Obligations Under A Bill Of Lading

Increased Obligations Under A Bill Of Lading. The carrier under a bill of lading is usually the shipowner. He will also be the owner under a charterparty. It is common that a charterparty will require the master to sign bills of lading on behalf of the owners in pretty much whatever form they are produced, for example: Clause 8 NYPE Timecharter – The Captain, who is to sign bills of lading for goods as presented ….. Gencon voyage Charterparty – The Captain to sign bills of lading …. as presented ….  Charterparty terms such as these require the master to sign the bills of lading, which are given to him by charterers/shippers (as carrier), even if the bills of lading impose greater obligations on the owner than those under the owner’s charterparty. Where the owner is taking on more responsibility (under the bill of lading) than he agreed under the charterparty, he is entitled to recover from the charterer any extra liability he incurs by reason of the increased obligations he has taken under the bill of lading. Thus the owner has an indemnity against his charterer. The Gencon voyage charterparty provides for this by saying that the bills are signed without prejudice to the charter party. Should the master sign all bills ‘as presented’? No. There are some bills of lading which the master is entitled to refuse to sign. If he does sign such bills of lading, then he will not be entitled to an indemnity from the Charterer. This is because he could have refused the charterer’s request to sign the bills of lading. The types of bills of lading which the master may refuse to sign are:

• Bills of lading incorrectly dated – bills of lading should be dated for the date loading of the cargo in that bill is completed. Many Letters of Credit/sale contracts impose a deadline for shipment, that is, completion of loading. There is pressure on the Charterer to obtain a bill of lading which is dated no later than the sale contract shipment date. If loading of goods is not completed until after that date then a correctly dated bill will not match the required documents he must present under this Letter of Credit, and he may not get paid. The charterer may ask the master to sign a back-dated bill of lading. The master is entitled to refuse.

• Bill of lading stating deck goods have been loaded under deck – the Hague and Hague-Visby Rules do not apply to deck goods and therefore owners are able to exclude their liability for loss of or damage to deck goods under bills of lading to a much greater extent than they can for under-deck cargo. Deck goods inevitably face much greater risks of loss and damage than under-deck goods. If goods are stated to be loaded under deck, then the carrier/owners would be bound by that bill of lading representation and Hague or Hague-Visby Rules would apply and impose much greater obligations on the carrier/owner. Owners will also be aware that such a misstatement can prejudice their P&I insurance cover. Thus, such a bill of lading would increase the risk of a successful claim against the owners, and greatly reduce the likelihood that they were insured for the loss. The owners would have to pay for the loss themselves.

• The bill of lading names a discharge port outside the charterparty limits – some charterparties may impose trading limits, for example, a restriction on where the vessel may trade. It may specifically exclude areas for the trading of the vessel. That is because the excluded areas are associated with higher risk to the vessel and possibly higher operating expenses. The vessel has not consented to go to those excluded places under the char- terparty and if the master signs a bill of lading saying that the vessel will go there, the vessel must do so. Signing such a bill gives up owners’ rights under the charterparty.

The bill of lading does not accurately represent the condition, quantity or nature of the goods – as stated above the bill of lading is prima facie evidence of the apparent condition, quantity and nature of the cargo. In the hands of a third party buyer, for value of the goods, the representations in the bill of lading become absolutely binding on the shipowner. Therefore, the shipowner will not be able to argue, as against the receiver/bill of lading holder, that he is not responsible for the difference between the goods as delivered and the goods as described in the bill of lading. That is the case even if the difference is wholly due to pre-loading factors.

For example, if goods are loaded damaged, but “clean” bills of lading are issued, that is, misstating the condition of the goods, then the receiver is entitled to believe that the goods were loaded in apparent good order and condition and the damage found on discharge occurred during the carriage, for which the carrier is responsible under the bill of lading contract of carriage. Similarly, if the weight of loaded goods is less than the bill of lading weight, then the carriers/owners can expect to face a shortage claim from the receivers, who have paid for the goods based on the bill of lading weight. The receivers/bill of lading holders will assume that the shortage is due to the fault of the shipowners under the bill of lading. In all these circumstances the carrier/owner is entitled to refuse to sign the bill of lading.