Bill of Lading in Dry Bulk Shipping

Bill of Lading (B/L) in Dry Bulk Shipping

 

A Bill of Lading (B/L) is a crucial document in the international shipping industry, including dry bulk shipping. It serves as a contract between the shipper and the carrier, a receipt for the goods being transported, and evidence of title to the cargo. In dry bulk shipping, the B/L is particularly important as the commodities being transported are often in large volumes and require specialized handling, such as grains, coal, iron ore, or cement.

Key Functions of a Bill of Lading in Dry Bulk Shipping:

  1. Contract of Carriage: The Bill of Lading (B/L) acts as a binding agreement between the shipper and the carrier, outlining the terms and conditions under which the cargo will be transported. This includes details like the destination, freight charges, and the specific handling requirements of the dry bulk cargo.
  2. Receipt of Goods: Upon loading the cargo, the carrier issues the Bill of Lading (B/L) to the shipper as a receipt acknowledging that they have received the goods in good order and condition. The document specifies the quantity, weight, and description of the dry bulk cargo, which becomes crucial in case of disputes or cargo damage during transportation.
  3. Evidence of Title: The Bill of Lading (B/L) serves as proof of ownership of the dry bulk cargo. It can be transferred to another party by endorsement, which allows the transfer of title and facilitates the buying and selling of the goods while they are in transit. This is especially important in the case of international trade, where ownership of the cargo may change hands multiple times before reaching its final destination.

Key Elements of a Bill of Lading in Dry Bulk Shipping:

  1. Shipper and Consignee Information: The Bill of Lading (B/L) must include the names and addresses of the shipper (the party sending the goods) and the consignee (the party receiving the goods). In some cases, the consignee may be designated as “to order,” allowing the Bill of Lading (B/L) to be endorsed and transferred to another party.
  2. Carrier Information: The Bill of Lading (B/L) identifies the carrier responsible for transporting the dry bulk cargo, including their name, address, and contact details.
  3. Description of Goods: The document provides a detailed description of the dry bulk cargo, including its quantity, weight, and any special handling requirements. This information is essential for the carrier to ensure proper stowage and care of the cargo during transportation.
  4. Freight Charges: The Bill of Lading (B/L) outlines the freight charges and any additional fees, such as surcharges or demurrage, associated with the transportation of the dry bulk cargo.
  5. Terms and Conditions: The Bill of Lading (B/L) specifies the terms and conditions governing the carriage of the cargo, including any relevant laws or regulations, liability limitations, and dispute resolution procedures.
  6. Date and Place of Issue: The Bill of Lading (B/L) includes the date and location where it was issued, as well as the signature of the carrier or their agent as proof of the agreement.

The Bill of Lading (B/L) is an essential document in dry bulk shipping, serving as a contract between the shipper and carrier, a receipt for the goods, and evidence of title to the cargo. Ensuring that all relevant information is accurately included in the Bill of Lading (B/L) is crucial to avoid potential disputes, delays, or additional costs during the transportation process.

The Bill of Lading (B/L) is typically issued in a pre-printed format. The B/L may pertain to either a specific or a general cargo transaction, or it may be drafted for liner services.

 

What are three (3) basic functions of Bill of Lading (B/L)?

1- Receipt for the cargo. Bill of Lading (B/L) is signed by the Ship Master or by the Shipowner’s Agents on behalf of the Carrier, with remarks as to the condition of the cargo

2- Evidence of a contract governing terms and conditions of carriage

3- Document of Title (DOT) to the cargo, by which implies the cargo may be transferred to another party

 

1- Bill of Lading (B/L) as a Receipt

Bill of Lading (B/L) indicates the quantity and description of the cargo loaded. Usually, the Bill of Lading (B/L) incorporates wording such as “Weight measurement, quality, and contents unknown. All particulars as declared by the Shipper”.

This wording is used because at the point of loading all the Ship’s Officers can tell is that the cargo has shipped on board several cases, drums, etc, or in the case of bulk cargo a quantity of a commodity, but is not capable to evaluate the exact composition of that cargo. In the case of a container or palletized cargoes, it is normal to remark “Container said to contain”. These types of wordings have been tested in many legal disputes. Nevertheless, since the terrorist attacks on the World Trade Centre in New York in September 2001, the United States Customs officers no longer permit Bill of Lading (B/L) for the United States ports to carry these types of catch-all phrases. The United States Customs officers demand the Full Description of the cargoes. 

Bill of Lading (B/L) comments on the condition of the cargo, usually by expressing “in apparent good order and condition”. 

Besides the quantity and condition of the cargo, the Bill of Lading (B/L) also shows any detail required to identify the cargo such as marks and numbers.

Bill of Lading (B/L) shows the names of the shipper and consignees, the name of the vessel, the loading port, and the discharging port. 

Bill of Lading (B/L) shows the freight payment, either that the freight has been prepaid or that the freight has to be collected. 

Eventually, the Bill of Lading (B/L) incorporates the signature of the Ship Master and the date. The date can be very important for the Letter of Credit (LC) and trading terms.

 

2- Bill of Lading (B/L) as Evidence of a Contract

In liner trades, the actual contract may well be no more than a telephone conversation or a Booking Note. Therefore, the Bill of Lading (B/L) is usually the sole means of incorporating the terms and conditions of carriage which are usually printed on the reverse side of the Bill of Lading (B/L) Form. Therefore, the Bill of Lading (B/L) Form provides Evidence of a Contract.

In bulk trades, the Bill of Lading (B/L) should contain a reference to the relevant Charterparty that includes wording such as “all terms, conditions, and exceptions of charterparty dated New York are deemed incorporated herein”.

Usually, Charterparty Forms incorporate wording to the effect that certain Charterparty Clauses, such as Clauses Paramount, are to be fully incorporated into the Bill of Lading (B/L) issued thereunder. Furthermore, Charterparty Arbitration Clause must be incorporated into the Bill of Lading (B/L) as, failing this, the Bill of Lading (B/L) Holder may not be able to apply for arbitration against the Carrier.

In case the terms of the Charterparty and the Bill of Lading (B/L) conflict, those of the Bill of Lading (B/L) will take precedence over those of the Charterparty.

This may sound odd at first when a person considers how much effort went into drafting the Charterparty, but remember the role of the Bill of Lading (B/L) as a Document of Title (DOT). If title to cargo has indeed been sold on, a new consignee would be completely remote from the original negotiations between the Charterer and the Shipowner. What the consignee would have, nevertheless, is the Document of Title (DOT) and that is what the consignee remunerated for and that is what the consignee has a right to receive. Consequently, the Bill of Lading (B/L) may incorporate the Charterparty, but this should not mean that the Charterparty incorporates anything more onerous than that which is expressly stated in the Bill of Lading (B/L).

 

3- Bill of Lading (B/L) as a Document of Title (DOT)

A shipper can transfer ownership of cargoes by making the Bill of Lading (B/L) over to a Named Consignee, or To The Order of that consignee, or by endorsing the Bill of Lading (B/L) to Another Party. 

Transfer of cargo ownership and the buying and selling of a Bill of Lading (B/L) is standard practice in global trade and a Bill of Lading (B/L) may change hands several times before it reaches the party who will finally claim and take delivery of the cargo.

When payment for the cargoes has been placed via a Letter of Credit (LC) the Bill of Lading (B/L) becomes critical in its other role as a Document of Title (DOT), i.e. as security for payment. Commercial Banks never want the actual title to the cargoes, with all the responsibilities that are also involved. Commercial Banks want the security of declining payment to a shipper until satisfied that all the prerequisites of a contract of sale have been achieved. Commercial Banks decline the transfer of title of the goods to consignees until payment has been completed.

 

Main Features of Bill of Lading (B/L): 

1- Date of the Bill of Lading (B/L)
2- Names of Shipper and Consignee
3- Quantity of Cargo
4- Accurate Cargo Description and Condition
5- Ship’s Name
6- Ports of Loading and Discharging
7- Terms and Conditions of Carriage
8- Payment of Freight.

 

Bill of Lading (B/L) at the Loading Port

Ship Agent may be assigned the duty of drawing up a Bill of Lading (B/L), and if a Bill of Lading (B/L) is subsequently required for a Letter of Credit (LC) transactions, it is reasonable that the Ship Agent is supplied with details of that Letter of Credit (LC) so that all relevant clauses can be incorporated in the wording.

All Bill of Lading (B/L) should be signed by either the Ship Master or by a duly authorized Ship Agent, in their capacities as servants of the Shipowner or the Disponent Owner (Time Charterer) i.e. the Carrier. If time does not permit the Ship Master to sign the Bill of Lading (B/L), a letter is usually drawn up giving the Ship Agent proper authority to sign the Bill of Lading (B/L). Alternatively, it may be agreed at the time of negotiating the Charterparty that “Charterers and/or their agents be authorized by owners to sign the Bill of Lading (B/L) as presented on Ship Master’s and/or Owner’s behalf, in accordance with Mate’s Receipts (MR), and/or Tally Clerk’s Receipts, without prejudice to this Charterparty”.

Uniform Custom and Practice for Documentary Credits (UCP 500) sets out the requirements of banks and other parties managing the Bill of Lading (B/L) and the shipping documents related to the Letter of Credit (LC). Uniform Custom and Practice for Documentary Credits (UCP 500) specifies that the Bill of Lading (B/L) must be signed by the Ship Master or by the Carrier or Carrier’s Agent in a format that identifies the Carrier’s name. For example, Panama Agencies Co an agent for HandyBulk LLC.

Accurately inserting a date in the Bill of Lading (B/L) is crucial. The date on which the complete cargo is actually loaded and the loading operation is completed. 

When cargo is loaded later than stipulated in the Letter of Credit (LC) transactions, shipowners may be requested to sign the Pre-Dated Bill of Lading, possibly against Letters of Indemnity (LOI) to be issued by the Charterers. The consignee may be well aware of the delay in loading and be comfortable with the proposed deal, which otherwise might involve time-consuming and tiresome additional paperwork. However, the wise Shipowner should consider such an approach cautiously. The Shipowner should contact the Protection and Indemnity Club (P&I Club) for advice, even in cases where the Shipowner is convinced that all parties are completely aware of the circumstances.

Usually, the Protection and Indemnity Clubs (P&I Clubs) do not support Shipowners issuing a Pre-Dated Bill of Lading (B/L). Letters of Indemnity (LOI) provided by Charterers under these circumstances are not legally enforceable.

A shipper may instruct the Ship Master to carry an Original Bill of Lading (B/L) in the Ship’s Bag for handing over at the destination port to a Named Consignee. Furthermore, the Ship Master may be requested to issue the shipper with a letter confirming the arrangement, termed Disposal Letter. This procedure was crucial in the days of sailing ships when the cargo-carrying ship could reach the discharging port before any other means of physical communication. However, this procedure become less important when steamships took over and fast mail ships could carry documents much quicker than the tramp ships. Today, this procedure is becoming rare, given the speed and reliability of airmail, but it is still encountered in the Short Sea (Coaster) trades. A relic of those early days, shipping people still issue more than one Original Bill of Lading (B/L) and Non-Negotiable Copy Bill of Lading (B/L). On the Bill of Lading (B/L), above the signature, there is a dotted line where the number set of Bill of Lading (B/L) has to be entered. In the old days, a person could quite understand the despatch of one Original Bill of Lading (B/L) via fast mail package, one in the Ship’s Bag and one held back by the shipper in case the other two became lost. Today, when Letters of Credit (LC) are so frequently involved, the Commercial Banks want all the Original Bill of Ladings (B/L) otherwise they lose their security, so the reason for a set of more than one is something of a historic anomaly. 

 

Releasing Bill of Lading (B/L)

Bill of Lading (B/L) should not be released to Shippers marked Freight Prepaid or incorporating any similar expression indicating that Freight has been paid to the Shipowner or Disponent Owner without that party’s Express Authority so to do. When Freight has not been remunerated, the release of Bill of Lading (B/L) puts the Shipowner in a weak legal position, as the Shipowner may reasonably lose the Right of Lien on the cargo if subsequently this is required to force payment of Freight. Therefore, either Freight should be Fully Prepaid, as indicated on the Bill of Lading (B/L), or alternative wording acceptable to all parties, and the Letter of Credit (LC) arrangements must be found. To give a Charterer the time to make required financial transactions, it is often agreed that Freight is to be paid within so many days of the signing and/or the releasing of Bill of Lading (B/L) by the Shipowner.

 

Cargo Quantity and Condition

Cargo quantity and condition must be satisfactorily and accurately expressed in the Bill of Lading (B/L). 

Usually, the quantity of general or bagged-baled cargoes can be accurately reckoned by Tallymen. Tallymen is appointed and employed by either a Shipowner or Charterer or jointly by both, in which event the Tally-Clerk’s Receipt takes the place of the Mate’s Receipt (MR). With bulk homogeneous cargo there may be a dispute between cargo quantity reckoned by Shore Apparatus and by the calculations of ship’s officers based on a Draft Survey. In some undeveloped ports where Shore Apparatus is unreliable or even non-existent, the ship’s draft measurement is the accepted means of reckoning intaken cargo weight, and the basis therefore of any Bill of Lading (B/L) figure.

Draft Survey should be performed by an Independent Draft Surveyor. Draft Survey should commence with the ship in ballast condition. The difference in the draft when fully laden calculated against the Ship’s Plans and allowing for Bunkers and Fresh Water (FW), etc. provided and consumed in the meantime, will provide a reasonably accurate measurement of cargo loaded. Likewise, a reasonable estimate of cargo on board can be performed even when commencing draft calculations with a laden ship.

If Ship Master observes a substantial discrepancy between Ship Weight Figures and Shore Weight Figures, Ship Master should clause the Bill of Lading (B/L) with Ship Weight Figures if possible, supporting these remarks with an Independent Draft Surveyor’s report or, failing this, certainly, Shipowners should strongly protest over the discrepancy.

The cargo condition may be checked by Tallymen or by Ship’s Officers as loading progresses, and appropriate remarks entered in either Tally-Clerk’s Receipt or Mate’s Receipt (MR), and thereafter in Bill of Lading (B/L). Cargo damage claims can be so high for some cargoes that a fully-fledged Cargo Survey is required. Numerous Protection and Indemnity Clubs (P&I Clubs) insist on Cargo Survey for some cargoes.

Shipowner’s local Protection and Indemnity Club (P&I Club) Representatives may assist in arranging for a respectable Cargo Surveyor to inspect all items presented for loading, recording damages apparent in the cargoes before loading such as indentation or rust, and supporting same with photos.

 

Clean Bill of Lading (B/L)

Many Letter of Credit (LC) dealings request for Clean Bill of Lading (B/L).  Clean Bill of Lading (B/L) expresses that cargoes described therein are in “Apparent Good Order and Condition”; with no additional or alternative wording revealing deficiencies in the cargoes. Unfortunately, challenging though it may be for shippers, a Carrier (Shipowner or Disponent Owner) cannot agree to issue a Clean Bill of Lading (B/L) when cargo is not in good condition, even where Letter of Indemnity (LOI) is offered by the Shippers or Charterers. Bill of Lading (B/L) must accurately reflect the actual condition of the goods, and to do otherwise is to act fraudulently.

Buyers infrequently have the opportunity to inspect the cargo and to assure themselves of its good condition. Usually, Buyers rely upon descriptions of quality and quantity as documented in the Bill of Lading (B/L). Despite a Clean Bill of Lading (B/L) indicating cargo to be unblemished, should goods be defective in some way, the Consignee, as an innocent party to a fraudulent act, has the right to claim redress from the Carrier (Shipowner or Disponent Owner), or to assume that the cargo was damaged at sea, again extremely likely the responsibility of the Carrier (Shipowner or Disponent Owner).

Outstanding supervision must be exercised by the Ship Master and by Ship Agent also to ensure that the Bill of Lading (B/L) incorporates only accurate information as to Cargo Condition, despite pressures and inducements from Shippers or Charterers.

Meanwhile, remarks incorporated should not be of trivial nature covering some insignificant defect normally acceptable in the trade concerned, as this might have the effect of interfering with a Letter of Credit (LC) transaction for no reason.

Unclean (Remarked) Bill of Lading (B/L) for a Letter of Credit (LC) transaction where a Clean Bill of Lading (B/L) is needed, puts the Shipper in a problematic position. The Consignee or Buyer can be informed of the problem, given a copy of a relevant Cargo Survey Report, and maybe renegotiate the purchase price. 

In some circumstances, the issue of a Clean Bill of Lading (B/L) against a Letter of Indemnity (LOI) may be justified where the Buyer is fully aware of the actual condition of the cargo, and where the cargoes will not be resold before the delivery at the port of discharge. However, it should again be noted that such a Letter of Indemnity (LOI) is not legally enforceable.

 

Bill of Lading (B/L) at the Discharging Port

The Carrier (Shipowner or Disponent Owner) should only deliver the cargo to a party who can produce an Original Bill of Lading (B/L) covering the item of cargo claimed. 

The Ship Agent should examine the Bills of Lading (B/L) and confirm it is in good order. When the Ship Agent is satisfied that all is accurate, the Ship Agent issues a Delivery Order in exchange for the Original Bill of Lading (B/L). Afterward, the Consignee presents the Delivery Order to the Port Authority or Terminal Operator and claims release of the cargo concerned.

The Original Bill of Lading (B/L) presented should be stamped, signed, and dated by the Ship Agent, and in doing this Ship Agent is said to have Sighted the Bill of Lading (B/L) on the behalf of the Ship Master. 

The Ship Agent should return the Bill of Lading (B/L) to the Consignee where this is the custom instead of issuing a Delivery Order. The Ship Agent must keep a careful record, as not more than one Original Bill of Lading (B/L) must be Sighted the Bill of Lading (B/L), or more than one Delivery Order be prepared for every set of Bill of Lading (B/L). As an aid to record-keeping in this respect, a copy of the Cargo Manifest may be used, on which to record Sighted the Bill of Lading (B/L).

When the Consignee claims an Original Bill of Lading (B/L) from the Ship’s Bag, the Ship Master or Ship Agent must satisfy themselves with the accurate identity of the Claimant.

In some trades, a Consignee endorses the reverse sides of the Original Bill of Lading (B/L) with confirmation of receipt of cargo, and such Bill of Lading (B/L) is said to be an Accomplished Bill of Lading (B/L). Sometimes, a Shipowner must obtain an Accomplished Bill of Lading (B/L) as a prerequisite for all or part of the Freight.

When a Bill of Lading (B/L) arrives at a discharge port unreasonably late, after a ship’s arrival, a Bill of Lading (B/L) may be said to be a Stale Bill of Lading (B/L). The Stale Bill of Lading (B/L) term is used to describe the Bill of Lading (B/L) presented to a bank for freight collection later than the terms set by a Letter of Credit (LC).

 

Delivery of Cargoes Without Production of an Original Bill of Lading (B/L)

The most serious problem arising at a discharging port regarding the Bill of Lading (B/L) is where for some reason the Bill of Lading (B/L) is unavailable. Usually, such a problem can be overwhelmed by providing the Consignee issues an appropriate Letter of Indemnity (LOI), fully guaranteed by a reputable bank. This Letter of Indemnity (LOI) is kept by the Ship Agent on the Shipowner’s behalf and ultimately exchanged for the Original Bill of Lading (B/L).

The Ship Agent should not delay in exchanging a Letter of Indemnity (LOI) for the properly presented Bill of Lading (B/L) because banks charge quite steeply on a time basis for their counter-signature on such documents.

Letter of Indemnity (LOI) for late arrival of Original Bill of Lading (B/L) must not incorporate any value or time limitation clauses, because the delivery of cargo to someone not entitled to receive it, is a fundamental breach of the Bill of Lading (B/L) contract and therefore positions the Carrier outside the terms of that contract, opening the door to an Action in Tort where the damages are not limited by the Bill of Lading (B/L) Clauses.

 

Types of Bill of Lading (B/L)

 

1- Clean Bill of Lading (B/L)

Clean Bill of Lading (B/L) is a Bill of Lading (B/L) that is unclaused (unremarked). Therefore, the Clean Bill of Lading (B/L) is a fully negotiable document.

2- Dirty Bill of Lading (B/L) – Foul Bill of Lading (B/L) 

Dirty Bill of Lading (B/L) is a Bill of Lading (B/L) that is in some way claused or dirty. Dirty Bill of Lading (B/L) implies that the cargo loaded on board is not perfect in every condition and therefore the shipowner is safeguarding himself against a Cargo Claim for bad delivery at the discharge port with an appropriate endorsement.

3- Received for Shipment Bill of Lading (B/L) – Custody Bill of Lading (B/L)

Most Bills of Lading (B/L) are issued when the cargo is actually shipped on board the ship. In the liner trades, there is the alternative where cargo is actually received into the custody of the Shipowner or Ship Agent, such as a Wharfinger or Port Authority, and is not actually on board the ship at that particular time. It is called Received for Shipment Bill of Lading (B/L) or Custody Bill of Lading (B/L). If such a Received for Shipment Bill of Lading (B/L) is issued, the Shipper is entitled to demand from the Carrier (Shipowner or Disponent Owner) an endorsement on the Bill of Lading (B/L). Under Uniform Custom and Practice for Documentary Credits (UCP 500), this endorsement must identify the date of shipment and reconfirm the name of the Carrier and the Ship. For example, 

“Shipped on board MV HANDYBULK YAGMUR at New York on 30th June 2022”.

Signed…………………….

Panama Agencies Co as agent for the HandyBulk LLC”

Received for Shipment Bill of Lading (B/L) or Custody Bill of Lading (B/L) is common in the container business where containers or cargo are often taken into the Carrier’s Custody at an inland depot.

4- Shipped Bill of Lading (B/L)

A Shipped Bill of Lading (B/L) is the Bill of Lading (B/L) that is usually issued, particularly for bulk cargo, and documents that the cargo described is actually on board the ship. If the Shipowner has previously issued a Received for Shipment Bill of Lading (B/L) or Custody Bill of Lading (B/L), this must be surrendered when the Shipowner issues the actual Shipped Bill of Lading (B/L) itself. 

Alternatively, the Shipowner can simply endorse the Received for Shipment Bill of Lading (B/L) as above. A Shipped Bill of Lading (B/L) is often, particularly in Letters of Credit (LC), tautologically described as a Shipped on Board Bill of Lading (B/L).

5- Direct Bill of Lading (B/L)

Direct Bill of Lading (B/L) covers the carriage of cargoes in one ship direct from one port to another.

6- Through Bill of Lading Bill of Lading (B/L)

Through Bill of Lading (B/L) is issued where the cargo will only be carried for part of the voyage by the Carrier signing the Bill of Lading (B/L). The rest may be overland transport or the cargo may be transshipment into another ship. The essence of a Through Bill of Lading (B/L), as opposed to a Combined Transport Bill of Lading (B/L), is that with a Through Bill of Lading (B/L) the Carrier signing it is only responsible as a Principal for his part of the carriage and acts as an Agent for the shipper for the other parts.

7- Combined Transport Bill of Lading (B/L)

Combined Transport Bill of Lading (B/L) is issued when the cargo is carried by more means than the ship itself. Combined Transport Bill of Lading (B/L) is mainly used in the Container Business when the different modes of the carriage can be especially complicated. For instance, the Carrier could take delivery of a container at the shipper’s premises, truck it to a railway terminal, rail to the port, ship it on board a Feeder Containership, tranship it onto the Ocean Containership and then repeat all that in reverse at the discharging destiny. With a Combined Transport Bill of Lading (B/L) the Carrier signing it takes responsibility as a Principal from start to finish but incorporates limitations of liability for the different sections according to the appropriate international conventions such as Hague-Visby for the sea transportation, C.I.M. convention for rail transportation, C.M.R. for the road transportation.

8- Order Bill of Lading (B/L)

Order Bill of Lading (B/L) should not be confused with an Open Bill of Lading (B/L) which shows No Consignee at all; such would be a most unsatisfactory document as it would be like a blank cheque. 

Order Bill of Lading (B/L) is very common undoubtedly because of its value in the Letter of Credit (LC) transactions. Order Bill of Lading (B/L) can best be compared with a cheque drawn to cash and once Order Bill of Lading (B/L) is endorsed by the Shipper it becomes in effect a Bearer Document. This sounds like an extremely dangerous practice as, theoretically, if someone dropped the Order Bill of Lading (B/L) in the street, someone picking Order Bill of Lading (B/L) up could claim the cargo; in fact, the procedure functions remarkably well.

The banks in a Letter of Credit (LC) transaction do not want to assume the liabilities and responsibilities of a Consignee but simply want to hold the Original Bill of Lading (B/L) as security. Thus, instead of the bank being named as the Consignee and then endorsing it over to the actual importer, the bank insists on the section of the Original Bill of Lading (B/L) marked Consignee having just the words To Order written in, and the Shipper’s endorsement on the back. When all is in order the Bill of Lading (B/L) is handed to the importer who can claim the cargo from the Carrier. Most Order Bill of Lading (B/L) has a space for a Notify Party to be inserted. Usually, Notify Party is the actual importer, and putting the actual importer’s name there ensures that the actual importer knows when to contact the bank. Incidentally, there is no actual legal obligation on a line to pass information to the Notify Party.

9 – Liner Bill of Lading (B/L) 

Liner Bill of Lading (B/L) is still only Evidence of a Contract it carries far more detail than a Charterparty Bill of Lading (B/L) because the reverse of a Liner Bill of Lading (B/L) incorporates the complete text of the contract of carriage. With a Charterparty Bill of Lading (B/L) such wording is not required as the contract is the Charterparty itself. Therefore, it is only required to incorporate a few clauses into the Charterparty Bill of Lading (B/L). 

10- Sea Waybill

In the liner trades, utilizing a Sea Waybill instead of a Bill of Lading (B/L) is becoming more prevalent. Sea Waybill has been in use for Air Freight practically since the commencement of carrying cargoes by air. A Sea Waybill looks very identical to a Bill of Lading (B/L). A Sea Waybill has two main functions, namely a Receipt for cargo and Evidence of a Contract. What a Sea Waybill does not have is any negotiability. A Sea Waybill is not a Document of Title (DOT). This indicates that the cargoes can only be delivered by the Carrier to the Named Consignee.

A Sea Waybill has no disadvantage at all if the Named Consignee has no intention of selling the cargo during the transportation or if a Letter of Credit (LC) is not involved. A Sea Waybill’s mere lack of Negotiability is one of Sea Waybill’s advantages because there can be no doubt or error when it comes to delivering the cargo to the right consignee. Not being proof of title, it does not matter if the ship arrives before the documents. Today, most Sea Waybills are in electronic form. Sea Waybill was not considered when most Bill of Lading Acts was written into statute books. In the United Kingdom, the Carriage of Goods by Sea Act 1992 has replaced the Bill of Lading Act 1855 and included Seaway Bills in its provision.

 

 

Time Charter and Bill of Lading (B/L) 

In Voyage Charter, the Charterparty is quite obviously between the Shipper and the Shipowner. Nevertheless, in Time Charter, the Shipper will not necessarily be aware of the relationship between the Shipowner and the Time Charterer (Disponent Owner). Therefore, the law recognizes that in certain cases the Charterparty signed between the Shipper and the Time Charterer (Disponent Owner) will also involve the Shipowner. 

Almost always the Time Charterer (Disponent Owner) has the same liberties as the Shipowner to make Charterparty terms with Shippers and this means that Freight Prepaid, Freight Payable, or Received for Shipment Bill of Lading (B/L) may be issued as well as Through Bill of Lading (B/L) that impose more liabilities on the issuer and the Shipowner.

When relationships between the Time Charterer (Disponent Owner) and the real Shipowner are good, a few problems may arise. However, in cases where the Shipowner has chartered out the ship to an unsubstantial or unethical Time Charterer (Disponent Owner), there are considerable potential pitfalls for the Shipowner. The worst scenario is if the Time Charterer (Disponent Owner) defaults on paying Hire Money. Then the Shipowner will most likely withdraw the ship from the charter and take over the operation of the ship. 

If the ship has cargo on board at the withdrawal time the Shipowner will need to determine what types of Bill of Lading (B/L) have been issued by the Time Charterer (Disponent Owner). Furthermore, the Shipowner will need to establish what payments, if any, the Shipper has paid over to the Time Charterer (Disponent Owner). If a “Freight Payable at Destination” Bill of Lading (B/L) has been issued, then the Shipowner can request the Freight from the Shipper before delivering the cargo. 

If the Bill of Lading (B/L) is “Freight Payable as per Charterparty” or Freight Payable within a certain period after loading, the Shipowner may be lucky enough to discover that payment had not yet been made, in this case, the Shipowner can demand the Freight or unfortunate find that the Shipper had sent the money to the Time Charterer (Disponent Owner).

If a “Freight Prepaid Bill of Lading (B/L)” has been issued, the Shipowner will be unlikely to recover any of the freight for the cargo. However, the Shipowner is legally obliged to continue the voyage and deliver the cargo to a Bill of Lading (B/L) Holder at the discharging port. The Shipowner has to pay the expensive port costs, and the bunkers required to complete the voyage. The Shipowner can claim these costs back from the Time Charterer (Disponent Owner). Usually, the Time Charterer (Disponent Owner) would hardly be able to settle the Shipowner’s claims.

If the cargo in question belongs to the defaulting Time Charterer (Disponent Owner), the Shipowner will be able to exercise a Lien on Cargo for unpaid daily hire and any associated costs in completing the voyage. 

 

Mate’s Receipt (MR)

When cargo is loaded onboard the ship, the shipper is entitled to be given some declaration of the receipt of that cargo. Traditionally, that was a Mate’s Receipt (MR) signed by a Ship’s Officer incorporating remarks as to the nature, quantity, and condition of the cargo concerned. 

Mate’s Receipt (MR) may be prepared before commencement of loading, thereby providing advance information for Ship’s Officers about the cargo to be loaded, assisting Stowage Plans (SP), and creating a suitable means of documenting a cargo’s good condition, or remarking upon cargo’s defects. Furthermore, Mate’s Receipt (MR) forms proper evidence of cargo quantity and quality.

Mate’s Receipts (MR) are simply receipts and not Documents of Title (DOT) that can be traded commercially. Mate’s Receipts (MR) are delivered to Shippers in return for cargo loaded and subsequently tendered to the Ship Master or the Shipowner’s Agents in return for a signed Bill of Lading (B/L).

In many ports, Mate’s Receipt (MR) is issued by the ship’s command and replaced by a document issued either by the Port Authority or a shore-based Tallying Company specifying the cargo loaded on board. When the Mate’s Receipt (MR) is not issued, the Ship’s Officers must inform the cargo quantify or quality to the Ship’s Agent so that suitable clauses may be placed on the Bill of Lading (B/L).

 

Governing Law of Ocean Bill of Lading (B/L)

In the shipping business, Bills of Lading (B/L) are critical documents. Bills of Lading (B/L) are such critical documents that most maritime disputes are about where and how Bills of Lading (B/L) apply. Bills of Lading (B/L) have three (3) functions:

  • Bills of Lading (B/L) are Receipt for the goods on board the ship
  • Bills of Lading (B/L) are Evidence of a Contract for carriage
  • Bills of Lading (B/L) is a Document of Title (DOT) with important financing functions

Parties to a Bill of Lading (B/L) are:

  • Carriers
  • Shippers

Commonly, the Carrier is the Shipowner or Time Charterer (Disponent Owner) of the ship. The Carrier enters into a Charterparty (Contract of Carriage) with the Shipper. 

Shipper is a person or company that is contracting with a Carrier to carry the cargoes. Identification of the Carrier is paramount because of significant consequences for liability and limitations of liability under applicable law. 

Usually, the Ocean Carrier issues the Bills of Lading (B/L). Bills of Lading (B/L) are usually printed on Standard Forms.

Ocean Transportation Intermediary (OTI) like a Non-Vessel Operating Common Carrier (NVOCC) can be considered as a Carrier. From the perspective of Shippers, Non-Vessel Operating Common Carrier (NVOCC) can be considered as a Carrier. From the perspective of a ship operating common carrier, Non-Vessel Operating Common Carrier (NVOCC) can be considered as a Shipper. Non-Vessel Operating Common Carrier (NVOCC) has the same obligations and defenses as any other carrier regarding its customers.

Ocean Transportation Intermediary (OTI) such as a Freight Forwarder cannot be considered a Carrier. Freight Forwarder is a service provider. Freight Forwarder does not take responsibility for shipments. So, Freight Forwarder is not a Carrier. Usually, Freight Forwarder is the agent of the Shipper. Freight Forwarder arranges carriage with the carrier on the Shipper’s behalf.

 

Governing Law of Ocean Bill of Lading (B/L) in the United States:

  • Harter Act 1893
  • Carriage of Goods by Sea Act (COGSA) 1937
  • Federal Bills of Lading Act 1916 (Pomerene Act)

Federal Bills of Lading Act 1916 (Pomerene Act) applies to Bills of Lading (B/L) that are utilized in Interstate and the United States Foreign Commerce. Federal Bills of Lading Act 1916 (Pomerene Act) provides a general United States legal framework for Bills of Lading (B/L).

Harter Act 1893 applies by force of law to the United States IntercoastalCoastwise, and Inland Waters voyages. 

Carriage of Goods by Sea Act (COGSA) 1937 applies by force of law concerning trade between United States Ports and Foreign Ports and preempts the Harter Act from the point at which the cargo is loaded onto the ship until the point when the cargo is discharged from the ship. 

Instead of Harter Act, parties can also decide to incorporate the Carriage of Goods by Sea Act (COGSA) by contract for the United States intercoastal, coastwise, and inland waters voyages.

Federal Bills of Lading Act 1916 (Pomerene Act) applies to Bills of Lading (B/L) used in United States interstate transportation and for voyages from United States ports to foreign ports.

 

Hague Rules and Bill of Lading (B/L)

Hague Rules refer to an International Convention. In the United States, Hague Rules entered force in 1937. Hague Rules intended to establish uniformity in international shipping. The United States adopted the Hague Rules through the enactment of the Carriage of Goods by Sea Act (COGSA). Most maritime nations and United States trading partners have adopted the Hague Rules. 

Hague Rules were amended in 1968. In 1968, Hague Rules amendments were adopted in the city of Visby. Hence, amended Hague Rules are usually referred to as Hague-Visby Rules

 

Hamburg Rules and Bill of Lading (B/L)

In 1978, Hamburg Rules were adopted by United Nations (UN). Hamburg Rules have not been adopted by many maritime nations and United States.

Carriage of Goods by Sea Act (COGSA) applies to Inland Transportation. Even though the Carriage of Goods by Sea Act (COGSA) only applies by law when cargo is in the custody of the ship, parties may contractually extend the Carriage of Goods by Sea Act (COGSA) to other parts of the voyage, including the inland transportation.

 

 

Negotiable Bills of Lading (B/L) Vs Non-Negotiable Bills of Lading (B/L)

The difference between Negotiable Bills of Lading (B/L) and Non-Negotiable Bills of Lading (B/L) is that Negotiable Bills of Lading (B/L) is a Document of Title (DOT) to the cargoes. Holder of Bills of Lading (B/L) holds title to the cargo identified in Bills of Lading (B/L). Non-Negotiable Bills of Lading (B/L) is not a Document of Title (DOT).

Federal Bills of Lading Act 1916 (Pomerene Act) expresses that Negotiable Bills of Lading (B/L) is one that states that the cargoes are to be delivered to the Order of a Consignee. On the other hand, Non-Negotiable Bills of Lading (B/L) specifies the Name of the Consignee and indicates on its face that it is Non-Negotiable or Not Negotiable.

Shipper can endorse a Negotiable Bills of Lading (B/L). Shipper can negotiate Bills of Lading (B/L) to a third party. Then, Carrier becomes responsible as if that third party was the original shipper. Ocean Carrier must deliver the cargoes to the Named Consignee on Non-Negotiable Bills of Lading (B/L). For Negotiable Bills of Lading (B/L), Ocean Carrier must deliver the cargoes to the person or company whom can produce the Original Bills of Lading (B/L). Receiver is either the original recipient of the Bills of Lading (B/L) or a third party to whom Bills of Lading (B/L) has been negotiated. Non-Negotiable Bills of Lading (B/L) is also referred to as Straight Bills of Lading (B/L).

Through Bills of Lading (B/L) covers both ocean and inland transportation of cargo. Through Bills of Lading (B/L) that includes a substantial carriage of cargoes by sea is a Maritime Contract.

According to Federal Bills of Lading Act 1916 (Pomerene Act), unless Ocean Carrier has a lawful excuse, Ocean Carrier must deliver cargoes covered by Bills of Lading (B/L) on demand of the Named Consignee in Non-Negotiable Bills of Lading (B/L) or the holder of Non-Negotiable Bills of Lading (B/L) for the cargoes when the consignee holds Bills of Lading (B/L).

According to Carriage of Goods by Sea Act (COGSA), Ocean Carrier must:

  • Make the ship Seaworthy
  • Adequately man, equip, and supply the ship
  • Make the holds, refrigerating and cooling rooms, and all other parts of the ship in which cargoes are carried, fit and safe for their reception, carriage, and preservation of cargoes
  • Ocean Carrier shall properly and carefully load, handle, stow, carry, keep, care for cargoes
  • Ocean Carrier shall properly and carefully discharge the cargoes carried

Carriage of Goods by Sea Act (COGSA) states that after receipt of cargoes into the care or custody of Ocean Carrier, Ocean carrier upon demand by the Shipper must issue Bills of Lading (B/L) that is incorporating:

  • Marks required to identify the cargoes being shipped
  • Number of packages or pieces
  • Quantity or Weight of cargoes shipped
  • Apparent Order and Condition of the cargoes 

Naturally, courts have specified that Bills of Lading (B/L) are contracts of adhesion where the Shipper and other affected parties have no option but to accept Ocean Carrier’s form. Therefore, Bills of Lading (B/L) are generally strictly construed against Ocean Carrier. If the wording in the Bills of Lading (B/L) is ambiguous and is susceptible to two reasonable and practical interpretations, then courts will enforce plain meaning of the Bills of Lading (B/L).

Details of Bill of Lading (B/L)

There are two types of contract for the carriage of cargoes by sea: 

1- Contract evidenced by a Bill of Lading (B/L) 
2- Charterparty

Although these are two separate contracts, a ship carrying cargo under a Bill of Lading (B/L) is often also running under a Charterparty. 

A Bill of Lading (B/L) is a contract between a Carrier (Shipowner or Time Charterer) and a Shipper of cargoes. A Bill of Lading (B/L) expresses that the Carrier undertakes to carry the Shipper’s cargoes to the destination in return for a determined amount of Freight payment. 

A Bill of Lading (B/L) is signed by or on behalf of the Shipowner. A Bill of Lading (B/L) expresses the terms on which those cargoes have been delivered to and received by the Shipowner. 

A Bill of Lading (B/L) also incorporates the terms on which the cargoes have been shipped.

If the Bill of Lading (B/L) is negotiable, the Bill of Lading (B/L) will serve as a Document of Title (DOT) to the cargoes. 

Most shipping lines have their in-house Bill of Lading (B/L) Forms, and once they are signed by the Carrier, the Bill of Lading (B/L) will be given over to the Shipper. 

A Clean Bill of Lading (B/L) is unclaused, which indicates it is a fully Negotiable Document.

A Dirty Bill of Lading (B/L) is claused, which indicates that the cargo is not in perfect condition. 

A Bill of Lading (B/L) has three (3) functions: 

1- A Bill of Lading (B/L) is a Receipt of the cargo shipped. A Bill of Lading (B/L) is both a receipt for the quantity of cargoes but also provides evidence of the condition of those cargoes. Clean Bill of Lading (B/L) or Claused Bill of Lading (B/L)

2- A Bill of Lading (B/L) is a Document of Title (DOT). A Bill of Lading (B/L) is a negotiable document

3- A Bill of Lading (B/L) is Evidence of the contract of carriage. The Bill of Lading (B/L) is not the contract but is evidence of a valid contract of carriage of cargoes by sea

A Bill of Lading (B/L) is not issued until the cargo is shipped on board, and the Shipper as the owner of the cargoes becomes jointly and severally liable to the Carrier (Shipowner or Disponent Owner) for any nonpayment of Freight due. 

A Bill of Lading (B/L) is a Document of Title (DOT) and is a Negotiable Document. Therefore, a Bill of Lading (B/L) Holder (the person or company in possession of the Bill of Lading (B/L) may sell the

cargoes to another person, even during transit of the cargoes. The Bill of Lading (B/L) is then endorsed and the Endorsee is entitled to the cargoes. The title is the right to ownership of property with or without possession. 

Many traders think that in today’s business circumstances the Bill of Lading (B/L) may not be the most appropriate document. Therefore, other documents, such as the Sea Waybill and the Combined Transport Bill of Lading (B/L), are becoming more common today. 

A Sea Waybill is not a Document of Title (DOT), but it bears the name of the Consignee who must only identify himself to take delivery of the cargo. A Sea Waybill is not a negotiable document; therefore a Sea Waybill is not accepted by the banks. 

The purpose of the Sea Waybill is to avoid delays to the ship and cargoes which may occur when the Bill of Lading (B/L) is late in arriving at the discharging port. 

Combined Transport Bill of Lading (B/L) covers door-to-door transport by several modes of transportation. Usually, the Combined Transport Bill of Lading (B/L) is used by Liner Companies that choose to propose a full service to their clients. 

In a Through Bill of Lading (B/L), a shipment of cargoes starts from and or finishes its voyage at a place at which the main carrying ship does not call. 

A valid Bill of Lading (B/L) incorporates the following details:

1- Date of Bill of Lading (B/L) 
2- Vessel Name
3- Description of Cargo
4- Name of the Shipper and the Consignee
5- Loading and Discharging Port
6- Payment of Freight
7- Number of Bill of Lading (B/L) Signature
8- Terms of carriage

 

Letter of Indemnity (LOI) and Bill of Lading (B/L)

Occasionally, Original Bills of Lading (B/L) are unavailable at a Discharging Port. This problem can be overcome if the Consignee issues an appropriate Letter of Indemnity (LOI) that is guaranteed by a bank. 

Generally, Carriers (Shipowners or Disponent Owners) do not deliver cargoes without the production of the fully negotiable Original Bill of Lading (B/L). Nevertheless, a Carrier may decide to deliver the cargo, if a Carrier is given a Letter of Indemnity (LOI) from a reliable Consignee. This is because if the Carrier delivers the cargoes without production of the Original Bill of Lading (B/L), that Carrier may face a claim for the value of the cargo from the Bill of Lading (B/L) Holder if the person or company who takes delivery of the cargoes is not the same. 

A Letter of Indemnity (LOI) guarantees that contractual conditions will be met failure to which a monetary payment will be made. A Letter of Indemnity (LOI) is issued by the bank to the Consignee and releases the Carrier from obligation in case the cargo is delivered to the wrong party without the production of the Original Bill of Lading (B/L).

 

Electronic Bill of Lading (B/L)

BIMCO (Baltic International Maritime Council) published Electronic Bill of Lading Standard for Bulk Shipping. Currently, less than 2% of world trade is carried on Electronic Bills of Lading (B/L) due to the absence of available standards and interoperability. To boost the adoption of digital trade documents in shipping, BIMCO (Baltic International Maritime Council) published an Electronic Bill of Lading (B/L) Standard.

The BIMCO (Baltic International Maritime Council) Electronic Bill of Lading (B/L) Standard is a structured dataset consisting of 20 predefined data fields that are routine to Bulk Shipping Bills of Lading (B/L). 

BIMCO (Baltic International Maritime Council) is a founding member of the FIT (Future International Trade) Alliance. FIT (Future International Trade) Alliance is a cross-industry partnership that is operating concurrently to create Open Standards for Electronic Trade Documents. 

BIMCO’s (Baltic International Maritime Council’s) eBL Standard is aligned with the United Nations/CEFACT Multimodal Transport Reference Data Model as well as the standards produced by FIT (Future International Trade) Alliance members. 

The members of the FIT (Future International Trade) Alliance are BIMCO (Baltic International Maritime Council), DCSA, FIATA, the International Chamber of Commerce (ICC), and SWIFT.

 

Legal Aspects of Bill of Lading (B/L)

The legal instrument that governs the transportation of goods aboard ships is commonly known as the Bill of Lading (B/L). Essentially, the Bill of Lading (B/L) is a receipt signed by the ship’s master or another duly authorized person acting on behalf of the shipowner, and it represents a DOT (Document of Title) to the goods specified therein. In the case of non-containerized cargo, the Bill of Lading (B/L) is typically preceded by an MR (Mate’s Receipt) or an equivalent document that serves the same purpose. As the name suggests, the MR (Mate’s Receipt) provides the shipper with proof that the property has been entrusted to the carrier, and that the goods are now in the carrier’s or shipowner’s possession and at their risk. As a general rule, the person in possession of the MR (Mate’s Receipt) is entitled to the Bill of Lading (B/L), which should be provided in exchange for the receipt. This person may also take legal action against anyone who unlawfully interferes with the goods.

It is important to note that the MR (Mate’s Receipt) does not represent a DOT (Document of Title) to the goods and that the mere endorsement or transfer of the MR (Mate’s Receipt) without notice to the shipper or their agent does not transfer ownership of the goods. 

Similarly, possession of the MR (Mate’s Receipt) does not equate to possession of the goods, and the statements contained within the MR (Mate’s Receipt) are not binding on the shipowner in the same way that the statements in a Bill of Lading (B/L) signed within the ship master’s authority are. However, the Bill of Lading (B/L) does provide prima facie evidence of the quantity and condition of the goods received.

The Function of Bill of Lading (B/L) 

The Bill of Lading (B/L) is a commercial instrument that declares that goods have been shipped on a specific vessel or have been received for shipment. The Bill of Lading (B/L) is endorsed by or on behalf of the shipowner and stipulates the conditions under which the goods have been handed over to and received by the shipowner. Most shipping companies utilize their own versions of Bills of Lading (B/L), and once the carrier has signed it, the document is given to the shipper.

By commercial convention, Bills of Lading (B/L) are transferred by endorsement or other means to banks and merchants who use them to acquire the ultimate right to the goods or a security interest in them. The seller dispatches the goods and provides the Bill of Lading (B/L) and all other necessary documentation, including a certificate of insurance and an invoice, to the bank. The bank then verifies the documents, takes possession of them, and pays the seller. The shipping documents are then handed over to the buyer’s bank. The buyer pays the bank, obtains the documents, and presents the bill of lading to the carrier to take possession of the goods. 

Bills of Lading (B/L) allow for the trading of goods through sale or security while they are in transit. Since the Bill of Lading (B/L) is a document that is relied upon by buyers and banks in commercial credit, it is critical that the terms of the document are precise. Credit is extended on the basis of the bank’s confidence in the veracity of the description of the goods stated in the Bills of Lading (B/L) and other related documents.

Banks are hesitant to accept Bills of Lading (B/L) that are not On Board Bills of Lading (B/L), or Bills of Lading (B/L) that may be Unclean (Claused Bills of Lading), which means that the Bill of Lading (B/L) shows that the goods were received in a condition that is anything other than apparently good.

To earn freight, the carrier is only responsible for transporting the goods and delivering them in the same sequence in which they were received. If the goods have any defects, the carrier will qualify the term Apparent Good Order by specifying the defects on the Bill of Lading (B/L).

There is a practice of issuing Letters of Indemnity (LOI) to cover Clean Bills of Lading (B/L). These Letters of Indemnity (LOI) declare that in exchange for a Clean Bill of Lading (B/L), the holder will indemnify the carrier against all risks and claims arising from defects. Such Letters of Indemnity (LOI) are unenforceable through legal means since they are used to obtain a Fraudulent Document of Title (DOT)

In Brown Jenkinson & Co. v Percy Dalton (London) Ltd. (1957), the Court of Appeal held that an agreement between the shipowner’s agents and the shippers, whereby the shipowner’s agents agreed to accept a Letter of Indemnity (LOI) from the shippers in exchange for the issue of a Clean Bill of Lading (B/L) in respect of defective goods, was deemed illegal and unenforceable under the law. The carriers made a representation that they knew to be false with the intention that it should be relied upon by the indorsees of the Bill of Lading (B/L).

Functions of the Bill of Lading (B/L)

The Bill of Lading (B/L) serves three (3) significant functions:

1- Bill of Lading (B/L) serves as a Receipt for the goods shipped
2- Bill of Lading (B/L) serves as a Document of Title (DOT) to the goods through which the property may be transferred to the Bill of Lading (B/L) Holder and upon which money may be advanced
3- Bill of Lading (B/L) serves as Evidence of the contract of carriage

1- Bill of Lading (B/L) as Receipt 

The original purpose of the Bill of Lading (B/L) was to serve as a receipt, commencing with the terms “Shipped Bill of Lading (B/L)” or “Received Bill of Lading (B/L)”, and delineating the goods by quantity, description, and shipping marks. 

The Bill of Lading (B/L) is typically endorsed by the ship master or agent acknowledging the amount and state of the goods when they were loaded aboard. A Bill of Lading (B/L) represents prima facie evidence of the quantity shipped, and the shipowner is obligated to deliver the entire amount of goods indicated in the Bill of Lading (B/L) unless the shipowner can demonstrate that the whole or some part of it was not actually shipped.

In the case of Grant v. Norway (1851), the shipmaster signed a Bill of Lading (B/L) for 12 bales of silk that the shipowner subsequently proved was never placed on board. The court determined that the shipmaster did not possess the authority to sign for goods that were not shipped, and the Bill of Lading (B/L) Holders had no entitlement to claim compensation from the shipowner for non-delivery.

According to the Hague and Hague-Visby Rules and Common Law, the Bill of Lading (B/L) is prima facie evidence that the goods were shipped, and the burden of disproving it falls on the shipowner. The evidence must demonstrate that the goods were not shipped.

In the Smith v. Bedouin Steam Navigation Co (1896) case, the shipmaster signed a Bill of Lading (B/L) indicating that 1000 bales of jute had been shipped. Upon delivery, there was a shortage of 12 bales. The House of Lords determined that the shipowners were liable unless they could establish that the 12 bales were not actually shipped. 

The Carriage of Goods by Sea Act, 1971, which incorporates the Hague-Visby Rules, states that statements in the Bill of Lading (B/L) shall be considered conclusive evidence when such a Bill of Lading (B/L) has been transferred to a third party acting in good faith.

If the Bill of Lading (B/L) incorporates the terms “weight, quantity, and contents unknown,” it is not even prima facie evidence, and the shipper must demonstrate that the goods were shipped to succeed in an action for non-delivery. This was the ruling in the New Chinese Antimony Co v. Ocean Steamship Co (1917) case. When the Bill of Lading (B/L) indicates the number of bags shipped as “weight and contents unknown,” that number remains prima facie evidence of the number of bags shipped. If the consignee can, therefore, demonstrate the short delivery, the inference will be drawn that the bags not delivered contain contents similar in quantity and weight to those that were delivered.

When the Bill of Lading (B/L) states that the goods were “Shipped in Good Order and Condition” or shipped in “Apparent Good Order and Condition,” the shipper is “estopped” from demonstrating against an indorsee for the value of the Bill of Lading (B/L) and against a person rightfully presenting the Bill of Lading (B/L) and taking delivery thereunder that the goods were not in apparent good order and condition, unless it is clearly demonstrated that the indorsee or person presenting the Bill of Lading (B/L) was misled or that they did not rely on the statement.

In the case of Compagnia Naviera Vascongade v. Churchill v. Sim (1947), the timber was visibly stained with petroleum but was indicated in the Bill of Lading (B/L) to be “Shipped in Good Order and Condition.” The court determined that the indorsee of the Bill of Lading (B/L) had the right to sue the shipowner for damages, and the shipowner was “estopped” from denying that the timber was shipped in good condition. According to the Hague and Hague-Visby Rules, the carrier is obliged to issue a Bill of Lading (B/L) that reflects the apparent order and condition of the goods. Such a Bill of Lading (B/L) constitutes prima facie evidence that the carrier received the goods in the order and condition specified. The shipowner is precluded from showing that the goods shipped were marked differently than specified on the Bills of Lading (B/L) if the marks indicate the commercial nature or description of the goods, but not if they were included for ease of identification.

2- Bill of Lading (B/L) as Document of Title (DOT)

A Bill of Lading (B/L) holds a significant legal standing as it represents the possession of the goods. It is essentially a “Document of Title”, which as per the famous Saunders v. Maclean (1883) case, acts as a key that unlocks the warehouse, either floating or fixed, where the goods may be stored, in the hands of the rightful owner.

When presented with a Bill of Lading (B/L), the shipowner is justified in releasing the cargo to the holder, provided they have no knowledge of any wrongdoing. However, in the absence of a Bill of Lading (B/L), the shipowner cannot release the goods, or else they may be held liable under the “Tort of Conversion”.

The Bill of Lading (B/L) confers the right to the holder to obtain delivery of the goods at the port of destination, and during transit, the holder can “deliver” the goods by transferring the Bill of Lading (B/L). This was demonstrated in the Horst Co v. Biddel Brothers (1912) case where the lawyers refused to pay for the goods until they were actually delivered. The court held that possession of the Bill of Lading (B/L) was equivalent to possession of the goods, and as per a CIF Contract (Cost, Insurance, Freight Contract), the seller was entitled to payment on shipping the goods and tendering the DOT (Documents of Title) to the buyer.

It is important to note that a Bill of Lading (B/L) differs from a Bill of Exchange, as it is not a negotiable instrument. Therefore, if the Bill of Lading (B/L) holder endorses it to an indorsee, they cannot transfer any better title than they themselves possess. In other words, if the holder has no title, they cannot pass any title to the indorsee. The term “negotiable” in relation to the Bill of Lading (B/L) simply means “transferable”. By transferring a “Negotiable Bill of Lading (B/L)”, the holder passes on the right to demand delivery of the goods from the carrier on presentation of the Bill of Lading (B/L), known as “constructive possession”.

3- Bill of Lading (B/L) as Evidence of the Contract of Carriage  

Following the transportation of goods by sea under a carriage contract, the shipper signs and delivers the Bill of Lading (B/L). Although the contract was not established before the signing and delivery of the Bill of Lading (B/L), the Bill of Lading (B/L) serves as excellent evidence of the contract’s terms and is the sole evidence in the possession of the indorsee. Nevertheless, the shipowners may demonstrate through oral evidence that the actual terms of the contract do not correspond with those outlined in the Bill of Lading (B/L).

In the Ardennes (1950) case, it was established that the B/L does not constitute the contract between the shipowner and the shipper. The shipper has the right to prove that the prior promise to initially call at a United Kingdom port constitutes the contract, enabling them to hold the shipowner accountable for higher import duty payments. As stated by Lord Goddard in the Ardennes case, it is well-established that the Bill of Lading (B/L) is not a contract in itself between the shipowner and the shipper of goods, although, as Lord Bramwell stated in Sewell v. Burdick case, the Bill of Lading (B/L) is the best evidence of that contract.

When the Bill of Lading (B/L) is transferred to the consignee, as seen in the Aliakmon (1986) case, or by the consignee to an indorsee, the Bill of Lading (B/L) represents the contract of carriage between the consignee/indorsee and the shipowner.

In the Leduc v. Ward (1888) case, it was decided that the indorsee of a Bill of Lading (B/L) was not affected by the alleged agreement between the shippers and the carriers for the ship to proceed via Glasgow.

When a charterer charters a ship to carry goods for themselves, the Bill of Lading (B/L) issued for the goods is a receipt and not evidence or the contract of carriage. The contract for the carriage of goods between the charterer and the shipowner is included in the charterparty.

In the Rodocanachi v. Milburn (1886) case, Rodocanachi chartered Milburn’s ship to transport a cargo of cotton seeds from Alexandria to the United Kingdom. The shipmaster signed the Bill of Lading (B/L) contained an exclusion clause that was not present in the charterparty. Lord Esher held Milburn accountable for the non-delivery of the goods. The B/L did not create a new contract or modify the contract outlined in the charterparty.

In the President of India v. Melcalf (1970) case, the charterer, who was also the consignee, was a FOB Buyer (Free On Board Buyer). The contract of carriage was included in the charterparty between the charterer and the shipowner. If the shipper is not the consignee, the Bill of Lading (B/L) serves as the contract of carriage between the owner and the consignee/indorsee.

Shippers cannot be forced to accept a Bill of Lading (B/L) in accordance with the charter if the charter involves unusual or burdensome terms that they were unaware of. They can demand their goods back if shipped at the ship’s expense.

When the charterer is the shipper and receives the Bill of Lading (B/L) with terms differing from the charter, the proper interpretation of the two documents, when taken together, is as between the shipowner and the charterer. If the charter provides that bills of lading are to be signed “without prejudice to the charter,” the Bill of Lading (B/L) does not vary or alter the terms of the charter, at least when the charterer becomes an indorsee. When the Bill of Lading (B/L) is indorsed as between the shipowner and the indorsee, the Bill of Lading (B/L) is considered to contain the contract.

Main Types of Bill of Lading (B/L)

1- Through Bill of Lading (B/L)

The Through Bill of Lading (B/L) bears a striking resemblance to the Conventional Bill of Lading (B/L) in both form and function. However, the Through B/L differs from its conventional counterpart in that it includes “boxes” on its face that enable the insertion of the name of a pre-carrier, along with the place of acceptance by said pre-carrier. Following this, the usual ports of loading and discharge are listed, succeeded by the name of the on-carrier, with space for indicating the place of delivery by the on-carrier.

It is worth noting that a Through Bill of Lading (B/L) is particularly well-suited to situations in which the ocean carrier is distant from either the place of origin or destination. In such cases, the cargo must typically be transported to/from the loading/discharging port of the ocean carrier by a coaster or short-sea vessel.

It is important to avoid confusing the Through Bill of Lading (B/L) with a Combined Transport Bill of Lading (B/L), which will be addressed here below. The key point to underscore is that the ocean carrier serves as an agent for both Pre-Carriers and On-Carriers and undertakes to make the necessary arrangements while charging a single-through rate. However, in the Through Bill of Lading (B/L), the ocean carrier’s liability is limited to the ocean voyage; claims arising from issues during pre/on-carriage must be directed toward the relevant parties.

A Through Bill of Lading (B/L) is expected to provide coverage for the entire voyage. In the case of Hanson v. Hamel & Horley (1922), the cargo in question, cod guano, was set to be shipped from Norway to Japan. It was loaded onto a local vessel for transshipment at Hamburg, en route to a Japanese vessel. At Hamburg, the second carrier issued a document known as a Through Bill of Lading (B/L). The House of Lords determined that this was an unacceptable tender because, regardless of the document’s purported nature, it was not a bill, and it did not cover the local voyage since it was not issued until Hamburg. Had the goods been damaged during the local leg of the journey, the consignee would have had no grounds for action against the first carrier.

2- Liner Bill of Lading (B/L)

In the context of liner traffic, the Liner Bill of Lading (B/L) serves as the principal instrument governing the legal relations between the shipper, carrier, and consignee. The contract of carriage is founded upon a booking, which may typically take the form of a brief telephone exchange, during which the carrier’s agent commits to providing the shipper with space on a specific vessel or within a specified timeframe.

In the course of liner operations, it is customary for the carrier to assume responsibility for arranging and covering the expenses of loading and unloading, and to offer ancillary services at ports and terminals.

 

3- Combined Transport Bill of Lading (CT-B/L) 

The Combined Transport B/L (CT-B/L) was specifically developed to cater to container trade. The layout of the CT-B/L resembles that of the Through B/L, with additional boxes provided to indicate the place of receipt and the place of delivery. However, the key distinction between the two lies in the fact that under the CT-B/L, the carrier assumes responsibility for the entire carriage.

In the realm of container transport, intermodalism is of utmost importance, as it allows for door-to-door or port-to-port transportation, or any combination thereof, with the added complication of the merchant having to arrange his own road haulage or relying on the carrier to handle everything. Furthermore, there may be rail or barge pre-carriage or on-carriage in addition to trucking, and given the increasing size of ocean carriers, feeder ships may be deployed to or from hub ports. As such, the CT-B/L must be flexible enough to accommodate all of these possibilities, with the clauses on the reverse side of the B/L crafted to facilitate this.

One challenge that must be overcome is the differences in international agreements that govern ocean carriage, road haulage, and rail carriage. These differences particularly impact time bars, liability limits, and methods of computing liability.

To address this, the CT-B/L specifies that in the event of loss or damage occurring during road transportation, the applicable convention will be the International Convention for the International Carriage of Goods by Road (CMR), whose full name is “Convention Relative au Contrat de Tranportation des Marchandises par voie de Rout”. If the goods cross an international border by rail, then the “Convention Internationale concernant le transport de Marchandises par Chemin de Fer” (CIM) applies.

In the rare event that a CT-B/L covers both ocean and air freight, air transportation is governed by the Warsaw Convention. If it is impossible to pinpoint exactly where the loss or damage occurred, the Hague-Visby Rules would be applicable.

4- Charter Party Bill of Lading (B/L) 

When a charterer obtains a Bill of Lading (B/L) directly from a shipowner, the contractual terms are contained in the charter party. The Bill of Lading (B/L) only serves as a receipt and a document of title, unless there is an explicit provision to the contrary in the documents.

As Lord Esher stated in the Rodocanachi v. Millburn (1886) case, such a Bill of Lading (B/L) is “only an acknowledgment of the receipt of the goods unless there be an express provision in the documents, the charter party and bill of lading, to the contrary.”

In the Leduc v. Ward (1888) case, it was observed that “where there is a charter party, the Bill of Lading (B/L) may be nothing more than a receipt for the goods between the shipowner and the charterer, since all other terms of the carriage contract are contained in the charter party. The Bill of Lading (B/L) is given solely to allow the charterer to deal with the goods during transit.”

However, if a charterer acquires a Bill of Lading (B/L) from a party other than the shipowners, then the Bill of Lading (B/L) becomes the document that defines the contractual relationship between those parties.

In the President of India v. Metcalf Shipping Co Ltd (1970) case, the charterers, and shipowners were embroiled in a disagreement over the shortfall in the quantity of goods delivered. The charterers wished to initiate arbitration proceedings, which were outlined in the charter party but not in the Bill of Lading (B/L) that they received from the sellers of the goods. The shipowners contended that their contract with the charterers, as endorsers of the Bill of Lading (B/L), as defined in the Bill of Lading (B/L) did not include an arbitration clause. However, the Court of Appeal rejected this argument. The endorsement of the Bill of Lading (B/L) to the charterer was merely an aspect of the contract of sale and did not intend to modify or replace the contractual arrangements between the shipowner and the charterer as stated in the charter party.

When a charterer endorses a Bill of Lading (B/L) to transfer the rights and responsibilities outlined in it, the indorsee will not be influenced by the terms of the charter party unless a clause in the Bill of Lading (B/L) explicitly incorporates some or all of the terms of the charter party itself. Such a clause must be unambiguous and explicit, or the Bill of Lading (B/L) would be one that the master could not legally issue due to the terms of the charter party.

Identity of Carrier in Bill of Lading (B/L)

When a bill of lading is issued for goods on a chartered vessel, a crucial question arises: whether the Bill of Lading (B/L) in the hands of a shipper other than the charterer, or a bona fide holder for value, constitutes a contract with the shipowner or the charterer, i.e., whether it is the shipowners’ or charterers’ Bill of Lading (B/L).

In the case of a Bareboat Charter, the Bill of Lading (B/L) contract will be with the Bareboat Charter, as Bareboat Charters are commonly treated as if they were the Shipowners for all intents and purposes. Therefore, a Shipmaster employed by a Bareboat Charter will not sign the Bill of Lading (B/L) as an agent for the Shipowner.

With respect to Voyage Charters or Time Charters, the presumption is that the contract will be with the Shipowner, who employs the Ship Master and the Crew Members. The Ship Master has the authority to bind the Shipowners regarding cargo owners who are unaware of any charter party agreements.

In The Starsin (2000) case, Justice Colman remarked that the issue of whether owners or time charterers are parties to the Bills of Lading (B/L) contract arises almost invariably as a consequence of bills being issued on Time Charterers’ forms and bearing words in the signature box that are argued to supersede the identity of carrier clause and the demise clause. Resolving the question of the identity of the party undertaking the obligations of carriage is fundamentally a matter of construing the language on the Bill of Lading (B/L). Unless the contract was made with the charterer alone, a Bill of Lading (B/L) signed by the Ship Master cannot be a Charterer’s Bill of Lading (B/L). Additionally, the signatory must have the authority to sign on behalf of the charterer, not the Shipowners.

Once it has been established, as a matter of construction, that the shipowner is the contracting party and that the Bill of Lading (B/L) is the “Owners’ Bill of Lading (B/L),” the shipowner can only escape liability for the carriage if they can show that the signatory lacked the actual or ostensible authority to bind them.

Even if the charter contains a clause stating that the Ship Master will sign the Bill of Lading (B/L) as the agent of the charterers, a contract may still exist with the owners if the bill of lading holder is unaware of the clause.

To avoid the possibility that time charterers other than by demise might be held liable as parties to a Bill of Lading (B/L) without being able to claim the protection from the limitation of liability provided by sections 502 and 503 of the Merchant Shipping Act, 1894, most modern Bills of Lading (B/L) used by liner companies contain a demise clause. However, since the enactment 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 under English law.

Negotiability of Bill of Lading (B/L)

A Bill of Lading (B/L) is a document that can make goods deliverable to a named person or to a name left blank or “to order.” However, if a Bill of Lading (B/L) makes goods deliverable “to order” or “to order or assigns,” it is not considered a Negotiable Instrument. This indicates that an indorsee (a person to whom the B/L is transferred) does not get a better title than the assignor (the person who transferred the B/L).

Under the Bills of Lading Act 1855 (which has since been replaced by the Carriage of Goods by Sea Act 1992), the transfer of a Bill of Lading (B/L) assigns the contract of carriage if the transferee owns the goods at the time of the lawsuit. If a consignee named in the Bill of Lading (B/L) or an indorsee who has acquired property takes the benefits and the burdens of the contract of carriage contained in the Bill of Lading (B/L), it is as if the contract had been made with them.

In the case of Sewell v Burdick (1884), machinery was shipped to a Black Sea port under a Bill of Lading (B/L) making goods deliverable to shippers or assigns. The shipper endorsed the B/L to his bank as security for a loan. The goods were warehoused on arrival in Russia but were eventually sold to pay for customs and other charges. The shipowners sued the bankers for freight as B/L holders, but the action was dismissed because the bankers were not the owners of the B/L; they were simply pledgees and had not claimed the goods.

In the case of Brandt v Liverpool Brazil and River Plate Steam Navigation Co., a Bill of Lading (B/L) was indorsed to the pledgees who made an advance to the shippers. Upon the arrival of the goods, they presented the Bill of Lading (B/L), paid the freight, and took delivery of the goods from the owners. The court held that a contract should be inferred between the shipowners and the indorsees of the Bill of Lading (B/L) to deliver and accept the goods according to the terms of the Bill of Lading (B/L). The rights under the contract follow the property in the goods, provided the owner is named in the Bill of Lading (B/L) as consignee or has the Bill of Lading (B/L) endorsed to him. The indorsee acquires the right to claim for breaches of the contract committed before as well as after he becomes the owner of the goods.

The indorsement need not be special, and simple delivery of the Bill of Lading (B/L) endorsed in blank is sufficient. With the right to sue are also transferred the liabilities in respect of the goods under the contract. The contract assigned by the indorsement is that which is expressed in the Bill of Lading (B/L).

Under the Carriage of Goods by Sea Act 1992, which replaced the Bills of Lading Act 1855, the passing of property and the transfer of contractual rights are no longer connected. Carriage of Goods by Sea Act 1992 Section 2(1) states that a person who becomes the lawful holder of a Bill of Lading (B/L) shall have transferred to him all rights of suit under the contract of carriage as if he had been a party to that contract. Title to sue now derives from whether the Bill of Lading (B/L) is lawfully held, rather than from how or when the property passed. A Bill of Lading (B/L) Holder is defined in the Carriage of Goods by Sea Act 1992 Section 5(2).

Bill of Lading (B/L) Holders can be consignees in possession, indorsees with possession of the bill by way of delivery, and Holders of “Order Bill of Lading (B/L)”. A person will be regarded as having become a lawful holder of a Bill of Lading (B/L) wherever he has become the holder of the bill in good faith. In The Aegean Sea (1998) case, “good faith” in the Carriage of Goods by Sea Act 1992 Section 5 was interpreted as meaning honest conduct.

Under the Carriage of Goods by Sea Act 1992 (Section 3), if the person in whom rights are vested by virtue of the Carriage of Goods by Sea Act 1992 (Section 2) takes or demands delivery from the carrier of any of the goods to which the document relates, makes a claim under the contract of carriage against the carrier in respect of any of those goods, or is the person who at the time before these rights vested in him took or demanded delivery from the carrier of any of those goods, that person shall become subject to the same liabilities under the contract as if he had been party to that contract.

The Carriage of Goods by Sea Act 1992 also applies to any Sea Waybill, which is a document that is not a Document of Title (DOT) but has the functions of a receipt and evidence of a contract of carriage and which identifies the person to whom delivery of the goods is to be made by the carrier in accordance with the contract. 

The Carriage of Goods by Sea Act 1992 also extends the rights of the suit in respect of ships’ delivery orders. Rights under the contract of carriage do not depend on a person being a lawful holder of the delivery order but merely on being identified in it as the person to whom delivery is to be made. Liabilities under the contract of carriage may also be incurred by that person in the same way as by the lawful Bill of Lading (B/L) Holder, and the person identified in the delivery order can become subject to the same liabilities under the contract as if he had been a party to that contract.

Important Clauses in Bill of Lading (B/L) 

The Bill of Lading (B/L) typically comprises a plethora of contractual provisions aimed at governing the interactions between the carrier and the proprietor of the cargo. These terms tend to differ among companies.

Identity of the Carrier in Bill of Lading (B/L)

In every instance of the Bill of Lading (B/L), it is imperative to identify the parties involved in the contract. The carrier, who is one of the contracting parties, can be identified from the name of the company that is prominently displayed on the Bill of Lading (B/L). The definition clause usually refers the reader back to the face of the document, specifically the signature provisions.

To clarify which party is the carrier, general clauses can be included in the Bill of Lading (B/L). One such clause is the demise clause. In the United Kingdom, the un-amended Merchant Shipping Act 1894, Section 503 permitted a shipowner, but not a charterer, to limit liability. If there was a substantial loss of cargo or a total loss, a claim by a cargo owner against the shipowner would be significantly reduced, but a claim against the charterer would have been fully successful. Consequently, charterers had a vested interest in making it clear that they were not the carriers liable under the contract and directing cargo owners to the shipowners. The demise clause served this purpose by fixing liability under the contract on the shipowner.

In The Ines (1995) case, Mr. Justice Clarke considered a demise clause in circumstances where he concluded that the parties intended there to be a contract between the cargo owner and shipowner, taking into account other clauses and the documents as a whole.

In the Alarsin (2000) case, a definition of a carrier clause stated that the carrier was the party on whose behalf the Bill of Lading (B/L) had been signed. The signature box on the face of the Bill of Lading (B/L) had the words signed “As Agent” for the carrier, and on the back of the document was an identity of carrier clause and a demise clause. The court ruled that the demise clause would normally take precedence unless the words in the signature box were intended to have that effect. The effect of the simpler definition was to inevitably point to the person on whose behalf the Bill of Lading (B/L) was signed.

Law and Jurisdiction Clause in Bill of Lading (B/L)

To determine the rights and liabilities of the parties involved in a Bill of Lading (B/L), it is necessary to establish the governing law and jurisdiction to settle any disputes arising from the contract. It is customary for the Bill of Lading (B/L) to include an express jurisdiction and governing law clause. The governing law is typically the law of the place chosen by the parties. If the jurisdiction of the carrier’s principal place of business is selected, the law of that country would also apply.

The expressed intention of the parties in a Bill of Lading (B/L) regarding the applicable law would be enforced even if it avoids the application of a law that compulsorily imports certain terms into the Bill of Lading (B/L).

If the contract includes an arbitration clause specifying the location of the arbitration, it is a strong indication that the parties intended the law of that place to govern the contract, but it is not conclusive. If a term of the contract is valid under one system of law but invalid under another, the law under which it is valid would be the proper law of the contract.

The express or implied choice of law made by the parties could be rendered void if the dispute was brought before English courts and the effect of the choice of law would be to reduce the carrier’s liability below that which would be imposed by the Hague-Visby Rules.

In The Moruiters (1983) case, a Bill of Lading (B/L) explicitly applied “the law of the Netherlands in which the Hague Rules are incorporated,” with the Amsterdam Court having exclusive jurisdiction. The House of Lords held that the choice of law provision sought to reduce the carrier’s liability, making the clause null and void under Article III, rule 8 of the Hague-Visby Rules, which apply in the United Kingdom.

In The Stolt Sydness (1997) case, Mr. Justice Rix ruled that English law applied in a case where the Hague Rules were incorporated by a U.S. Clause Paramount.

The parties would usually prefer to know in advance the jurisdiction where disputes will be resolved and the applicable law to understand the extent of the liabilities they are undertaking and the rights they possess. A valid exclusive jurisdiction clause would typically prevent forum shopping.

Himalaya Clause

In The Himalaya case, a passenger sued the master and bosun for negligence after falling off a gangplank due to their failure to moor the ship properly. The exemption clause in the passenger’s ticket did not extend to the master and bosun, giving rise to the Himalaya Clause. Properly drafted, this clause makes the crew party to the contracts made by the shipowner and gives them the same exemptions and limitations.

The Himalaya clause received judicial approval in The Eurymedon (1975) and The New York Star (1980) cases. The carrier may contract as an agent for the stevedore if the bill makes it clear that the stevedore is intended to be protected by its provisions, and the carrier contracts as an agent for the stevedore that such provisions apply to it. The carrier must have authority from the stevedore or a later validation, and there should be no issue with the stevedore providing consideration.

In The Mahkutai (1996) case, the Privy Council considered the effectiveness of a Himalaya clause in a time charterer’s Bill of Lading (B/L) to extend to the shipowner the benefit of a jurisdiction clause in the Bill of Lading (B/L). The Council distinguished between terms such as exceptions or limitations and a jurisdiction clause, as the latter embodied a mutual agreement under which both parties agreed with each other as to the relevant jurisdiction for the resolution of disputes. As it created mutual rights and obligations, it did not fit within the list of terms commonly referred to in standard Himalaya Clauses, such as exceptions, limitations, conditions, or liberties benefiting the carrier.

If the cargo is damaged during loading or discharging, the carrier would be liable under the Hague and Hague-Visby Rules, and the stevedore could claim the equivalent immunity. The Himalaya Clause enables a sub-contractor to defend a claim by the cargo owner by extending every right, exemption, limitation, condition, defense, and immunity to which the carrier is entitled to the sub-contractor.

Under the Himalaya clause, the carrier is deemed to be acting as an agent or trustee on behalf of its servants or agents, and they are considered parties to the contract of carriage. The consideration is the performance by the stevedores of the loading and discharging operations, and it does not matter if the stevedores may already be under an obligation to the carrier to perform the operations.

Clause Paramount 

According to the Carriage of Goods by Sea Act 1924 (Section 3), every Bill of Lading (B/L) issued in the United Kingdom to which the Hague Rules applied had to contain an express statement that it is subject to the provisions of the Rules as applied by the Act. This express statement was commonly known as a Clause Paramount, indicating that there was a set of rules that would have supremacy under the terms of the contract. While the Carriage of Goods by Sea Act 1924 only applied to outward shipments from Britain, the Clause Paramount was effective in incorporating the Rules contractually for other voyages. Many states enacting the Hague Rules also require bills to have a similar clause paramount, such as the United States Carriage of Goods by Sea Act 1986, which applies to contracts of carriage to or from U.S. ports in foreign trades.

Various forms of Clause Paramount incorporate either the entire Carriage of Goods by Sea Act 1924 or its foreign equivalent, while other forms only include certain parts of the Rules. In some cases, the use of the word Paramount merely indicates that the rules are intended to override only some of the express terms in the contract.

In the Marifortuna Naviera S.A. v Government of Ceylon (1970) case, it was decided that the exceptions in the Rules did not exclude the shipowner’s liability for a breach of a particular term regarding notice of readiness.

Although the Carriage by Sea Act 1971 does not require a clause paramount, there may be situations where neither the Hague Rules nor the Hague-Visby Rules apply, making it necessary to include a clause paramount for contractual reasons.

Jason Clause in Bill of Lading (B/L)

Contracts for the carriage of goods by sea include a Jason Clause, which was introduced to limit the effect of decisions made by the United States courts based on a principle of public policy that was not recognized by English common law. The U.S. courts held that it was against public policy for a sea carrier to try to exclude liability for negligence or unseaworthiness through contractual terms, and any such provision was void and had no effect. The U.S. Harter Act 1898 (Section 3) modified the American doctrine by allowing sea carriers a limited exemption from liability for negligence in ship navigation and management.

In The Irrawady (1897) case, the U.S. Supreme Court determined that the exemptions permitted by the Harter Act were only available as a defense to claims against shipowners and did not allow owners to pursue their own claims for general average contributions when the general average act was caused by negligence for which they would have been responsible outside of the exemption. To address this issue, a clause was incorporated that explicitly stated that a shipowner could recover in general average if due diligence had been exercised to ensure the ship was seaworthy in all respects.

The Jason Clause was upheld in The Jason (1911) case, but it was only partially effective since the U.S. courts interpreted the exercise of due diligence as a condition precedent to the owners’ right to recover the cargo contribution independent of causative effect.

This led to the introduction of the New Jason Clause, which contractually adopts the English law position. As such, only the shipowners’ actionable fault causing the loss will defeat their claim in General Average (GA).

 

Both to Blame Collision Clause

A both-to-blame collision clause is designed to deal with a rule of United States law. The United States is not a party to the 1910 Collision Convention, unlike the United Kingdom which originally gave effect to it in the Maritime Conventions Act 1911. An American shipowner whose ship is involved in a collision can attach in an American port any ship in the same ownership as the one with which he has collided, even if the collision occurred in some distant part of the world. By the law of the United States where cargo is lost or damaged in a ship for which both ships are to blame, the cargo owners may recover in full against the non-carrying ship. The non-carrying ship will then claim an indemnity from the carrying ship with the result that the carrying ship ends up indirectly paying for the cargo’s collision loss, yet it would have been exempted from this under the Hague or Hague-Visby Rules. The Both to Blame Collision Clause allows the carrier to claim an indemnity from the cargo owner for the appropriate sum paid to the non-carrying ship.

However, it should be noted that the legality of the clause was tested in the United States in United States of America v Atlantic Mutual Insurance Co. (1952) where a bill of lading contained the clause. The Supreme Court decided that the clause was invalid as being a violation of the rule which in general forbids carriers from stipulating against the negligence of themselves or their employees.

 

What is the difference between a Through Bill of Lading (B/L) and a Combined Transport Bill of Lading (CT-B/L)?

A Through Bill of Lading (B/L) and a Combined Transport Bill of Lading (CT-B/L) are both documents used in the international shipping industry, but they differ in their scope and application.

  1. Through Bill of Lading (B/L): A Through Bill of Lading is a transport document that covers the entire transportation of goods from the point of origin to the final destination, involving multiple modes of transportation (e.g., sea, rail, road, or air). The carrier who issues this document is responsible for the entire journey, even if other carriers are involved in the transportation. It is a single contract that streamlines the shipping process, simplifying documentation and providing greater visibility and control over the shipment.
  2. Combined Transport Bill of Lading (CT-B/L): A Combined Transport Bill of Lading (CT-B/L), also known as a Multimodal Transport Bill of Lading, is a document that covers the transportation of goods using multiple modes of transport (sea, rail, road, or air) under a single contract. However, in this case, each carrier involved in the transportation process is only responsible for the segment of the journey they handle. This type of Bill of Lading typically involves separate contracts with each carrier, which can make the process more complex and potentially increase the risk of delays or mishandling of goods.

Both Through Bill of Lading and Combined Transport Bill of Lading (CT-B/L) involve the use of multiple modes of transportation for shipping goods. The key difference between the two lies in the responsibility of the carriers. In a Through Bill of Lading, one carrier is responsible for the entire journey, while in a Combined Transport Bill of Lading (CT-B/L), each carrier is responsible for its specific segment of the journey.

 

What are the consequences arising when payment of ship charter hire is late?

Late payment of ship charter hire can lead to several consequences for the parties involved, primarily the charterer (the party renting the vessel) and the shipowner. The specific consequences may vary depending on the terms of the charter party agreement, but they generally include the following:

  1. Interest on late payments: If the charterer fails to make the payment on time, they may be required to pay interest on the outstanding amount. The interest rate and calculation method are typically specified in the charter party agreement.
  2. Suspension of services: The shipowner may choose to suspend the vessel’s services until the outstanding payment, along with any interest, is received. This can cause delays in the transportation of goods and may result in additional costs for the charterer, such as demurrage or detention fees.
  3. Termination of the charter party: If the late payment persists beyond a specified grace period, the shipowner may have the right to terminate the charter party agreement. This could lead to legal disputes, financial losses, and damage to the reputation of both parties.
  4. Lien on cargo: In some cases, the shipowner may have the right to exercise a lien on the cargo on board the vessel as a security for the unpaid charter hire. This means that the shipowner can retain possession of the cargo until the outstanding payment is made.
  5. Damage to business relationships: Late payment of charter hire can strain the relationship between the charterer and the shipowner, which may affect future business dealings between the two parties.
  6. Legal disputes: If the shipowner takes legal action to recover the unpaid charter hire, the charterer may face costly litigation, which could result in financial losses and damage to their reputation.

It is essential for the charterer to comply with the payment terms outlined in the charter party agreement to avoid these consequences and maintain a good relationship with the shipowner. Similarly, shipowners should clearly specify the payment terms and the consequences of late payments in the charter party agreement to protect their interests.

What is Port Congestion? and discuss Port Congestion and the Laura Prima (1982) ruling

Port congestion refers to a situation where there is an excessive number of ships waiting to load or unload cargo at a port, leading to delays in berthing, cargo handling, and other port operations. This can be caused by a variety of factors, such as insufficient infrastructure, labor disputes, weather-related disruptions, or a sudden increase in trade volume. Port congestion can have significant consequences for shipping companies, importers, exporters, and other stakeholders in the supply chain, as it may lead to increased costs, delays, and contractual disputes.

The Laura Prima (1982) ruling is a landmark English case that addressed the issue of port congestion in the context of laytime and demurrage in charter parties. The case involved a dispute between the charterer and the shipowner regarding the calculation of laytime during a period of port congestion.

In this case, the vessel Laura Prima was chartered to transport a cargo of sugar from Brazil to Iran. The charter party agreement included a clause that provided for laytime to commence upon the vessel’s arrival at the port, even if there was no berth available due to port congestion. After the Laura Prima arrived at the destination port, it faced severe congestion and had to wait for an extended period before it could berth and discharge the cargo. The shipowner claimed demurrage from the charterer for the additional time spent waiting.

The court held that the laytime clause in the charter party agreement should be interpreted literally, and the laytime started to count upon the vessel’s arrival at the port, regardless of the congestion. Consequently, the charterer was liable to pay demurrage for the additional time the vessel spent waiting due to the congestion.

The Laura Prima ruling highlights the importance of carefully drafting and negotiating charter party agreements to address issues such as port congestion, laytime, and demurrage. In the aftermath of the ruling, charterers and shipowners began to include explicit clauses in their charter party agreements to allocate the risk of port congestion and specify the circumstances under which laytime would commence or be suspended.

Importance of Laura Prima (1982) case in Ship Chartering

The Laura Prima (1982) case is considered a significant ruling in the field of ship chartering due to its impact on the interpretation of laytime and demurrage clauses in charter party agreements. The case emphasized the need for clear contractual language and the proper allocation of risk between the charterer and the shipowner when dealing with situations like port congestion. The importance of the Laura Prima case in ship chartering can be attributed to the following reasons:

  1. Clear interpretation of laytime clauses: The ruling established that courts would interpret laytime clauses literally, according to the specific terms agreed upon by the parties. In the Laura Prima case, the court held that laytime commenced upon the vessel’s arrival at the port, regardless of the congestion, as stipulated in the charter party agreement. This decision highlighted the importance of clearly defining laytime provisions to avoid disputes and misunderstandings.
  2. Allocation of risk: The Laura Prima case emphasized the need for charter parties to address the allocation of risk related to port congestion and other unforeseen events explicitly. After the ruling, parties in the shipping industry became more cautious about drafting and negotiating charter party agreements to allocate the risk of port congestion and other delays appropriately.
  3. Inclusion of specific clauses: The ruling prompted the shipping industry to adopt more detailed clauses in charter party agreements to deal with port congestion and its impact on laytime and demurrage. These clauses often specify the circumstances under which laytime will commence, be suspended, or not be counted, ensuring that both parties understand their obligations and liabilities in case of port congestion or other delays.
  4. Impact on demurrage claims: The Laura Prima case has had a lasting impact on demurrage claims in the shipping industry. The ruling made it clear that charterers could be held liable for demurrage if laytime is exceeded due to port congestion, provided that the charter party agreement stipulates such terms. This has led to an increased focus on clearly defining demurrage provisions and the circumstances under which they may apply.

The Laura Prima (1982) case has played a critical role in shaping the shipping industry’s approach to laytime and demurrage clauses in charter party agreements. The ruling emphasized the importance of clear and specific contractual language in allocating risks and responsibilities related to port congestion and other potential delays, ultimately leading to more robust and comprehensive charter party agreements.

Compare and contrast a Through Bill of Lading (B/L) with a Combined Transport Bill of Lading (CT-B/L)

A Through Bill of Lading (B/L) and a Combined Transport Bill of Lading (CT-B/L), also known as a Multimodal Transport Bill of Lading, are both documents used in international shipping involving multiple modes of transportation. Although they share similarities, they differ in terms of responsibility and liability. Below is a comparison of these two types of bills of lading:

  1. Scope and Coverage: Through B/L: It covers the entire transportation of goods from the point of origin to the final destination, involving multiple modes of transportation (e.g., sea, rail, road, or air). CT-B/L: It also covers the transportation of goods using multiple modes of transport under a single contract. However, each carrier involved in the transportation process is only responsible for the segment of the journey they handle.
  2. Carrier Responsibility: Through B/L: The carrier who issues the Through Bill of Lading is responsible for the entire journey, even if other carriers are involved in the transportation. CT-B/L: Each carrier involved in the transportation process is responsible for their specific segment of the journey, as defined in the Combined Transport Bill of Lading.
  3. Contractual Obligations: Through B/L: The Through Bill of Lading represents a single contract between the shipper and the carrier, simplifying the documentation and providing greater visibility and control over the shipment. CT-B/L: The Combined Transport Bill of Lading usually involves separate contracts with each carrier responsible for their respective segments of the journey. This can make the process more complex and potentially increase the risk of delays or mishandling of goods.
  4. Liability: Through B/L: Since the carrier who issues the Through Bill of Lading is responsible for the entire journey, they are also liable for any loss or damage to the goods during transit. CT-B/L: Liability for loss or damage to the goods is shared between the carriers involved in the transportation process, according to their specific segment of the journey.

Both Through Bill of Lading and Combined Transport Bill of Lading involve the use of multiple modes of transportation for shipping goods. The main difference between the two lies in the responsibility and liability of the carriers. In a Through Bill of Lading, one carrier is responsible for the entire journey, while in a Combined Transport Bill of Lading, each carrier is responsible for their specific segment of the journey.

 

 

What is a Split Bill of Lading (B/L)?

A split bill of lading is a type of shipping document used in international trade that divides the contents of a single shipment into multiple consignments, each with its own bill of lading. This practice is typically employed when a shipper wants to sell portions of the cargo to multiple buyers or when buyers want to share the shipment without having to physically divide the goods.

In essence, the original bill of lading is replaced by several “split” bills of lading, each representing a separate consignment within the original shipment. These split bills function as individual contracts of carriage, and they convey the same rights, responsibilities, and liabilities as the original bill of lading. The parties involved in the transaction, such as the shipper, consignee, carrier, and freight forwarder, must all agree to the arrangement and ensure that the split bills accurately represent the divided cargo.

It is important to note that splitting a bill of lading should be done with caution, as it may increase the risk of fraud or miscommunication. Proper due diligence and communication between all parties are essential to ensure a smooth and secure transaction.

 

 

Bill of Lading (B/L) related Problems and Handling

Bill of lading (B/L) is a crucial document in international trade and shipping, serving as a contract of carriage, receipt of goods, and proof of ownership. However, several problems may arise during the handling of a bill of lading, which can lead to delays, disputes, or financial losses. Here are some common B/L-related problems and how to handle them:

  1. Incorrect or incomplete information: Ensure that all necessary details, such as shipper, consignee, description of goods, quantity, weight, and shipping terms, are accurate and complete. Double-check the information before issuing the B/L and promptly notify relevant parties of any discrepancies.
  2. Lost or delayed bill of lading: A missing B/L can disrupt the release of cargo and may require a costly indemnity bond. To mitigate this risk, use a courier service with tracking capabilities and consider electronic B/Ls (eB/Ls), which are more secure and faster to transmit.
  3. Fraudulent bills of lading: Protect your business against fraud by verifying the legitimacy of the B/L, the parties involved, and the transaction. Implement strict internal controls, use electronic data interchange (EDI) systems, and consider joining trusted networks or platforms to share information and collaborate securely.
  4. Endorsement issues: Ensure that the B/L is correctly endorsed by the relevant parties, especially when transferring ownership or when a negotiable B/L is involved. Failure to properly endorse the document can lead to delays or disputes.
  5. Split or combined bills of lading: When splitting or combining B/Ls, ensure that all parties agree to the arrangement and that the new B/Ls accurately represent the cargo. This can help avoid miscommunication, fraud, or disputes.
  6. Amendments and corrections: If a B/L requires changes after issuance, promptly notify all parties involved and request an amended B/L from the carrier. Keep in mind that some amendments may require additional fees or may not be possible after the shipment has sailed.
  7. Disputes over cargo claims or freight charges: Establish clear communication channels with all parties, including the carrier, shipper, consignee, and freight forwarder. Use mediation, arbitration, or legal action as a last resort to resolve disputes.
  8. Original bills of lading vs. telex release: Original B/Ls may take longer to process and deliver, while telex releases offer a quicker and more efficient way to transfer ownership and release cargo. However, telex releases may be susceptible to fraud. Weigh the pros and cons of each option and choose the one that best suits your specific situation.
  9. Switch bills of lading: A switch B/L is issued to replace the original B/L, often to protect the identity of the shipper or consignee, or to facilitate a trade transaction. While this can be useful in certain situations, it may increase the risk of fraud or miscommunication. Ensure that all parties involved understand and agree to the switch B/L arrangement, and exercise due diligence to minimize potential issues.
  10. Non-negotiable bills of lading: These B/Ls can only be released to the named consignee, which may limit flexibility in the event of changes to the transaction. Be cautious when issuing or accepting non-negotiable B/Ls, and ensure that all parties are aware of the limitations and potential risks involved.
  11. Clean vs. Claused bills of lading: A clean B/L indicates that the goods were received by the carrier in good condition, whereas a claused B/L contains notations indicating damage or discrepancies. To avoid disputes or cargo claim issues, ensure that the B/L accurately reflects the condition of the goods upon receipt by the carrier.
  12. Bank involvement in B/L transactions: When a letter of credit (LC) is involved, banks play a critical role in verifying and processing B/Ls. Ensure that the B/L complies with the terms of the LC to avoid delays or additional costs, and maintain open communication with the banks involved.

Handling bill of lading-related problems requires thorough attention to detail, effective communication, and collaboration among all parties involved in the shipping process. By implementing strong internal controls, adopting secure electronic systems, and maintaining open communication channels, many potential issues can be prevented or resolved quickly. Effectively handling bill of lading-related problems involves a combination of careful planning, attention to detail, clear communication, and collaboration among all parties involved in the shipping process. By understanding the potential issues and taking proactive steps to address them, you can minimize risks and ensure smoother, more efficient international trade transactions.

 

In bulk shipping when Original Bills of Lading (B/L) are lost can I obtain a new set?

If the original Bills of Lading (B/L) are lost in bulk shipping, obtaining a new set of original B/Ls is generally not possible. However, you can still arrange for the release of the cargo by following an alternative procedure, which usually involves providing a Letter of Indemnity (LOI) to the carrier.

A Letter of Indemnity is a document issued by the shipper or consignee (or their bank) in which they undertake to indemnify the carrier against any potential claims, losses, or damages that may arise due to the release of cargo without the presentation of the original B/L. The LOI serves as a guarantee to the carrier that they will be protected from any legal or financial consequences resulting from the loss of the original B/L.

To obtain a Letter of Indemnity, follow these steps:

  1. Notify the carrier: Inform the carrier immediately about the loss of the original B/L and request the release of the cargo without the original documents. The carrier may require you to provide proof that the B/Ls have been lost, such as a police report or a statement from the courier company.
  2. Prepare the Letter of Indemnity: Draft an LOI that includes all relevant details, such as the shipment details, the reason for the loss of the original B/L, and the indemnification terms. It’s essential to ensure that the LOI is legally sound and comprehensive to protect all parties involved.
  3. Obtain a bank guarantee or insurance: Since carriers may require additional security, you may need to arrange for a bank guarantee or an insurance policy to back the indemnity provided in the LOI. This ensures that the carrier will be compensated in case the indemnifying party fails to fulfill their obligations.
  4. Submit the LOI to the carrier: Present the completed LOI, along with any required guarantees or insurance, to the carrier. Once the carrier is satisfied with the documentation and the indemnification terms, they may release the cargo without the original B/L.

Please note that releasing cargo without the original B/L carries certain risks, such as potential claims from other parties or disputes over ownership of the goods. It’s essential to exercise due diligence and ensure that all parties involved understand and agree to the arrangement.

While obtaining a new set of original Bills of Lading is not possible in the case of loss, you can still arrange for the release of the cargo by providing a Letter of Indemnity, along with additional guarantees or insurance as required, to indemnify the carrier against potential claims or losses.

 

In bulk shipping can I have more than 3 Original Bills of Lading (B/L)?

 

In bulk shipping, it is possible to have more than three Original Bills of Lading (B/L), but it is not a common practice. Typically, carriers issue three original B/Ls, which provides a balance between ensuring the security of the transaction and minimizing the risk of losing or misplacing the documents.

The primary reason for issuing multiple original B/Ls is to provide a safeguard against the loss or damage of a single document. However, having too many original B/Ls can increase the risk of fraud, misplacement, or confusion during the shipping process. Additionally, each original B/L must be endorsed and surrendered to the carrier before the cargo can be released, which may become more cumbersome with an increased number of documents.

If you have a specific requirement for more than three original B/Ls, you should discuss this with your carrier or freight forwarder. They may be willing to accommodate your request, provided that all parties involved in the transaction agree to the arrangement, and the associated risks are well understood and managed.

Keep in mind that with the increasing adoption of electronic B/Ls (eB/Ls), the need for multiple original physical documents may become less relevant. Electronic B/Ls offer greater security, efficiency, and traceability compared to traditional paper B/Ls and can mitigate the risks associated with lost, damaged, or fraudulent documents.

 

In bulk shipping what is an endorsement in blank Bill of Lading (B/L)?

In bulk shipping, an endorsement in blank on a Bill of Lading (B/L) refers to the practice of endorsing the B/L without specifying a named consignee or endorsee. This endorsement effectively turns the B/L into a bearer document, allowing any party in possession of the B/L to claim the cargo, as the title to the goods can be transferred by simply handing over the endorsed B/L to the new holder.

An endorsement in blank is used in cases where the shipper or consignee wants to maintain flexibility in transferring the ownership of the goods while the cargo is in transit. This is especially useful when the final buyer is unknown at the time of shipment or when the cargo is traded multiple times during the voyage.

To endorse a B/L in blank, the current holder of the document (usually the shipper or a named endorsee) needs to sign the back of the B/L without specifying a new consignee or endorsee.

It is essential to be aware of the risks associated with endorsing a B/L in blank, as it can increase the possibility of fraud, theft, or unauthorized transfer of the cargo. To mitigate these risks, parties involved in the transaction should exercise due diligence, maintain clear communication, and implement robust internal controls. Additionally, considering the adoption of electronic B/Ls (eB/Ls) can offer enhanced security and traceability, reducing the risks associated with endorsing B/Ls in blank.

 

Bill of Lading (B/L) problems and issues to avoid in Dry Bulk Shipping

 

In dry bulk shipping, the Bill of Lading (B/L) is a crucial document that requires proper attention to avoid potential issues. Here are some common B/L-related problems specific to dry bulk shipping and how to avoid them:

  1. Inaccurate cargo description and weight: Ensure that the Bill of Lading (B/L) accurately reflects the cargo’s description, including the type of commodity, quality, and weight. Inaccurate information can lead to disputes, additional costs, or delays in cargo release. Use reliable weighing methods and work closely with surveyors, cargo inspectors, and the carrier to ensure accuracy.
  2. Incorrect loading and discharge ports: Confirm the correct loading and discharge ports to avoid potential rerouting costs, delays, or penalties. Communicate with all parties involved in the shipping process to ensure that the port information is consistent across all shipping documents.
  3. Stowage and segregation issues: For dry bulk cargoes that require specific stowage or segregation conditions, ensure that the Bill of Lading (B/L) reflects these requirements, and that the carrier is informed accordingly. Failure to adhere to proper stowage or segregation can lead to cargo damage or contamination claims.
  4. Laytime and demurrage clauses: In dry bulk shipping, the Bill of Lading (B/L) often incorporates charter party terms related to laytime and demurrage. Make sure that these clauses are clear and consistent with the charter party agreement to avoid disputes and unnecessary costs.
  5. Vessel nomination and substitution: Ensure that the Bill of Lading (B/L) accurately reflects the nominated vessel, and any provisions for vessel substitution, if applicable. Miscommunication or discrepancies in vessel information can lead to delays or disputes.
  6. Compliance with local regulations: Dry bulk cargoes may be subject to specific import or export regulations, such as customs clearances or sanitary requirements. Ensure that the B/L includes any necessary information or declarations to comply with these regulations and avoid potential fines or delays.
  7. Freight payment terms: Ensure that the Bill of Lading (B/L) clearly states the freight payment terms (e.g., prepaid, collect, or payable elsewhere) to avoid confusion or disputes over freight charges.
  8. Proper endorsement and transfer: In the case of negotiable B/Ls, ensure that the documents are properly endorsed to facilitate the transfer of ownership. Failure to do so can lead to delays or disputes over the release of cargo.

To avoid these common Bill of Lading (B/L)-related issues in dry bulk shipping, ensure accurate and complete information on the B/L, maintain clear communication with all parties involved, and have a thorough understanding of the specific requirements of the cargo and the applicable regulations. By taking these proactive steps, you can minimize risks and ensure smoother shipping transactions.

 

What is the role of Bill of Lading in Charter Party?

The Bill of Lading (B/L) and the charter party are two separate but interconnected documents in the context of shipping and international trade. While the charter party is a contract between the shipowner and the charterer outlining the terms and conditions for the use of the vessel, the B/L serves as a contract of carriage, receipt of goods, and document of title. The role of the B/L in a charter party can be summarized as follows:

  1. Evidence of the contract of carriage: The B/L acts as evidence of the agreement between the shipowner (or carrier) and the shipper for the transportation of goods. It typically incorporates the terms and conditions of the charter party, ensuring consistency between the two documents.
  2. Receipt of goods: The B/L serves as proof that the carrier has received the cargo in the agreed condition. This is crucial for both the charterer and shipowner, as it establishes the point at which responsibility for the goods transfers from the shipper to the carrier.
  3. Document of title: The B/L functions as a document of title, allowing the transfer of ownership of the goods during transit. This is particularly relevant in the case of negotiable B/Ls, which can be endorsed and transferred to other parties. The charter party may specify conditions under which the B/L can be transferred, such as the requirement for charterers to provide the shipowner with a list of approved consignees.
  4. Determination of laytime and demurrage: The B/L often includes information related to laytime (the time allowed for loading and unloading) and demurrage (penalties for exceeding laytime). These terms are usually defined in the charter party, and the B/L helps to ensure that the agreed-upon laytime and demurrage conditions are met.
  5. Fulfillment of payment and freight obligations: The B/L may specify the terms of payment for the freight charges, such as whether the charges are prepaid, payable at the destination, or payable elsewhere. These terms are typically aligned with the charter party agreement, which sets out the financial responsibilities of the charterer and shipowner.

The Bill of Lading plays a critical role in a charter party by serving as evidence of the contract of carriage, a receipt of goods, a document of title, and a means of enforcing laytime and demurrage terms. The B/L ensures that the terms and conditions of the charter party are consistently applied throughout the shipping process, thereby facilitating smooth and efficient transactions for all parties involved.

 

What is Charter Party Bill of Lading?

A Charter Party Bill of Lading (CP B/L) is a specific type of Bill of Lading (B/L) used in connection with a charter party agreement. A charter party is a contract between a shipowner and a charterer that outlines the terms and conditions for the use of a vessel for the transportation of goods. The Charter Party Bill of Lading serves as a document that links the terms and conditions of the charter party to the actual shipment of goods.

The main functions of a Charter Party Bill of Lading are:

  1. Contract of Carriage: The CP B/L acts as evidence of the agreement between the shipowner (or carrier) and the shipper for the transportation of goods. The B/L incorporates the terms and conditions of the charter party, ensuring consistency between the two documents.
  2. Receipt of Goods: The CP B/L serves as a receipt confirming that the carrier has received the cargo in the agreed condition. This is essential for both the charterer and shipowner, as it establishes the point at which responsibility for the goods transfers from the shipper to the carrier.
  3. Document of Title: The CP B/L functions as a document of title, allowing the transfer of ownership of the goods during transit. This is particularly relevant in the case of negotiable B/Ls, which can be endorsed and transferred to other parties.
  4. Incorporation of Charter Party Terms: The CP B/L typically includes a clause that states that the B/L is subject to the terms and conditions of the charter party. This incorporation clause ensures that the charter party’s provisions, such as laytime, demurrage, and dispute resolution, apply to the parties involved in the shipment of goods.

A Charter Party Bill of Lading is commonly used in various types of charter agreements, such as voyage charters, time charters, and bareboat charters. It is important for all parties involved in the shipping process to understand the implications of using a CP B/L and ensure that the terms and conditions of the charter party are consistently applied throughout the shipment of goods.

 

 

In bulk shipping who should be the Consignee on a Bill of Lading (B/L)?

In bulk shipping, the consignee on a Bill of Lading (B/L) is the party who is entitled to receive the cargo at the destination port. The consignee is responsible for taking delivery of the goods and, in the case of a negotiable B/L, can transfer the title of the goods by endorsing the B/L.

Determining the appropriate consignee depends on the specific shipping arrangement and the nature of the transaction. Here are some common scenarios for listing the consignee on a B/L in bulk shipping:

  1. Named consignee: In cases where the buyer or end receiver of the cargo is known at the time of shipment, the named consignee can be the buyer or their agent. This is common in straightforward sales transactions or long-term supply agreements.
  2. Charterer as consignee: When a charterer is responsible for arranging the sale of the cargo and finding the end buyer, they may be listed as the consignee on the B/L. This allows the charterer to control the release of the cargo and transfer the title to the buyer once the sale is finalized.
  3. “To Order” consignee: In situations where the final buyer is unknown at the time of shipment or the cargo may be traded multiple times during transit, the B/L can be consigned “To Order” or “To Order of the Shipper.” This means the shipper retains control of the cargo and can endorse the B/L to transfer the title to the buyer once identified.
  4. “To Order of a Bank” consignee: When the transaction is financed using a Letter of Credit, the B/L may be consigned “To Order of [Bank’s Name].” This means the bank retains control of the cargo until the buyer fulfills their payment obligations. Once the payment is made, the bank endorses the B/L, allowing the buyer to take possession of the goods.

The consignee on a B/L in bulk shipping depends on the specific circumstances of the shipping arrangement and the nature of the transaction. It can be a named consignee, the charterer, an “order” consignee, or a bank. Careful consideration should be given to selecting the appropriate consignee to ensure a smooth shipping process and to avoid potential disputes or delays.

 

In dry bulk shipping what is “To Order of a Bank” consignee in Bill of Lading?

In dry bulk shipping, a “To Order of a Bank” consignee in a Bill of Lading (B/L) refers to a specific arrangement where the B/L is consigned to the order of a specific bank. This is typically done when the transaction is financed using a Letter of Credit (LC) or other trade financing instruments provided by the bank.

In this arrangement, the bank is designated as the consignee in the B/L, which means the bank retains control over the cargo until the buyer fulfills their payment obligations. The B/L serves as a document of title and a key component of the trade documentation required under the Letter of Credit (LC).

Once the buyer provides payment as per the terms of the Letter of Credit (LC), the bank will endorse the B/L, allowing the buyer to take possession of the goods. This endorsement transfers the title of the goods to the buyer, enabling them to receive the cargo at the destination port.

The “To Order of a Bank” consignee arrangement offers several benefits:

  1. Risk mitigation: For the seller, this arrangement reduces the risk of non-payment, as the bank guarantees the payment under the Letter of Credit (LC). For the buyer, it ensures that the goods are only released upon meeting the Letter of Credit (LC) conditions and presenting the endorsed Bill of Lading (B/L).
  2. Trade financing: Banks provide financing to buyers, enabling them to complete transactions that might otherwise be difficult due to limited liquidity.
  3. Enhanced security: By designating the bank as the consignee, the risk of unauthorized transfer or release of the cargo is minimized.

The “To Order of a Bank” consignee in a Bill of Lading (B/L) for dry bulk shipping is an arrangement that involves consigning the Bill of Lading (B/L)to a specific bank involved in financing the transaction. This setup provides enhanced security and risk mitigation for both the buyer and the seller while enabling trade financing through the bank.

 

 

What are the requirements of Bill of Lading (B/L) when payment is made by Letter of Credit (LC)?

 

When payment for a transaction is made through a Letter of Credit (LC), there are specific requirements for the Bill of Lading (B/L) that need to be met to ensure smooth processing and compliance with the terms of the Letter of Credit (LC). Here are some key requirements of the B/L in the context of an Letter of Credit (LC):

  1. Consistency with LC terms: The Bill of Lading (B/L) must be consistent with the terms and conditions specified in the LC, including the description of goods, quantity, weight, shipping terms (such as Incoterms), and any other relevant details.
  2. Consigned to the correct party: The Bill of Lading (B/L) should be consigned as per the Letter of Credit (LC) requirements, which is often “To Order of [Bank’s Name]” or “To Order of the Shipper.” This allows the bank to control the release of the goods until payment is made by the buyer.
  3. Original B/L: The Letter of Credit (LC) typically requires the presentation of the original Bill of Lading (B/L), which serves as a document of title. The number of original B/Ls required should be specified in the Letter of Credit (LC), and all original copies must be presented for the bank to release payment.
  4. Clean B/L: The Bill of Lading (B/L) should be “clean,” meaning it should not contain any clauses or notations that indicate damage to the goods or other issues that may affect the cargo’s value or delivery. Banks usually require a clean Bill of Lading (B/L) as a condition for payment under the Letter of Credit (LC).
  5. Timeliness: The B/L must be issued within the time frame specified in the Letter of Credit (LC). Additionally, the shipment date must be within the validity period of the Letter of Credit (LC) to ensure compliance with the terms.
  6. Proper endorsement: If the Bill of Lading (B/L) is a negotiable document, it must be properly endorsed by the relevant parties (usually the shipper or the bank) to ensure a smooth transfer of title.
  7. Compliance with regulations: The Bill of Lading (B/L) should comply with any local or international regulations applicable to the goods being shipped, such as customs requirements, export/import licenses, or other documentation required by the Letter of Credit (LC).
  8. Freight payment terms: The Bill of Lading (B/L) must clearly indicate the freight payment terms (e.g., prepaid, collect, or payable elsewhere) in accordance with the terms specified in the Letter of Credit (LC).

It is crucial for all parties involved in a transaction using an Letter of Credit (LC) to ensure that the Bill of Lading (B/L) meets these requirements. Failure to comply with the Letter of Credit (LC) terms can result in delays, additional costs, or even the refusal of payment by the bank. By paying close attention to the Bill of Lading (B/L) requirements and maintaining clear communication with the bank and other parties involved, you can minimize the risk of issues and ensure a successful transaction.

 

How to Complete a Bill of Lading (B/L) under a Letter of Credit (LC) in dry bulk shipping?

Completing a Bill of Lading (B/L) under a Letter of Credit (LC) in dry bulk shipping requires careful attention to the details specified in the LC to ensure compliance and avoid discrepancies that may lead to delays or refusal of payment by the bank. Here’s a step-by-step guide to completing a B/L under an Letter of Credit (LC) in dry bulk shipping:

  1. Review the Letter of Credit (LC) terms: Thoroughly review the LC terms and conditions, paying close attention to the requirements related to the B/L, such as the consignee, description of goods, quantity, weight, shipping terms, freight payment terms, and any additional requirements or special instructions.
  2. Complete the Bill of Lading (B/L) form: Fill in the Bill of Lading (B/L) form with accurate and consistent information as per the LC terms. This includes:a. Shipper’s name and address b. Consignee, typically “To Order of [Bank’s Name]” or “To Order of the Shipper” in an Letter of Credit (LC) transaction c. Notify party, usually the buyer or their agent d. Description of goods, including type, quality, and any special handling or stowage requirements e. Quantity and weight of the goods, ensuring consistency with the Letter of Credit (LC) and other shipping documents f. Loading and discharge ports g. Vessel name and voyage number h. Freight payment terms, such as prepaid or payable at the destination i. Date of shipment or onboard notation, in compliance with the LC’s specified time frame
  3. Verify the Bill of Lading (B/L): Double-check all the information on the Bill of Lading (B/L) to ensure it matches the LC requirements and is consistent with other shipping documents, such as the commercial invoice, packing list, and certificate of origin.
  4. Obtain a clean Bill of Lading (B/L): Ensure the Bill of Lading (B/L) is “clean,” meaning it does not contain any clauses or notations indicating damage to the goods or other issues that may affect the value or delivery of the cargo.
  5. Proper endorsement: If the Bill of Lading (B/L) is a negotiable document, ensure it is properly endorsed by the relevant parties (usually the shipper or the bank) to facilitate the transfer of title.
  6. Obtain original Bills of Lading (B/L): Obtain the specified number of original Bills of Lading (B/L) as required by the LC. This is typically 3 original B/Ls, but the Letter of Credit (LC) may specify a different number.
  7. Present the Bill of Lading (B/L) to the bank: Submit the original Bill of Lading (B/L) along with other required documents (e.g., commercial invoice, packing list, certificate of origin) to the bank within the specified time frame for processing and payment under the Letter of Credit (LC).

By following these steps and maintaining clear communication with the bank and other parties involved, you can ensure the successful completion of a Bill of Lading (B/L) under a Letter of Credit in dry bulk shipping. Always be vigilant in ensuring compliance with the Letter of Credit (LC) terms to avoid potential delays or payment issues.

 

 

What is the difference between a Letter of Credit (LC) and a Bill of Lading (B/L)?

 

A Letter of Credit (LC) and a Bill of Lading (B/L) are two distinct documents used in international trade transactions, each serving a unique purpose. Here are the main differences between a Letter of Credit and a Bill of Lading:

  1. Purpose:

Letter of Credit (LC): An LC is a financial instrument issued by a bank on behalf of a buyer, guaranteeing that the seller will receive payment as per the agreed terms and conditions if they present the required documents, such as a B/L, commercial invoice, packing list, and others. An LC reduces the risk of non-payment for the seller and ensures that the buyer receives the goods as per the agreed-upon terms.

Bill of Lading (B/L): A B/L is a transport document issued by a carrier (or their agent) that serves as a contract of carriage, a receipt for the goods, and a document of title. It provides evidence of the agreement between the carrier and the shipper for the transportation of goods, confirms the receipt of the cargo, and allows the transfer of ownership during transit.

  1. Parties involved:

Letter of Credit (LC): The main parties involved in an LC transaction are the issuing bank, the buyer (applicant), the seller (beneficiary), and sometimes a confirming bank or advising bank.

Bill of Lading (B/L): The main parties involved in a B/L are the shipper, the carrier, the consignee, and the notify party.

  1. Function:

Letter of Credit (LC): The primary function of an LC is to provide a financial guarantee to the seller, ensuring that they will receive payment upon presenting the required documents that prove compliance with the terms and conditions of the LC.

Bill of Lading (B/L): The B/L serves multiple functions: as a contract of carriage between the shipper and the carrier, as a receipt for the goods shipped, and as a document of title that allows the transfer of ownership of the goods during transit.

  1. Issuance:

Letter of Credit (LC): An LC is issued by a bank at the request of the buyer, subject to the buyer’s creditworthiness and the bank’s willingness to extend credit to the buyer.

Bill of Lading (B/L): A B/L is issued by the carrier or their agent upon receiving the goods for shipment from the shipper.

A Letter of Credit is a financial instrument that guarantees payment to the seller, while a Bill of Lading is a transport document that serves as a contract of carriage, a receipt for the goods, and a document of title. Both documents play essential roles in international trade transactions, helping to mitigate risk and facilitate the smooth flow of goods and payments between the buyer and the seller.

 

 

In dry bulk shipping can Shipper hold Bill of Lading (B/L)?

 

In dry bulk shipping, a shipper can hold the Bill of Lading (B/L) under certain circumstances. When the B/L is consigned “To Order of the Shipper” or simply “To Order,” the shipper retains control over the cargo and can hold the B/L until certain conditions are met, such as the buyer making payment or fulfilling other contractual obligations.

By holding the B/L, the shipper effectively controls the title to the goods, as the B/L serves as a document of title. The shipper can endorse the B/L and transfer the title to the buyer once the agreed-upon conditions are satisfied. In this case, the buyer would need the endorsed B/L to take possession of the goods at the destination port.

However, it is important to note that holding the B/L as a shipper comes with certain responsibilities and risks, such as ensuring the safekeeping of the original B/L and managing the risk of non-payment or other disputes with the buyer.

In many cases, especially when the transaction is financed using a Letter of Credit, the shipper may consign the B/L “To Order of a Bank” instead. This means the bank retains control of the cargo until the buyer fulfills their payment obligations, and the shipper does not hold the B/L directly.

A shipper can hold the Bill of Lading in dry bulk shipping when it is consigned “To Order” or “To Order of the Shipper.” This allows the shipper to control the title to the goods until certain conditions are met. However, this approach comes with certain responsibilities and risks that the shipper must carefully consider and manage.

 

 

How to Endorse a Negotiable Bill of Lading (B/L) in dry bulk shipping?

 

Endorsing a negotiable Bill of Lading (B/L) in dry bulk shipping is a crucial step in transferring the title and control of the cargo to another party, such as the buyer or a bank. Here’s a step-by-step guide on how to endorse a negotiable B/L in dry bulk shipping:

  1. Review the Bill of Lading (B/L): Ensure that the Bill of Lading (B/L) is negotiable, meaning it is consigned “To Order” or “To Order of the Shipper” or “To Order of a Bank.” Non-negotiable B/Ls, such as those consigned to a named consignee, cannot be endorsed or transferred.
  2. Verify the endorsement authority: The party currently holding the title to the cargo, usually the shipper or a bank, should be the one to endorse the Bill of Lading (B/L). Ensure that the person endorsing the B/L has the authority to do so on behalf of the endorsing party.
  3. Write the endorsement: On the back of the original Bill of Lading (B/L), write the endorsement as follows:a. If the Bill of Lading (B/L) is consigned “To Order” or “To Order of the Shipper,” the shipper should write: “Endorsed in blank by [Shipper’s Name]” or “Transferable by [Shipper’s Name].” Optionally, the shipper may also specify the name of the new consignee (e.g., “Endorsed to the order of [Buyer’s Name]”) to make the endorsement more specific.b. If the Bill of Lading (B/L) is consigned “To Order of a Bank,” the bank should write: “Endorsed in blank by [Bank’s Name]” or “Transferable by [Bank’s Name].” The bank may also specify the name of the new consignee (e.g., “Endorsed to the order of [Buyer’s Name]”).
  4. Sign and date the endorsement: The authorized representative of the endorsing party should sign and date the endorsement on the back of the Bill of Lading (B/L). This signature serves as confirmation that the endorsing party has transferred the title to the new consignee or endorsed the B/L in blank, allowing any holder of the document to take possession of the cargo.
  5. Transfer the original Bill of Lading (B/L): Once the Bill of Lading (B/L) has been endorsed, it should be physically handed over to the new consignee, their agent, or the bank, depending on the specific arrangement in the transaction.

By following these steps, you can successfully endorse a negotiable Bill of Lading (B/L) in dry bulk shipping, allowing the transfer of the title and control of the cargo to the specified consignee or any holder of the endorsed Bill of Lading (B/L).

 

 

Does a Straight Bill of Lading (B/L) need to be endorsed?

A Straight Bill of Lading (B/L) does not need to be endorsed. A Straight Bill of Lading (B/L) is a non-negotiable transport document that is issued directly to a named consignee, usually the buyer. The title to the goods is transferred automatically upon the delivery of the cargo, without the need for endorsement or transfer of the B/L.

Since a Straight B/L is not a document of title like an Order Bill of Lading (B/L), the consignee simply needs to provide proof of their identity to take possession of the goods at the destination port. There is no need for an endorsement or transfer of the Bill of Lading (B/L) , as the named consignee has the exclusive right to receive the cargo.

A Straight Bill of Lading does not need to be endorsed, as it is a non-negotiable document issued to a named consignee, who can take possession of the goods by providing proof of their identity. The title to the goods is transferred automatically upon delivery without the need for endorsement or transfer of the Bill of Lading (B/L).

 

 

Bill of Lading (B/L) Endorsement Process in Dry Bulk Shipping

 

In dry bulk shipping, the Bill of Lading (B/L) endorsement process is an essential step when dealing with a negotiable B/L. The endorsement allows the transfer of the title and control of the cargo to another party, such as the buyer or a bank. Here’s an overview of the B/L endorsement process in dry bulk shipping:

  1. Ensure the Bill of Lading (B/L) is negotiable: The Bill of Lading (B/L) must be consigned “To Order,” “To Order of the Shipper,” or “To Order of a Bank” for it to be negotiable and eligible for endorsement. Non-negotiable Bills of Lading (B/L), such as Straight Bills of Lading (B/L) issued to a named consignee, cannot be endorsed or transferred.
  2. Identify the endorsing party: The endorsing party should be the one currently holding the title to the cargo, which is usually the shipper or a bank. Ensure that the person endorsing the Bill of Lading (B/L) has the authority to do so on behalf of the endorsing party.
  3. Write the endorsement: On the back of the original Bill of Lading (B/L), the endorsing party should write the endorsement as follows:a. If the Bill of Lading (B/L) is consigned “To Order” or “To Order of the Shipper,” the shipper should write: “Endorsed in blank by [Shipper’s Name]” or “Transferable by [Shipper’s Name].” Optionally, the shipper may also specify the name of the new consignee (e.g., “Endorsed to the order of [Buyer’s Name]”) to make the endorsement more specific.b. If the Bill of Lading (B/L) is consigned “To Order of a Bank,” the bank should write: “Endorsed in blank by [Bank’s Name]” or “Transferable by [Bank’s Name].” The bank may also specify the name of the new consignee (e.g., “Endorsed to the order of [Buyer’s Name]”).
  4. Sign and date the endorsement: The authorized representative of the endorsing party should sign and date the endorsement on the back of the Bill of Lading (B/L). This signature serves as confirmation that the endorsing party has transferred the title to the new consignee or endorsed the B/L in blank, allowing any holder of the document to take possession of the cargo.
  5. Transfer the original Bill of Lading (B/L): Once the B/L has been endorsed, it should be physically handed over to the new consignee, their agent, or the bank, depending on the specific arrangement in the transaction.

By following these steps, the Bill of Lading (B/L) endorsement process can be successfully completed in dry bulk shipping, allowing the transfer of the title and control of the cargo to the specified consignee or any holder of the endorsed Bill of Lading (B/L).

 

 

Who should endorse a Bill of Lading (B/L) for cargo release in dry bulk shipping?

In dry bulk shipping, the party who should endorse a Bill of Lading (B/L) for cargo release depends on the type of B/L and the current holder of the title to the cargo. Here are the possible scenarios:

  1. Negotiable Bill of Lading (B/L) consigned “To Order” or “To Order of the Shipper”:

In this case, the shipper, who initially holds the title to the cargo, should endorse the Bill of Lading (B/L) . The shipper can either endorse the Bill of Lading (B/L) in blank or specify the name of the new consignee (usually the buyer). Once the B/L is endorsed, the shipper should transfer the original endorsed Bill of Lading (B/L) to the new consignee or their authorized agent.

  1. Negotiable Bill of Lading (B/L) consigned “To Order of a Bank”:

If the Bill of Lading (B/L) is consigned “To Order of a Bank,” the bank, acting on behalf of the buyer in the transaction, should endorse the Bill of Lading (B/L). The bank can either endorse the Bill of Lading (B/L) in blank or specify the name of the new consignee (usually the buyer). Once endorsed, the bank should transfer the original endorsed Bill of Lading (B/L) to the new consignee or their authorized agent.

  1. Non-negotiable Bill of Lading (B/L) (Straight Bill of Lading (B/L) ):

In the case of a Straight Bill of Lading (B/L) , there is no need for endorsement. A straight B/L is consigned directly to a named consignee, who can take possession of the goods at the destination port by providing proof of their identity. No endorsement or transfer of the B/L is necessary in this case, as the title to the goods transfers automatically upon delivery.

In summary, the party that should endorse a Bill of Lading for cargo release in dry bulk shipping depends on the type of B/L and the current holder of the title to the cargo. In the case of a negotiable Bill of Lading (B/L), it could be the shipper or a bank, while no endorsement is needed for a straight Bill of Lading (B/L) .

 

Who is the Holder of the Bill of Lading in dry bulk shipping?

 

The holder of the Bill of Lading (B/L) is the person or entity that possesses the original, negotiable Bill of Lading (B/L). The Bill of Lading (B/L) serves as a document of title to the goods it represents, and the holder of the Bill of Lading (B/L) has the right to take possession of the goods at the destination port.

In most cases, the holder of the Bill of Lading (B/L) is the consignee, which is the person or entity named on the Bill of Lading (B/L) as the recipient of the cargo. However, in the case of a negotiable Bill of Lading (B/L) consigned “To Order,” “To Order of the Shipper,” or “To Order of a Bank,” the holder of the Bill of Lading (B/L) could be any person or entity that holds the original, endorsed Bill of Lading (B/L).

The holder of the Bill of Lading (B/L) has significant control over the cargo and the transaction, as they are the ones who can take possession of the goods and initiate payment. In the case of a Letter of Credit transaction, for example, the bank issuing the Letter of Credit typically requires that the Bill of Lading (B/L) be consigned “To Order of a Bank,” allowing them to retain control of the cargo until the buyer fulfills their payment obligations.

The holder of the Bill of Lading (B/L) is the person or entity that possesses the original, negotiable Bill of Lading (B/L), and has the right to take possession of the cargo at the destination port. The consignee is typically the holder of the B/L, but in the case of a negotiable Bill of Lading (B/L) consigned “To Order,” the holder could be any person or entity that holds the original, endorsed Bill of Lading (B/L).

 

Notify Party in Bill of Lading (B/L)

The Notify Party in a Bill of Lading (B/L) is a person or entity named on the B/L who is to be notified of the arrival of the cargo at the destination port. The Notify Party is usually not the consignee, but rather a third party who needs to be informed of the shipment’s arrival, such as a freight forwarder, customs agent, or another representative of the consignee.

The Notify Party is responsible for receiving and acting upon any notifications regarding the shipment’s arrival, such as customs clearance or delivery instructions. They are not typically involved in the ownership or possession of the cargo, but rather serve as a point of contact for logistical and administrative purposes.

When filling out a B/L, the shipper should include the Notify Party’s name and address in the appropriate section of the document. The Notify Party should be someone who is likely to be available and responsive, and who has the necessary knowledge and authority to act on behalf of the consignee. In some cases, the consignee may choose to act as their own Notify Party.

The Notify Party in a Bill of Lading is a third party named on the document who is to be notified of the shipment’s arrival at the destination port. They are responsible for receiving and acting upon any notifications related to the cargo’s arrival, and serve as a point of contact for logistical and administrative purposes.

 

 

In dry bulk shipping Notify Party can be a Bank in Bill of Lading (B/L)?

in dry bulk shipping, a bank can be named as the Notify Party in a Bill of Lading (B/L). The Notify Party is the person or entity named on the B/L who is to be notified of the arrival of the cargo at the destination port. While the Notify Party is typically not the consignee, but rather a third party who needs to be informed of the shipment’s arrival, such as a freight forwarder or customs agent, it is possible for a bank to be named as the Notify Party.

In some cases, when the buyer is using a Letter of Credit to pay for the goods, the bank issuing the Letter of Credit may request to be named as the Notify Party on the Bill of Lading (B/L). This is because the bank wants to be notified of the cargo’s arrival to ensure that the shipment is in compliance with the Letter of Credit terms, such as the delivery time frame and the quality of the goods. The bank may also use the notification as an opportunity to verify that the shipping documents are in order before releasing payment to the seller.

A bank can be named as the Notify Party in a Bill of Lading (B/L) in dry bulk shipping, particularly when the buyer is using a Letter of Credit (LC) to pay for the goods. The bank may request to be named as the Notify Party to ensure that the shipment is in compliance with the Letter of Credit terms and to verify the shipping documents before releasing payment to the seller.

 

Bill of Lading (B/L) Example in Dry Bulk Shipping

Bill of Lading (B/L) Example in Dry Bulk Shipping

Date: April 29, 2023

Shipper: ABC Mining Company Address: 12345 Mountain Road, Ore City, Country A
Consignee: XYZ Steel Manufacturing Address: 67890 Industrial Park, Steel Town, Country B
Notify Party: XYZ Steel Manufacturing Address: 67890 Industrial Park, Steel Town, Country B
Vessel Name: MV HandyBulk Carrier Voyage No: 1234
Port of Loading: Port of Ore City, Country A Port of Discharge: Port of Steel Town, Country B

Description of Goods: Iron Ore
Quantity: 50,000 metric tons +/- 10% More or Less in Shipper’s Option
Freight: USD 12.50 per metric ton, payable upon presentation of original Bill of Lading and other supporting documents
Freight Prepaid: Yes

Marks and Numbers: N/A
Shipped on Board Date: April 29, 2023

Place of Issue: Ore City, The United States of America
Date of Issue: April 29, 2023

Number and Type of Originals: 3 Original Bills of Lading
Documentary Credit No: LC1234567890, issued by Bank of Country B, dated April 15, 2023

Special Instructions: Vessel to be fully seaworthy and suitable for the carriage of dry bulk cargo. The carrier is responsible for ensuring the cargo is safely stowed, lashed, and protected from any damage during the voyage. Any shortage or damage must be reported immediately to the consignee and notify party.

Freight Forwarder: Global Shipping Agency Address: 23456 Harbour Street, Port City, The United States of America
Signed for the Carrier: John Smith Title: Agent for MV HandyBulk Carrier

Please note that this is a fictional example for illustrative purposes only and should not be used as an actual Bill of Lading without consulting a professional or a relevant authority.

 

Where can I find a Bill of Lading (B/L) Form?

We kindly suggest that you visit the web page of BIMCO (Baltic and International Maritime Council) to obtain the original Bill of Lading (B/L) Forms. www.bimco.org