Fraudulent Act

Purchasers of a cargo rarely have the opportunity to examine same and to assure themselves of its good condition. Instead they must rely upon descriptions of quality and of quantity as entered in bills of lading. Despite a clean bill of lading indicating cargo to be unblemished, should goods be defective in some way, the consignee (as an innocent party to a fraudulent act) has the right to claim redress from the carrier, or to assume that the cargo was damaged at sea – again very likely the responsibility of the carrier. It follows that great care must be exercised by ship’s masters and by port agents alike to ensure that bills of lading contain only accurate statements as to cargo condition, despite pressures and inducements from shippers and from certain port authorities. On the other hand, remarks contained should not be of trivial nature covering some insignificant defect normally acceptable in the trade concerned, as this might have the effect of interfering with a letter of credit transaction for no reason. It can be seen that a shipper or seller presented with “unclean” bills of lading for a transaction where “clean” bills are needed, is in a difficult position. The problem need not be insurmountable however. The consignee or buyer can be informed of the difficulty, given a copy of a relevant survey report, perhaps renegotiate the purchase price, and still give instructions to his bankers to accept the “qualified” bills. Alternatively, and very occasionally, the issue of clean bills against a letter of indemnity may be justified where the buyer is fully aware of the actual condition of the cargo, and where the goods will not be resold prior to the delivery at the port(s) of discharge. However it should again be noted that such an indemnity is not legally enforceable.