Defining a bill of lading for cargo ships employment in time charter agreement

Outline of bill of lading functions

A bill of lading is a receipt for goods either received (before shipment) or shipped on board. It provides good evidence of the existence and terms of a contract between the shipper and carrier . (A contract of carriage may exist without issue of a bill of lading, however.)

A bill of lading is not a true contract, since it is usually signed by only one of the parties. It is a document of title, signifying that the holder has the legal right to possession of the goods it describes . (The right to possession should not be confused with the right to ownership, which will usually bedetermined by the terms of the sales contract.)

A bill of lading may, depending on how it is made out, be negotiable, i.e. transferable to a third party so as to effect transfer of title to the goods it describes.

The bill of lading as a receipt for goods

The bill of lading’s prime function is as a receipt issued for:

• goods received for shipment either by a carrier or a freight forwarder, etc. pending shipment on a vessel; or

• goods shipped on board the carrying vessel, depending on the wording or endorsements on the bill.

A bill of lading states the quantity and apparent order and condition of the goods when received into the carrier’s care and is normally printed with wording such as “Received in good order and condition unless otherwise stated...” or “shipped in good order and condition unless otherwise stated....”. If this statement is not true, appropriate remarks should be made on the face of the bill of lading. Any shortage or damage to the goods occurring before acceptance by the carrier should therefore be stated on the face of the bill of lading.

If there is no clausing of the bill of lading showing a defective condition or quantity of the goods on receipt by the carrier, the consignee may reasonably expect to receive his goods in good order and condition. Any loss or damage found on delivery will be assumed to be caused by the carrier’s negligence unless he can prove it to be attributable to one of the excepted perils listed in his contract of carriage (e.g. Act of God, inherent vice, etc.).

Where a mate’s receipt is issued, the bill of lading’s description of the quantity/condition of the goods is copied from the description in the mate’s receipt. It is most important, therefore, that the mate’s receipt states the actual quantity/condition of the goods at the time of loading where this is other than “in good order or condition” or differs in quantity from that stated in the shipping note.

Delivery of the goods

The carrier, carrier’s agent or master is legally obliged to deliver the goods to the first person presenting a signed original bill of lading at the discharge port, together with proof of his identity and proof that freight and any other charges due have been paid. (A negotiable bill of lading is effectively, therefore, a cloakroom ticket for cargo: whoever has the bill of lading can collect the cargo.)

Once the goods are released to a receiver (i.e. legally delivered), any carrier’s lien for unpaid freight, etc. will be lost.

If the bill of lading has been transferred by the original consignee, the endorsements on it should be checked before delivery.

If the presented bill of lading appears to be in order, the master or the agent should sign it and date it (known as “sighting the bill”). It is then said to be “accomplished” and is usually stamped “ACCOMPLISHED”. The goods can then be released to the receiver. A delivery order may be issued by the agent to the receiver.

Delivery may be (and in practice is often) made without presentation of a bill of lading, but only when certain precautions have been taken.

For a better understanding of the main functions of a bill of lading it is useful to know the basic documentary procedures used in tramp and liner shipping operations, as outlined below.

Modern liner shipping & documentary procedures for dry cargo ships

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