell his goods to another person just buy delivering the bill of lading for consideration. Thus, a lawful holder can pass the property in goods by delivering the documents to a third party. It is pertinent to state that a Straight Bill of Lading is not a document of title.

Bill of Lading as a Document of Credit

Documentary credit covers letter of credit transactions where the buyer’s bank provides a letter of credit that effects the payment for the goods purchased. The seller is comforted by substituting the credit worthiness of the bank for the creditworthiness of the buyer. Documentary credit usually provides the seller with a reliable mechanism of payment. The seller is assured of payment irrespective of whatever dispute arises from the sale contract.