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BILL OF LADING

NATURE AND THREE FUNCTIONS OF BILL OF LADING ('B/L')

A bill of lading is a document indicating that described goods are shipped by a named
person on a named ship at a particular place for carriage to a named destination and
delivery there to a named consignee or to his order/ to his assigns.

Some bills however (especially for containers) only indicate goods as "received for
shipment";
and some only refer to a consignee without any reference to “order” (“straight bills of
lading”: see F below)

It is usually signed by or on behalf of the master and usually has many terms printed on
the back.

It has to be tendered to collect the goods, i.e. the carrier is in breach of contract if he
delivers without it, and hence can insist on having it if he is to deliver.
Note however that this requirement is often broken: the ship may agree to deliver
without bill of lading, whether in a charterparty or in a separate transaction, in return for
promise of an indemnity against any adverse consequences of so doing. Such
arrangements can however cause serious problems when things go wrong.

To make sure that there is a bill at destination for delivery to be made, bills are usually
issued in sets of two or three "originals" (plus copies), which were formerly sent to
destination by different means to reduce the risk of loss. The b/l normally states how
many there are.

Consequent upon the fact that it must be tendered, the bill of lading is treated as
representing the goods and dealings with it represent dealings with the goods..

A bill of lading should be distinguished from

pre-carriage documents (mate's receipts, etc)
and post-carriage documents (delivery orders - 'D/0s')
(see F below)

Following on what is said above, the bill of lading is said to have three functions:
evidence of the contract; receipt for the goods; and document of title; and in common
law countries at least it is a transferable contract..

BILL OF LADING AS EVIDENCE OF CONTRACT

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When is the contract of carriage made? Can be on reservation of space, but (probably
more usually) only on receipt of goods by or for the carrier (even if notification of the
shipment has ben given earlier)

On any basis, the b/l being issued after shipment, it is said not itself to be a contract, but
only evidence of a contract made earlier.

This is in theory true as regards the original shipper, but not otherwise (i.e. not
when the bill is in the hands of a later transferee); and in practice is hardly true at
all, because the bill can usually be regarded as reducing to writing a contract made
earlier.

BILL OF LADING AS RECEIPT FOR GOODS: LIABILITY FOR FALSE

STATEMENTS ON BILL

The particulars in the bill of lading relating to the goods are not promises, but merely
statements which provide prima facie evidence that goods were received as described.
If the goods do not arrive as described, the carrier may want to say that this is because
they were not delivered to the ship as described. The statements are certainly prima
facie evidence that they were, but that could be disproved by the carrier.

E. BILL OF LADING AS DOCUMENT OF TITLE : EFFECT OF TRANSFER

A bill of lading may be transferred to another person, thus transferring (in a loose sense)
the right to the goods. It is usually said that this makes the bill “negotiable”, though for
English lawyers this is a misleading term as when properly used it has a different
meaning. “Transferable” would have been better. But “negotiable” (and where
appropriate “non-negotiable”) are in regular use internationally.

(Some documents called bills of lading may not be transferable/negotiable: see below as
to the “straight bill of lading”.)
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F. OTHER DOCUMENTS USED IN CONNECTION WITH SEA CARRIAGE

Mate's receipt

This is an interim document, not necessarily signed by the master, used in some
situations to acknowledge loading; it is then normally surrendered in return for a proper
signed b/l.

It is not (normally) evidence of the contract, as it normally contains no terms, though

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doubtless it is evidence that some contract has been entered into in relation to the goods;

It is said not (normally) to be a receipt for the goods, presumably because the mate
(first officer) or person signing for him does not have authority to bind the carrier by such a
document;

It is not a document of title, because the custom of merchants has not been proved
that it is treated as representing the goods. Thus for a seller/shipper to keep the mate's receipt
on shipment s not likely to constitute retention of property and/or possession for purposes of
security: for the carrier may legitimately deliver the b/l, when issued, to someone else - a
provision for issuance of b/l against mate's receipt is apparently for the carrier’s benefit so he
need not rely on it.

Delivery Order

The term delivery order (D/O) is not a term of art: it can have all sorts of meanings. Some
are just part of a procedure for getting goods out of the dock. The main type concerning us
here is that used to divide up a bulk cargo: big bulk carriers carry more than any single buyer
would usually want, and carriers do not apparently like issuing a lot of Bs/L. (A 450,000-
tonne bulk grain carrier coming into Rotterdam would need a great many). So the holder of
the b/l asks the holder of the goods concerned to deliver part to a named person. These
documents are sometimes indorsed too, just like Bs/L. But it has never been established that
these are documents of title either.

Two main types:

(i) addressed to person holding goods, viz. in our context (though they are used in
warehousing too) the carrier ("ship's D/O");

(ii) addressed to agent of issuer at port of discharge, viz. taking effect only after the end
of transit ("merchant's D/O").

Type (i) - to what extent as good as a b/l?

1. Can you transfer property in goods afloat by transferring a D/O? Yes, because that
only requires intention in the laws of many countries - there is no need for a
document at all. But D/Os are largely used for parts of a bulk and in some countries
(no longer in UK) property cannot pass in parts of a bulk (till the part is measured
out) anyway. So in the context of splitting a bulk, a D/O may not be effective to pass
property.

2. Can you transfer constructive possession of the goods by doing so? No: this needs a
document of title - it is the key feature of a document that its transfer has this effect.
To get the same effect the holder of the gods (carrier) would need to “attorn” to the
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new holder on every transfer.

3. Can the person to whom delivery is to be made under such a document sue the carrier
on the contract of carriage? Yes under the U.K. Act of l992, and it seems to be
envisaged that such documents may be transferred by the person originally designated
and subsequent holders and so can be sued on by a person not named in them. But
the 1855 formulation does not allow holders of such documents to sue carriers: it
concerns bills of lading only. The party concerned would have to sue, if at all, under
a Brandt v. Liverpool contract (implied contract arising from request and delivery).

Through or combined transport (multimodal)Bs/L

Terminology is not stable, but in general a Through B/L is an ordinary b/l with provisions for
further transit, whether by sea or some other mode. One has to look carefully to see whether
the carrier agrees to fix this as principal or as agent.

A Combined Transport (or Multimodal) B/L covers different modes of transport and involves
the carrier undertaking the whole carriage (though there may be different regimes of liability
for the different legs and this may cause difficulty, e.g. when it is not certain when the
damage occurred). Is it a b/l a document of title? do the 1992 Act or Hague Rules apply?
None of these are clear.

Short form B/L

This is just an ordinary b/l without all the terms on the back: the terms are mostly
incorporated by reference to some standard set of conditions. May be transmissible by visual
display since the reader knows that there is nothing on the back.

TERMS OF CONTRACT:

(1) Obligations of carrier

As for voyage charters, with appropriate changes (e.g. (i) deviation more likely to be
acceptable; (ii) likewise the meaning of “reasonable dispatch” differs; (iii) for the purposes of
duties adhering at the beginning of the voyage (seaworthiness and cargoworthiness) each
consignment is on a separate voyage from the place at which is was loaded.

(2) Obligations of shipper

As for voyage charter, with appropriate changes (e.g. orders given by shipper less likely)

(3) Burden of proof as to excepted perils

This can cause problems, at any rate at the negotiation stage of a dispute. In general it
seems that if the receiver proves non-receipt or damaged arrival of goods, carrier can then plead
(unless estopped) that they were never loaded, or loaded damaged (see “Bill of lading as receipt
for Goods” above), or else plead a general excepted peril (eg “perils of the sea”, “inherent vice”)
and leave it to the receiver to prove that a non-excepted peril (e.g. unseaworthiness) caused the
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loss. The incidence of proof can be important in claim negotiations. (The Rotterdam Rules seek
to deal with this problem in some detail.)