Proprietary

The mere endorsement and delivery of a bill of lading by way of pledge, for example to a bank in a letter of credit transaction, did not pass the property in the goods to an endorsee so as to make him liable on the contract in the bill of lading. For the Act to apply it is not necessary for the property in the goods to pass at the same time as the endorsement of the bill of lading. If contemporaneous transfer of property and the bill of lading were required then the Act would be rendered useless in a large number of cases where the contract of sale specifies the moment at which property in the goods to pass which moment may well be one other than the time of transfer of the bill. Where the shipper retained the proprietary right in the goods he would also retain the rights of suit against the shipowner under the contract in the bill of lading. In this situation it was said that the Bills of Lading Act 1855 could hardly be construed as intending to take those rights from him and transfer them to the endorsee, in this situation the bankers. If the proprietary rights and the rights of suit are not transferred, neither would be the liabilities under the contract. Section 2 of the Bills of Lading Act 1855 preserves the right of the shipowner to claim freight from the original shipper although the bill of lading may have been assigned by him. Section 2 also preserves the right of the original shipper to stop the goods in transit.