Trading Terms

The B/L will of course show the names of the shipper and consignees, the name of the ship, the loading port and the destination. There will also be some reference to the freight payment, either that it has been prepaid or that it has to be collected. Finally it will have the signature of the Master (often signed ‘for the Master’ by the ship’s agent) and the date. The date can be very important, affecting, as it does, letters of credit and trading terms. A shipper can transfer ownership of goods by making the bills of lading over to a named consignee, or to the ‘order’ of that consignee, or by “endorsing” the bills of lading to another party. In fact, such transfer of ownership and the buying and selling of bills of lading is common practice in international trade and a bill of lading may change hands several times before it reaches the party who will eventually claim and take delivery of the cargo at the discharge port(s). Where payment for the goods has been arranged via a documentary credit (often called a letter of credit) the B/L becomes vital in its other role as a document of title, namely as security for payment. Banks never want actual title to the goods, with all the responsibilities that also involves, but they do want the security of denying payment to a shipper until satisfied that all the conditions of a contract of sale have been carried out and, of course, denying title to consignees until payment has been made by them to the bank concerned. Where consignments of Parcel or Liner Cargo are concerned, the actual contract may well be no more than a telephone conversation or a simple fax message (very occasionally a ‘Booking Note’) and so the B/L is often the only means of setting out the terms and conditions of carriage which are usually printed on the reverse side of the B/L form and so provide evidence of a contract.