Bill of lading

Bill of lading

A bill of lading (/ˈleɪdɪŋ/) (sometimes

abbreviated as B/L or BOL) is a document
issued by a carrier (or their agent) to
acknowledge receipt of cargo for
shipment. Although the term historically
related only to carriage by sea, a bill of
lading may today be used for any type of
carriage of goods.[1]A comprehensive
article on Bill of Lading Bills of lading are
one of three crucial documents used in
international trade to ensure that exporters
receive payment and importers receive the
merchandise.[2] The other two documents
are a policy of insurance and an invoice.[3]
Whereas a bill of lading is negotiable, both
a policy and an invoice are assignable. In
international trade outside the United
States, bills of lading are distinct from
waybills in that the latter are not
transferable and do not confer title.
Nevertheless, the UK Carriage of Goods by
Sea Act 1992 grants "all rights of suit
under the contract of carriage" to the
lawful holder of a bill of lading, or to the
consignee under a sea waybill or a ship's
delivery order.

A bill of lading must be transferable,[4][5]

and serves three main functions:

it is a conclusive receipt,[6] i.e. an

acknowledgement that the goods have
been loaded;[7] and
it contains or evidences[8] the terms of
the contract of carriage; and
it serves as a document of title to the
goods,[9] subject to the nemo dat rule.
Typical export transaction use Incoterms
terms such as CIF, FOB or FAS, requiring
the exporter/shipper to deliver the goods
to the ship, whether onboard or alongside.
Nevertheless, the loading itself will usually
be done by the carrier himself or by a third
party stevedore.

Description
A bill of lading is a standard-form
document that is transferable by
endorsement (or by lawful transfer of
possession).[10] Most shipments by sea
are covered by the Hague Rules, the
Hague-Visby Rules or the Hamburg Rules,
which require the carrier to issue the
shipper a bill of lading identifying the
nature, quantity, quality and leading
marks[11] of the goods.

In the case of Coventry v Gladstone, Lord

Justice Blackburn defined a bill of lading
as "A writing signed on behalf of the owner
of 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."
Therefore, it can be stated that the bill of
lading was introduced to provide a receipt
to the shipper in the absence of the
owners.

Although the term "bill of lading" is well

known and well understood, it may
become obsolete. Articles 1:15 & 1:16 of
the Rotterdam Rules create the new term
"transport document"; but (assuming the
Rules come into force) it remains to be
seen whether shippers, carriers and
"maritime performing parties" (another
new Rotterdam Rules coinage) will
abandon the long-established and familiar
term, "bill of lading".

History
While there is evidence of the existence of
receipts for goods loaded aboard
merchant vessels stretching back as far as
Roman times,[12] and the practice of
recording cargo aboard ship in the ship's
log is almost as long-lived as shipping
itself, the modern bill of lading only came
into use with the growth of international
trade in the medieval world.

The growth of mercantilism (which

produced other financial innovations such
as the charterparty (once carta partita), the
bill of exchange and the insurance
policy[13]) produced a requirement for a
title document that could be traded in
much the same way as the goods
themselves. It was this new avenue of
trade that produced the bill of lading in
much the same form as we know today.

Roles and purposes of bill of

lading

As cargo receipt …

The principal use of the bill of lading is as

a receipt issued by the carrier once the
goods have been loaded onto the vessel.
This receipt can be used as proof of
shipment for customs and insurance
purposes, and also as commercial proof of
completing a contractual obligation,[14]
especially under INCOTERMS such as
CFR[15] (cost and freight) and FOB (free on
board).

Although the Hague-Visby Rules provide

that a bill of lading is only prima facie
evidence of receipt, the Carriage of Goods
by Sea Act 1992 s.4 declares a BoL
"conclusive evidence of receipt".[16][17][18]

A "clean bill of lading" (aka "on-board bill

of lading") is used when there is full
compliance with no discrepancies
between the description filed by shipper
and the actual goods shipped. A clean
bill of lading indicates that the goods
have been properly loaded on board the
carrier's ship in accordance with the
contract.
A "dirty bill of lading" (aka "claused bill
of lading") will be issued if the goods to
be shipped differ in quality or quantity
from the contract description, or if
freight has yet to be paid. The buyer's
bank is entitled to reject a dirty bill of
lading, but will often accept it after an
agreed reduction in price.[19]
"STC": if the cargo cannot be effectively
examined, such as goods in a sealed
container), the carrier will issue a bill of
 lading describing the goods as
"container (identified by number) said to
contain" the contracted cargo. If the
cargo within the container does not
comply with description, the consignee
will take action against the seller, and
the carrier will not be involved.

As evidence of the contract of

carriage
…

The bill of lading from carrier to the

shipper can be used as an evidence of the
contract of carriage by the fact that carrier
has received the goods and upon the
receipt the carrier would deliver the goods.
In this case, the bill of lading would be
used as a contract of carriage. In this
case, the bill of lading can be used if
shipper does not properly ship the goods
then the shipper cannot receive the bill of
lading from the carrier. Eventually, the
shipper would have to deliver the bill of
lading to the seller. In this case, the bill of
lading is used as a contract of carriage
between seller and carrier. However, when
the bill of lading is negotiated to a bona
fide third party then the bill of lading
becomes a conclusive evidence where no
contradictory evidence can be introduced.
It is because the third party cannot
examine the actual shipment and can only
pay attention to the document itself, not
survey or examination of the shipment
itself.[18] However, the bill of lading will
rarely be the contract itself, since the
cargo space will have been booked
previously, perhaps by telephone, email or
letter. The preliminary contract will be
acknowledged by both the shipper and
carrier to incorporate the carrier's standard
terms of business. If the Hague-Visby
Rules apply, then all of the Rules will be
automatically annexed to the bill of lading,
thus forming a statutory contract.

As title …
When the bill of lading is used as a
document of title, it is particularly related
to the case of buyer. When the buyer is
entitled to received goods from the carrier,
bill of lading in this case performs as
document of title for the goods. There are
two types of bill of lading that can perform
as document of title. They are straight bill
of lading and order bill of lading. Straight
bill of lading is a bill of lading issued to a
named consignee that is not negotiable. In
this case, the bill of lading should be
directed only to one specific consignee
indicated on the bill of lading. Order bill of
lading is the opposite from a straight bill
of lading and there is no specific or named
consignee. Therefore, an order bill of
lading can be negotiated to a third party.

Simply, the bill of lading confers prima

facie title over the goods to the named
consignee or lawful holder. Under the
"nemo dat quod non habet" rule ("no one
gives what he doesn't have"), a seller
cannot pass better title than he himself
has; so if the goods are subject to an
encumbrance (such as a mortgage, charge
or hypothec), or even stolen, the bill of
lading will not grant full title to the holder.

Types of bills of lading

Bills of lading may take various forms,
such as on-board and received-for-
shipment.[20]

An on-board bill of lading denotes that

merchandise has been physically loaded
onto a shipping vessel, such as a
freighter or cargo plane.
A received-for-shipment bill of lading
denotes that merchandise has been
received, but is not guaranteed to have
already been loaded onto a shipping
vessel.(Typically, it will be issued by a
freight-forwarder at a port or depot).
Such bills can be converted upon being
loaded.[21]
Charter-party bill of lading, for a sulfuric acid bulk
cargo

A straight bill of lading is used when

payment has been made in advance of
shipment and requires a carrier to
deliver the merchandise to the
appropriate party.
An order bill of lading is used when
shipping merchandise prior to payment,
 requiring a carrier to deliver the
merchandise to the importer, and at the
endorsement of the exporter the carrier
may transfer title to the importer.
Endorsed order bills of lading can be
traded as a security or serve as
collateral against debt obligations.[19]

Bills of lading and

charterparties compared
A charterparty is the contract governing
the relationship between the shipowner
and the charterer. The bill of lading
governs the relationship between the
shipper and the carrier (who will be either
a shipowner or a demise charterer). If the
exporter (the shipper) is shipping a small
amount of cargo, he will arrange for a
carrier to carry the goods for him, using a
bill of lading. If the exporter needs the
whole (or a very substantial part) of the
ship's cargo capacity, the exporter may
need to charter the vessel, and he will
enter into a charterparty agreement with
the shipowner.

If the charter party is a time or voyage

charterparty, the shipowner will still have
control of the ship and its crew. If there is
a demise (or "bareboat") charterparty, the
charterer will effectively have a long lease
and will have full control of the vessel.
When the master (captain) issues a B/L to
a shipper, he will be acting as an agent for
the carrier, who will be either the
shipowner (time or voyage) or the
charterer (demise).

In a time-charterparty or voyage-
charterparty, if the charterer is shipping his
own cargo (rather than the cargo of a third
party) he will receive a bill of lading from
the master, acting as agent of the
shipowner; but that B/L will serve solely as
a receipt and document of title, and its
terms will (subject to contrary intent) be
secondary to the terms of the charterparty,
which remains the dominant contract.[22]
Sea waybills and electronic
data interchange (EDI)
Under Art. III of the Hague-Visby Rules, a
carrier must, on demand, provide the
shipper with a bill of lading; but if the
shipper agrees, a lesser document such as
a "sea waybill" may be issued instead. In
recent years, the use of bills of lading has
declined, and they have tended to be
replaced with the sea waybill. (If a so-
called bill of lading is declared to be "non-
negotiable", then it is not a true B/L,[23] and
instead will be treated as a sea waybill.)
The main difference between these two
documents is that the waybill gives the
bearer the right to possession of the
cargo, but does not confer title in the
goods. As a result, there is no need for the
physical document to be presented for the
goods to be released. The carrier will
automatically release the goods to the
consignee once the import formalities
have been completed. This results in a
much smoother flow of trade, and has
allowed shipping lines to move towards
electronic data interchange which may
greatly ease the flow of global trade.
For some time, it has been the case that
the cargo may arrive at the destination
before the bill of lading; and a practice has
arisen for the shipper (having sent the bill
of lading to the banks for checking) to
send to the consignee a letter of
indemnity (LOI) which can be presented to
the carrier in exchange for the cargo. The
LOI indemnifies the carrier against any
cargo claim, but the document is not
transferable and has no established legal
status. For letter of credit and
documentary collection transactions, it is
important to retain title to the goods until
the transaction is complete. This means
that the bill of lading still remains a vital
document within international trade.

Alternatively, to overcome the possibility of

the goods reaching the destination ahead
of the cargo, majority of the Shipping Lines
offer an “Express release” service
(formerly known as “Telex release”). By
surrendering the full set of bills of lading
issues at the port of loading, the shipping
line can instruct the port of discharge to
release the cargo without the physical
presentation of bills of lading at
destination.

Electronic bills of lading …

For many years, the industry has sought a
solution to the difficulties, costs and
inefficiencies associated with paper bills
of lading. One answer is to make the bill
an electronic document.[24] An electronic
bill of lading (or eB/L) is the legal and
functional equivalent of a paper bill of
lading.[25] An electronic bill of lading must
replicate the core functions of a paper bill
of lading, namely its functions as a receipt,
as evidence of or containing the contract
of carriage and as a document of title.[26]

The UK Carriage of Goods Act 1992 s.1(5)

enables the trade minister to make
regulations for electronic transactions. As
yet, no such regulations have been made,
as electronic interchange is already lawful.
Electronic "clubs" such as BOLERO[27] have
been quite successful, but the maritime
trade community is traditional and loath to
move away from paper transactions, so
progress has been very slow. However, in
recent times, it has been proposed that
Blockchain technology may be the answer
to cover the myriad steps in an export
trade transaction, thereby enabling
electronic transactions and information
transfer that is both speedy and reliable.

Name
The word "lading" means "loading", both
words being derived from the Old English
word hladan.[28] "Lading" specifically refers
to the loading of cargo aboard a ship.[29]
The Dutch word "lading" has exactly the
same meaning (freight, cargo, an amount
of transportable goods) as it has in the
English "bill of lading", but is not restricted
to shipping.

Under English law, the Carriage of Goods

by Sea Act 1992 provides that the term
"bill of lading" includes a "received-for-
shipment" bill of lading issued by, say, a
freight forwarder or a storage
depot/warehouse. A "combined bill of
lading" may be issued by a carrier who,
say, collects goods from a factory for
subsequent delivery to a ship via multi-
modal transport.

How to recognize a valid

international bill of lading
The table below explains how to recognize
a valid BOL for most international shipping
companies, including the SCAC:
Carrier SCAC + Master BOL Examples

Cosco (CCLU, CSLU, COSU or CBHU) 10 Numbers CCLU1234567890

Evergreen EGLV(12 Numbers) EGLV123456789012

OOCL OOLU(10 Numbers) OOLU1234567890

Matson MATS(10 Numbers) MATS1234567890

Maersk MAEU or MRKU(9 Numbers) MAEU123456789

K-Line KKLU AA(A or 1)(Followed by 6 Numbers) KKLUAAA123456

MSC MSCU or MEDU[30] A(A or 1) (Followed by 6 Numbers) MSCUAA123456

Hapag-Lloyd HLCU AA(A or 1) (Followed by 9 Numbers) HLCUAAA123456789

CMA CGM (CMAU or CMDU) AAA (Followed by 7 Numbers) CMAUAAA1234567

Hyundai HMDU AAAA (Followed by 7 Numbers) HMDUAAAA1234567

Hyundai QSWB ( followed by 7 numbers) QSWB6444089

NYK NYKS AAAA (Followed by 8 Numbers) NYKSAAAA12345678

Yang Ming YMLU(E, B, T or W) (Followed by 9 Numbers) YMLUE123456789

UASC Lines UASUAAAAA (Followed by 6 Numbers) UASUAAAAA123456

ZIM ZIMU or SSPH AAA (Followed by 4-7 Numbers) ZIMUAAA1234567

MOL MOLU (11 Numbers)A MOLU12345678901A

Hamburg Süd SUDU55555(7-Alphnumeric) SUDU12345AAAAAAA

APL APLU(Sometimes has a 0) (Followed by 8 Numbers) APLU012345678

SM Lines (SMLM) + 4letters + 8 Numbers SMLMNJPE70038700

Turkon Lines TRKU + 6 letters + 6 numbers TRKUMERNYC054228

Maruba MRUB + 6 letters (POLPOD) + 6 numbers (YYNNNN) MRUBBUEHKG180001

See also
Law of Carriage of Goods by Sea
 Trade finance
Waybill

References

Notes …

1. Carriage of Goods by Sea Act 1992

s.1(2)b
2. "UNCTAD" (PDF). unctad. unctad.
3. In a CIF contract, the buyer is
essentially buying three documents, all
of which grant rights over the cargo
4. Carriage of Goods by Sea Act 1992
s.1(2)
 5. If a so-called "bill of lading" is NOT
transferable, it will be merely a sea-
waybill or a ship's delivery order
6. Carriage of Goods by Sea Act 1992 s.4
7. ... or received for shipment
8. "Evidences": the contract may already
have been made informally by say,
booking cargo space on board.
9. Levi, Maurice D. (2005). International
Finance, 4th Edition. New York, NY:
Routledge. ISBN 978-0-41-530900-4.
10. Bohra, Harsh. International Trade and
Finance. Wide Vision.
11. that is, the identification marks and
numbers.
12. "THE EVOLUTION OF THE BILL OF
LADING SF du Toit (University of
Johannesburg)" (PDF). pp. 2–3.
13. "BILL OF LADING" (PDF). Archived
from the original (PDF) on 2014-05-
30.
14. Qais Ali Mahafzah, The Legal
Effectiveness of the Both-to-Blame
Collision Clause under Bills of Lading
and Charterparties, 41 Journal of
Maritime Law & Commerce 263
(2010).
15. CFR - formerly known as C&F
16. s.4 thereby overrules the decision in
Grant v Norway 1851 10 CB 665
17. Law Commission report into "Rights of
Suit in respect of Carriage of Goods by
Sea", LAW COM No 196 1991
18. Mayer, Ray August; with revisions by
Don; Bixby, Michael (2013).
International business law : text,
cases, and readings (6th ed.,
international ed.). Harlow [etc.]:
Pearson. ISBN 0273768611.
19. Buckley, Adrian (2004). Multinational
Finance. Harlow, UK: Pearson
Education Limited. ISBN 978-0-27-
368209-7.
20. The Carriage of Goods by Sea Act
1992 s.1(2) provides that a bill of
 lading may be a "received for shipment
bill of lading"
21. ... but there is no legal advantage to
this exercise.
22. see: Sandeman v Scurr (1866) L.R. 2
Q.B. 86, Manchester Trust v Furness
[1895] 2 QB 282 & [1895] 2 QB 539, &
The Draupner [1910] AC 450
23. s.1 Carriage of Goods by Sea Act 1992
24. Section 1(5) of the UK's Carriage of
Goods by Sea Act 1992 empowers the
minister to make such provisions.
25. "PAPERLESS TRADING (ELECTRONIC
BILLS OF LADING) ‐Frequently asked
questions ("FAQs") - UK P&I" .
 Ukpandi.com. 2013-07-30. Retrieved
2014-07-31.
26. "Electronic Bills of Lading (eB/Ls)" .
Essdocs.com. Retrieved 2014-07-31.
27. BOLERO
28. "Online Etymology Dictionary" .
29. "Definition of lading in English" .
Oxford University Press. Retrieved
2015-09-12.
30. "New MSC Bill of Lading Prefix:
MEDU" . MSC. Retrieved 28 February
2019.

External links
 William W. Porter, A Treatise on the Law
of Bills of Lading (Philadelphia: Kay and
Brothers, 1891)

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