Bill of Lading

Even more than charterparties, bills of lading are core contracts in the business of the international carriage of goods by sea. In every situation where there is a charterparty there will be at least one bill of lading, usually many more. To get a proper understanding of charterparties, how they work and what they do in practice, it is necessary to have a good understanding of the bill of lading contract and the close relationship between the two contracts. WHAT ARE BILLS OF LADING? When goods are carried by sea, a seller of goods is unable to give delivery of the goods to the buyer physically. Instead of handing over the goods, the practice that has developed is that the seller gives the buyer a document, describing the goods, proving they are on board the ship and entitling the buyer to obtain delivery of the goods on production of the document to the shipowner. This document is the bill of lading. The bill of lading is a two-sided paper document. On its face it records details of the goods, who shipped them, where they are going from and to and the date on which loading is completed. On its reverse is the ‘small print’ containing terms and conditions. Samples of bills of lading are attached in Appendix 1. There are different styles of bill of lading, to reflect the different types of goods carried. THREE FUNCTIONS OF A BILL OF LADING: A bill of lading has three key functions, all of which are important to the parties trading the goods, and the shipowner: • A receipt • A document of title • A contract of carriage.