Chapter 2 Bill of Lading

Week 3 & 4

2.0 The Bill of Lading

2.1 Introduction to bill of lading2.2 The nature, functions and types of bills of lading 2.3 Shipment bills of lading process2.4 Transhipment bills of lading2.5 Types of bills of lading2.6 Types of clause of bills of lading

2.1 Introduction to Bill of Lading• International sale involves several

contracts– Sale contract– Charter party (C/P)– Bill of lading (B/L)– Letters of credit

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Definitions– Bill of lading or similar document of title: • Received for shipment – Art III r 3 (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).

• Through or combined transport bill of lading (sea leg)• Straight bill of lading – Rafaela S• Documents regarded as documents of title in custom or trade– Except if marked non-negotiable; e.g., mate’s receipt– Documents acknowledging shipment– Receipts of cargo retained by consignor– Ship delivery order– Not sea waybill

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Definitions

– Art I (c): “goods” excluded from the Rules – live animals, deck cargo – excluded for policy reasons – greater risks with these cargoes

– Precondition for deck cargo to be excluded: clear statement that goods are carried on deck; and in fact cargo is so carried; it is not enough to have general liberty clause to carry cargo on deck (Svenska Traktos)

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Functions of Bill of Lading

(i) Receipt for goods received on board and prima facie evidence of weight, quality, quantity and condition of goods; clean or claused bill of lading; “shipped” or “received for shipment” bill of lading; mate’s receipt; estoppel when in the hands of someone other than the shipper (i.e., lawful holder or endorsee)

(ii) Document of title; right to take delivery of goods; transfer of title by endorsement.

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Functions of Bill of Lading(iii) Evidence of the terms of a contract of carriage between

the shipper and carrier; the terms are usually subject to one of the international conventions.– If the charter party is a contract of carriage and the bill

of lading is also a contract of carriage, which contract governs the carriage of the cargo on the voyage in question?

– where the B/L is issued to the charterer as shipper (i.e., CIF or C&F) = C/P

– where the B/L is subsequently acquired by the charterer as receiver or intermediate buyer (i.e., FOB) = C/P

– any other case = B/L (because the holder of the B/L will not a party to the C/P; he will not be the charterer of the vessel)

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Bill of Lading : Negotiable Instrument• Property in common law and civil law systems are usually in terms of

personality and realty or movable and immovable.

• Personal property is held as a chose in possession (tangible) or a chose in action (intangible).

• Endorsement of a chose in action transfers right of title from one holder to another for valuable consideration. This makes the chose in action a negotiable instrument.

• Sea waybill is generally considered to be a non-negotiable instrument; in the Rafaela S case it was held by the House of Lords that a “straight” bill of lading can be considered as a document of title.

• Ocean Bill of Lading: If a consignment is transported by sea, nationally or internationally Ocean Bill of Lading is used. Ocean Bill of Lading is a common term used in shipping.

• Inland Bill of Lading: Inland Bill of Lading is the bill of lading which allows the shipping carrier to ship cargo, by road or rail, across domestic land, but not over seas.

• Multimodal/Combined Transport Bill of Lading: This is a type of Through Bill of Lading that involves a minimum of two different modes of transport, land or ocean. The modes of transportation can be anything from freight boat to air.

• Direct Bill of Lading: Direct Bill of Lading is used when you know the same vessel that picked up the cargo will deliver it to its final destination.

• Clean Bill of Lading: If a consignment with no damage on packages apparently, the carrier issues a Bill of lading called Clean Bill of Lading.

• Clean On Board Bill of Lading: A consignment with no damage on packages apparently and if such consignment gone on board the vessel, a Clean On Board Bill of Lading is issued by carrier of goods.

• Unclean Bill of Lading/Claused bill of lading/foul bill of lading/Dirty Bill of Lading/Soiled Bill of Lading. If owner of ship or his agent does not agree with one or more of the statements mentioned in the bill of lading, he add the said clause or clauses on the bill of lading. This bill of lading is called unclean bill of lading, claused bill of lading or foul bill of lading.

• Shipped On Board Bill of Lading: A Shipped On Board Bill of Lading is issued when the cargo arrives at the port in good, expected condition from the shipping carrier and is then loaded onto the cargo ship for transport over seas.

• Received Bill of Lading: Received for shipment’ bill of lading can be issued to shipper immediately up on receipt of goods by the carrier after necessary export customs clearance procedures of exporting country.

• Through Bill of Lading: Under a Through Bill of Lading, the shipping carrier can pass the cargo through several different modes of transportation and/or several different distribution centers. This Bill of Lading needs to include an Inland Bill of Lading and/or an Ocean Bill of Landing depending on its final destination.

• Stale Bill of Lading: A Bill of Lading can be treated as ‘Stale’ , if it is presented long after sailing of vessel pertaining to a shipment at port of loading. Such presentation of Bill of Lading could be with the Supplier’s Bank, Discounting Bank, Negotiating Bank, Buyer’s Bank or buyer. The term ‘Stale Bill of Lading’ is also used when a bill of lading is presented with a bank after expiry date of credit.

• Straight Bill of Lading: Straight Bill of Lading is also known as Consignment Bill of Lading. Straight Bill of Lading is a non negotiable Bill of Lading where in no payment is required against the goods. The carrier of goods release cargo to consignee on production of identity of consignee at port of final destination.

• Transshipment bill of lading is another type of bill of bill of lading.Some times, the shipping company (carrier of goods ) may not have direct service from shipper’s place to consignee’s destination. The cargo is transshipped from the intermediate port. In such cases, all transshipment expenses are met by ship owner or his agent, who accepted the goods at port of loading. When transshipping goods, a bill of lading is issued by the vessel owner or his agent who transship the goods. This is called ‘transshipment bill of lading’.

Standard/Normal Clauses that appear on a bill of lading and what it signifies

1. Shippers Load, Stow and count or SLAC – Shipping line is saying that the shipper has loaded, stowed and counted the contents.

2. Said to Contain or STC – Shipping line is saying that based on the shippers declaration, the container is said to contain XYZ cargo and they haven’t verified the contents.. It is the shipper’s responsibility to ensure that they declare the actual and correct cargo loaded in the container.

3. Shipped on Board - Shipping line is confirming that the container has been loaded on board the ship mentioned in the bill of lading

4. Received for Shipment – Shipping line is confirming that the container has been received by them under their control for shipment on a nominated vessel

5. Freight Prepaid – Shipping line is certifying that the freight for the carriage of the cargo has been paid at the origin port Freight

6. Collect – Shipping line is certifying that the freight for the carriage of the cargo has to be paid at the destination port

7. Freight Payable at XXXXXXX – Shipping line is certifying that the freight for the carriage of the cargo has to be paid at a specified location

Special Clauses that are sometimes requested by customers which some carriers allow at their discretion

1. 14 (or “x” number) demurrage or detention free days at destination – By showing this clause on the bill of lading, the carrier is confirming the demurrage or detention or combined free days at destination that is offered to the client

2. Express Bill of Lading, no original required – By showing this clause on the bill of lading, the carrier is confirming that cargo maybe released to the consignee on the bill of lading without the requirement of an original bill of lading

3. On-carriage to final destination on consignee’s risk, cost and responsibility – This clause is shown in some bills of lading where the Place of Delivery is some inland point, but the movement from the Port of Discharge to Place of Delivery will be done by the consignee or their nominated agent.. This is normally requested by the shipper and in such cases, the shipper and the carrier do not take any responsibility for the movement..

4. The value of the cargo is XXXXX covered under commercial invoice YYYYY – In very special cases where dictated to by a Letter of Credit, some carriers show this clause in the body of the bill of lading as per request of the shipper

Clauses that are contentious and not readily allowed by the carrier(s)

• Clean on Board - The clause “CLEAN ON BOARD” was initially used on break bulk vessels.. In all break-bulk and bulk vessels, there is a document called Mate’s Receipt.. This document is like a delivery note and has all the information pertaining to the shipment like cargo description, number of bundles, weight, measurement etc and this note is handed over to the ship at the time of loading..

• Under Deck Stowage – There maybe cases where a container may require to be kept away from the elements – either sun or water..

• Deck Stowage – Customers might specifically request that a container be stowed on deck as the cargo might be Out of Gauge and needs the space and clearance so as not to be crushed by other containers under deck during loading or discharging operations..