Bills of Lading

For shippers with only a small quantity of cargo available, the chartering of any vessel is hardly a practical proposition. Their requirements are normally catered for by the regular liner services which operate between major ports or alternatively they may make use of the services of tramp vessels which sail from port to port in search of cargo. In either case, once the cargo is loaded, a bill of lading will be issued which will act, not only as a receipt for the cargo shipped, but also as prima facie evidence of the terms of the contract of carriage. Most companies engaged in the liner trade will produce their own proprietary brand of bill, while smaller operators can adopt the standard forms drafted by the international shipping organisations. With the development of international trade and documentary credits, bills of lading have acquired a third function, that of acting as negotiable documents of title in situations where the shipper requires to transfer the ownership of cargo while it is in transit. In such circumstances, the endorsement and transfer of the bill effectively transfers such rights in the goods as are held by the transferor and also enables the transferee to claim delivery of the goods on arrival at the port of discharge. Where such facilities are not, however, required by the shipper, the bill of lading will frequently be replaced by a non-negotiable receipt, known as a waybill. Such a document possesses all the attributes of the normal bill of lading
with the exception that it is not a negotiable document of title. Whereas the parties to a charterparty are free to negotiate their own terms, the inherent inequality of bargaining power as between the parties to a bill of lading contract has necessitated restrictions being imposed on the traditional principle of freedom of contract. International conventions have defined the basic obligations of the carrier towards the cargo and prescribed the maximum immunities and limitation of liability he can claim. The provisions of one of these conventions, the Hague/Visby Rules, are now incorporated into English law by the Carriage of Goods by Sea Act 1971 and any attempt contractually to exclude them is declared to be null and void. While the Rules establish the mandatory core of carrier liability, they are not intended as a comprehensive code, and the parties are free to reach agreement on all other aspects of the contract of carriage on their own terms. The development of containerisation has introduced a further complication in that many
of these contracts of carriage now envisage the participation of a succession of carriers. In such circumstances the normal procedure is to issue a through bill of lading which may provide either that the carrier issuing the bill undertakes responsibility for the entire carriage
through to the destination, or that each successive carrier only accepts liability for the period during which the goods are under his control. Should these successive stages involve carriage by different modes of transport, then the through bill of lading is known as a combined (or multimodal) transport document. Unless the terms of the contract otherwise provide, the provisions of the Carriage of Goods by Sea Act 1971 will of course only apply to the sea leg of such a combined carriage operation. Accordingly a combined transport document will normally include a term to the effect that, while the party issuing the document undertakes to deliver the goods to the agreed destination, any responsibility for loss or damage will be governed by the law of the place where the loss occurred and of the mode of transport being used at the time.