Negotiable instrument

Once it has been determined as a matter of construction and without regard to the existence of actual or ostensible authority that the shipowner is the contracting party and that the bills of lading are “owners’ bills”, the shipowner can escape liability for the carriage only if he can show that the signatory had neither actual or ostensible authority to bind him. A contract may be with the owners even though the charter contains a clause that the Master shall sign the bills of lading as agents of the charterers if the bill of lading holder does not know of the clause. In an attempt to avoid the possibility that time charterers other than by demise might be held liable as parties to a bill of lading without being able as owners of the ship to claim the protection from the limitation of liability afforded by the Merchant Shipping Act, 1894 sections 502 and 503, most modern bills of lading in use by liner companies contain a demise clause.  However since the enactment into English law of article 1.2 of the Convention on Limitation of Liability for Maritime Claims 1976 by section 186 of the Merchant Shipping Act, 1995 such precautions have become unnecessary. Goods shipped under a bill of lading may be made deliverable to a named person or to a name left blank or “to order”. Bills of lading making goods deliverable “to order” or “to order or assigns” are not negotiable instruments.  “Negotiable instrument” describes a document which can give to a transferee a better title than that possessed by a transferor. A bill of lading is not “negotiable” in this sense since an indorsee does not get a better title than his assignor.