Waybill

In situations where a negotiable document of title is not required, the presentation problem can be solved by the substitution of a waybill for the normal bill of lading. These documents were first developed for use in land and air transport in which negotiable documents of title were not required since the journeys involved were normally so brief that little opportunity was provided for the consignee to sell the goods in transit.

Since negotiation of a waybill is not possible, the obligation of the carrier is to deliver to the named consignee and, provided the latter can identify himself, there is no requirement for presentation of the waybill before he can obtain delivery of the goods.

The waybill differs from the bill of lading in that, while it acts as a receipt and provides evidence of the contract of carriage, it lacks the third characteristic in that it does not constitute a negotiable document of title. For this reason it is not so acceptable where documentary credits are involved or where there is a possibility that the consignee might wish to sell the goods in transit.

Nevertheless, increasing use is being made of the waybill and it is reported that as much as 85 per cent of the trans-Atlantic trade in containerized cargo could be carried on waybills. Typical examples are provided by in-house movements of goods between different branches of a multinational firm, the shipment of household or personal effects, and open account trading with long-standing and trusted overseas buyers where security is not needed.

It must also be remembered that general cargo is rarely sold in transit, while cargo of mixed ownership in containers packed by freight forwarders is never so sold. All these shipments provide opportunities for the use of waybills since they are destined for delivery solely to the named consignee.

The modern waybill follows the pattern of the short form bill of lading in that it is a short form document with a blank back but with a specific clause incorporating the carrier’s standard terms and conditions. As with the bill, the waybill is available either in a proprietary or common form. Again, it is generally a received for carriage document, although facilities are available for shipped notation. Unlike the bill of lading, however, it is not subject to the Hague-Visby Rules in the United Kingdom, although most standard versions include a clause expressly incorporating the rules except in the case of deck cargo and live animals.

The obvious advantage of the waybill is that it avoids the problems arising from the late arrival of documentation. The consignee has merely to identify himself at the port of dis- charge in order to obtain delivery of the cargo since the presentation rule does not apply.

As no negotiation of the document is envisaged, the contents of the waybill can be telexed to the destination, thus speeding up the receipt of the required information by the carrier. The major drawback, however, is that, as the waybill is neither negotiable nor a document of title, it is not well suited to transactions involving documentary credits, where banks tend to place greater emphasis on security than simplification. For them the negotiable document of title endorsed in blank is the ideal solution, since it provides the required security for the credit without involving the bank in any liability under the contract of carriage.

The only method by which an equivalent security could be acquired through the use of a waybill would be for the bank to be designated as consignee in the document. This would not necessarily be an attractive solution for the bank for two reasons. First, as the bank is not a party to the contract of carriage, the shipper is free to change his instructions and order the carrier to deliver to a party other than the consignee designated in the waybill. Secondly, in the event of default in repayment of the credit, the cargo would not readily be disposable in the absence of a document of title. A further potential problem arising from doubt as to whether the consignee under a waybill had title to sue the carrier has now been resolved by s 2(1) of the Carriage of Goods by Sea Act 1992.

In an attempt to remove some of the above anomalies associated with the use of a waybill, the CMI recently formulated a set of rules for voluntary incorporation into any contract of carriage covered by such a document.

Recognizing that neither the Hague nor the Hague- Visby conventions are applicable to waybills, the Rules provide that a contract of carriage covered by a waybill shall be governed by whichever international convention or national law, if any, would have been compulsorily applicable if the contract had in fact been covered by a bill of lading or similar document of title. The Rules then proceed to incorporate a provision relating to representations in a waybill as to the quantity or condition of goods received for shipment similar in effect to Art III rules 3 and 4 of the Hague-Visby Rules. Accordingly, such representations, if not qualified by the carrier, shall be prima facie evidence in favor of the shipper and conclusive evidence in favor of a consignee in good faith.

The Rules further confirm the right of the shipper, as original party to the contract of carriage, to change the name of the consignee at any time before the consignee claims delivery of the goods after their arrival at the contractual destination. Such right is subject to the proviso that the shipper gives the carrier adequate warning and indemnifies him against any additional expenditure involved.

The shipper can, however, relinquish such right of control to the consignee at any time not later than the receipt of the goods by the carrier, provided that such transfer of control is recorded on the waybill. Banks prepared to accept a waybill as security for a commercial credit will presumably insist on such a transfer of control.

Finally, the Rules, while requiring the carrier to deliver the goods to the consignee on production of proper identification, absolve him from liability for wrong delivery on proof that he exercised reasonable care in seeking to identify the consignee.