Bill of Lading is one of the most common contracts used in international carriage of goods by sea. It is highly important that the Bill of Lading is correctly executed and contain all necessary elements in order to safeguard interests of cargo owners and all other involved parties...

Contracts of Carriage: Bill of Lading what is and what it does?

In this article our lawyers will explore one of the most typical contracts of carriage - the bill of lading. The article will explore in depth all the necessary information required to understand for what particular scenarios bill of lading is used and what are the essential elements to ensure that bill of lading is legally binding.

The article will, furthermore, provide the reader with information on the most common types of bill of ladings used in international carriage of goods by sea and provide the reader with understanding on the types of bill of ladings used for different scenarious at carriage of goods by sea.

What is a bill of lading and for what it is used?

If you are importing goods, exporting goods or dealing with ocean freight and air freight, the Bill of Lading is the most important document to have. Bill of Lading generally is a receipt, however it may act as a contract and a document of title. Bill of Lading is issued by or on behalf of a shipowner for the goods loaded on board of its ship, the original Bill of Lading related to these goods shall be presented to the shipowner, so the shipowner undertakes to the consignor to deliver the goods upon the presentation of this Bill of Lading. This is transferable to the subsequent holders of Bill of Lading without involvement of the shipowner.

In principle, the two main types of contracts used in carriage of goods by sea nowadays are the bill of lading and charterparty. The bill of lading and charterparty remain two distinct contracts which are used in carriage of goods by sea. 

Bills of lading have become the customary the document which is used in all international carriage of goods. In practice of course there is a possibility that both bill of lading and charterparty are thoroughly connected in the particular carriage of goods by sea. The bill of lading may expressly incporate terms from another document - the charterparty, by the use of express incorporation words which should appear in front of the bill of lading. 

Most common types of Bill of Lading:

Bearer bill of lading. It does not identify the consignee and is marked to order. In case of transfer to the third party, constructive possession may be transferred without indorsement of the bill.

Charterer’s bill of lading

Issued by a charterer, any implied or statutory contract arising from this type of bill of lading will be with the charterer, rather than shipowner.

Charterparty bill of lading

Incorporates the terms of charterparty. As mentioned in the introduction part, the bill of lading has a possibility to incorporate terms of a particular charterparty.

Claused bill of lading

Contains remarks to the order and condition of the goods, including weight and quantity of the goods loaded.

Clean bill of lading

Contains provision that the goods have to be loaded in good condition and order. Will usually be required for contact of sale and letters of credit.

Combined transport bill of lading

Issued for carriage, involves more than one transport, e.g. road and sea carriage, plane and sea carriage.

Freight forwarder’s bill of lading

Contractual carrier is a freight forwarder, even if the party has no physical role in actual carriage of the goods in question.

Freight prepared bill of lading

Will prevent the carrier to claim freight from the bill of lading holder or to exercise lien over the cargo.

Liner bill of lading

Carrier is responsible for loading, stowing, discharging of the cargo.

Ocean bill of lading

Carrier has responsibilities starting from the moment of loading of the cargo up to discharge of the cargo.

Order bill of lading

The consignee upon the transfer of bill to the third party must endorse it by signing a reverse of the subsequent bill. Names a consignee.

Since there are various types of bill of lading, the choice of the type shall be made depending on what you specifically need.

FUNCTIONS OF BILL OF LADING

Receipt

Bill of lading would act as a receipt that the goods are being transported and will be a proof that the goods have been transferred to the shipping line in good condition.

Document transferring constructive possession

Bill of lading would identify party entitled to possession of the goods in question.The transfer of constructive possession does not always require an attornment. The constructive possession of the goods in this case will entitle the holder of the bill of lading to claim the goods from the carrier and sue in case goods have been delivered to someone else.

Title to goods

When the goods arrive to the destination bill of lading acts as a title to those goods. Only the consignee listed on the Bill of Lading has contractual rights to request for the release of the goods. Bill of lading shall be presented by that consignee and would act as an evidence of the confirmation of the delivery.

The Main Elements Contained in Bill of Lading

Bill of lading will contain the most important information about the cargo and parties involved in the process, for example: Type of cargo being shipped Who is the seller/exporter of the cargo Vessel the cargo is transported on Shipping line Freight forwarder Who is the buyer Consignee Notify party Other information such as number of the bill of lading etc.

If some of the information is missing on a bill of lading it may cause issues in the port of loading or discharge, and may void the bill of lading. It may also influence the ownership of the particular goods.

FREQUENTLY ASKED QUESTIONS ABOUT BILL OF LADING

How do I choose my type of bill of lading?

Bill of lading has various types and the choice of the specific type shall be determined by desired level of protection, who issues bill of lading, form of transmission, purpose of the bill of lading, relationship between buyer and seller etc.

How many bills of lading should I prepare?

Bill of lading is usually issued in the set of three originals.

Can I use bill of lading in court in case of false information?

Bill of lading is a legally binding contract that is used as evidence in court if your shipment gets implicated in legal issues. Double-check your bill of lading so there is no false information indicated, otherwise it could result in payment or shipment delay and be a reason for claim in court.

What to do if I have lost my bill of lading?

Always transfer your bill of lading via tracked courier services or electronic means. Loss of bill of lading may result in legal and financial problems, if you have lost your bill of lading and it has resulted in legal problems, we advise you to immediately contact our maritime lawyers for further guidance – info@baraccuda.eu

Baraccuda Maritime & Shipping Legal Services are qualified and experienced maritime lawyers who will be able to assist you in issues you may come accross in the field of maritime or shipping law. 

For urgent matters use our contact phone or direct contact form - https://baraccuda.eu/en/contacts