Receipt for the Goods

Where a charterer takes a bill of lading directly from a shipowner the contract is contained in the charter party and the bill of lading is only a receipt and a document of title.  In the words of Lord Esher in Rodocanachi v. Millburn (1886) such a bill of lading was “only an acknowledgement of the receipt of the goods unless there be an express provision in the documents (the charter and bill of lading) to the contrary”.  In Leduc v. Ward (1888) it was said that “where there is a charter party, as between the shipowner and the charterer the bill of lading may be merely in the nature of a receipt for the goods because all the other terms of the contract of carriage between them are contained in the charter party; and the bill of lading is merely given as between them to enable the charterer to deal with the goods while in the course of transit”.  Where a charterer took a bill of lading other than directly form the shipowners the bill of lading became the document defining the contractual relationship between those parties.  In President of India v. Metcalf Shipping Co Ltd (1970) the charterers were is dispute with the shipowners regarding short delivery of goods.  The limitation period had lapsed and the charterers sought arbitration which was provided for in the charter party but not in the bills of lading which the charterers had taken from the shippers of the goods, their sellers.  The shipowners submitted that their contract with the charterers as endorsees of the bill of lading was to be found in the bills of lading which contained no arbitration clause.  This was rejected by the Court of Appeal.  The endorsement of the bill to the charterer was very much an incident of the contract of sale and was in no way intended to alter or supplant the contractual arrangements between the shipowner and the charterer contained in the charter party.  Where the charterer indorses a bill of lading so as to transfer the rights and obligations evidenced by it, the indorsee will not be affected by the terms of the charter party unless there is a clause in the bill of lading incorporating some or all of the terms of the charter party itself and such a term must be clear and express or the bill of lading is one which the master could not have legally given on account of the terms of the charter party.