Freight the Carrier

Bills of lading are, by commercial practice, transferred by endorsement or otherwise to banks and merchants who take them in order to obtain the ultimate right to the goods or a security interest therein. The seller consigns the goods and present the bill of lading and all other documents necessary to clear the export of the goods including a certificate of insurance and invoice to the bank who check the documents, take possession and pay him. The shipping documents are then negotiated back to the buyer’s bank. The buyer can pay the bank, obtain the documents and present the bill of lading to the carrier in order to obtain delivery of the goods. Bills of lading open the door to dealing in the goods by way of sale or security while in transit. Since a bill of lading is to be acted on by buyers and by banks under commercial credits it is of the greatest importance that the terms should be accurate. Credit will be extended on the basis of a bank’s faith in the truth of the stated description of the goods in the bills of lading and other documentation. Banks are reluctant to accept bills which are not shipped on board bills of lading or which may be unclean or claused i.e. a bill of lading which indicates that the goods were received in otherwise than apparent good condition. To earn freight the carrier is only bound to carry the goods and deliver them in the same order in which he received them. Should the goods have any defects then the carrier will qualify the term “apparent good order” by stating the defects on the bill.