bill of lading (B/L)

Definition
A document issued by a carrier, or its agent, to the shipper as a contract of carriage of goods. It is also a receipt for cargo accepted for transportation, and must be presented for taking delivery at the destination. Among other items of information, a bill of lading contains (1) consignor's and consignee's name, (2) names of the ports of departure and destination, (3) name of the vessel, (4) dates of departure and arrival, (5) itemized list of goods being transported with number of packages and kind of packaging, (6) marks and numbers on the packages, (7) weight and/or volume of the cargo, (8) freight rate and amount. It serves as a proof of ownership (title) of the cargo, and may be issued either in a negotiable or non-negotiableform. In negotiable form, it is commonly used in letter of credit transactions, and may be bought, sold, or traded; or used as security for borrowingmoney. A bill of lading is required in all claims for compensation for any damage, delay, or loss; and for the resolution of disputes regarding ownership of the cargo. The rights, responsibilities, and liabilities of the carrier and the shipper under a bill of lading (often printed on its back) are governed generally either by the older Hague rules, or by the more recent Hague-Visby rules. See also lading.

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What is bill of exchange and state its essentials ?

BALBIR

Section 5 defines a bill of exchange as an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to or to order of, a certain person or to the bearer of the instrument. A bill of exchange is also called a draft. There are three parties to a bill of exchange, namely drawer, drawee and payee. The maker of the bill is called the drawer, the person who is ordered to pay is called the drawee and the person to whom or to whose order the money is directed to be paid is called the payee. In some cases drawer and payee may be one person. The payee, or if, it is endorsed; endorsee is called the holder of the bill. The drawee of a bill of exchange who has signified his assent to the order of the drawer is called the acceptor. The acceptor becomes liable to the holder only when he has communicated his assent but not before.

Essentials of a bill of exchange:

In order that an instrument may be called a bill of exchange it should satisfy the following conditions: 1. It must be in writing.

2. It must contain an unconditional order to pay. 3. It must be signed by the drawer. 4. There must be three parties to the instrument and the parties must be certain. 5. The order must be to pay a certain sum of money. 6. The instrument must contain an order to pay money and money only. 7. It must comply with the formalities as regards date, consideration, stamp etc. A bill of exchange like a promissory note may be written in any language. It may be written in any form of words provided the requirements of the section are complied with.

What Is Bill Discounting?

Also known as a discounting of bill, a bill discounting is a process that involves effectively selling a bill to a bank or similar entity for an amount that is slightly less than the par value and before the maturity date associated with the bill of exchange. The debtor tenders payment to the new owner of the discounted bill in the full amount agreed upon originally. This approach allows the issuer of the bill to receive cash before the actual due date associated with the bill, while also allowing the buyer to make a modest profit on the cash advance extended to the bills originator. One of the easiest ways to understand how bill discounting works is to consider a bill of exchange issued by ABC Company to its client, XYZ Company. ABC Company decides to cash in the outstanding bill in order to make use of the revenue now rather than later. To this end ABC approaches a bank with an offer to sell the bill for 90% of the par value. The bank looks over the transaction and decides the deal is viable. Upon approval, ABC receives 90% of the par value of the bill and instructs XYZ Company to remit payment to the bank. Once the bank receives full payment from XYZ, the deal is considered complete. There are several factors that a financial institution will consider before choosing to enter into a bill discounting transaction. One has to do with the degree of risk involved with making the purchase. This will usually mean evaluating the debtor involved to determine what degree of risk exists that he or she will either settle the bill late or even default on the debt altogether. The amount of time that remains until the bill comes due is also a consideration, with institutions favoring a shorter duration between buying the instrument and receiving payment in full. Assuming the financial institution determines that the degree of risk involved is within an acceptable range, the transaction can be completed and the originator of the bill of exchange compensated with an agreed-upon percentage of the total par value of the bill. Part of the bill discounting procedure will involve the creation of a contractual arrangement between the seller and the buyer of the commercial bill. Typically, the terms of the contract identify the percentage to be paid to the seller, and also include provisions that protect the buyer in the event that the bill is not paid according to terms. This may include the imposition of late fees or other charges, or even ultimately holding the seller liable for full payment of the bill discounting obligation if the debtor should default on the outstanding balance.

Bill discounting is a major activity with some of the smaller Banks. Under this type of lending, Bank takes the bill drawn by borrower on his (borrower's) customer and pays him immediately deducting some amount as discount/commission. The Bank then presents the Bill to the borrower's customer on the due date of the Bill and collects the total amount. If the bill is delayed, the borrower or his customer pays the Bank a pre-determined interest depending upon the terms of transaction.

What is the difference between bill discounting and bill purchase?

In:Business & Finance, Investing and Financial Markets [Edit categories] Answer: This is a technical question and according to my opinion tenor is involved in the usance bill so we use the term of discounting whereas in sight bill no tenor is involved and we have to pay on sight or at one as per UCP 600 so we purchase the bill instead of discounting as it is payable on first demand.

Saifullah Arif Soneri Bank Limited

Dear, According to me, Demand Bill is payable on demand, supported by doccuments to title, so it is purchased at full value by bank, while discouting means at less than value and it is just like clean finance, because usance is other than demand, a period and uncertainity is involved, usually there are no document to title to goods, so bank keep high margin and pay less than face value.So we use Purchase of Bill in term of Demand Bill and Discouting of Bill in term of Usance Bill.

Sheikh Junaid, Allied Bank Limited.

According to me, In case of the bill purchase, the bill is purchased and that in case of bill discounting the bank is only financing against the said bill. The title of the bill would be transferred in favour of the bank in case of Bill purchase and whereas the title of the bill remains with the party in case of Bill Discounting. Further the responsibility of recovery of the amounts under the Bill purcahse would absolutely on the bank in case of Bill Purchase and the responsibility of recovery of the money under the bill discounting would be on the party.

Meaning and Types of Hundis

A Hundi is a negotiable instrument written in an oriental (vernacular) language. The term Hundi includes all indigenous negotiable instruments whether they are in the form of notes or bills. But they are mostly of the nature of bills of exchange. They are virtually inland bills of exchange and recognized by custom and law in India. The term comes from the Sanskrit word Hund which means to collect. It means that Hundis were used as means of collection of debts. Hundis are very popular among the Indian merchants and indigenous bankers from ancient times. The Negotiable Instruments act does not apply to Hundis. Hundis are governed by the custom and usages of the locality in which they are intended to be used. In case there is no customary rule known as to a certain point, the court can apply the rules of the Negotiable Instruments Act. It is also open to the parties to exclude expressively the applicability of any custom relating to Hundis by agreement and include the provision of the Negotiable Instrument Act. A Hundi is a negotiable instrument by usage. It is often in the form of a bill of exchange drawn in any local language in accordance with the custom of the place. Some times it can also be in the form of a promissory note. A hundi is the oldest known instrument used for the purpose of transfer of money without its actual physical movement. The provisions of the Negotiable Instruments Act shall apply to hundis only when there is no customary rule known to the people. Types of Hundis There are a variety of hundis used in our country. Let us discuss some of the most common ones. 1. Shah-jog Hundi: This is drawn by one merchant on another, asking the latter to pay the amount to a Shah. Shah is a respectable and responsible person, a man of worth and known in the bazaar. A shah-jog hundi passes from one hand to another till it reaches a Shah, who, after reasonable enquiries, presents it to the drawee for acceptance of the payment. 2. Darshani Hundi: This is a hundi payable at sight. It must be presented for payment within a reasonable time after its receipt by the holder. Thus, it is similar to a demand bill. 3. Muddati Hundi: A muddati or miadi hundi is payable after a specified period of time. This is similar to a time bill. There are few other varieties like Nam-jog hundi, Dhani-jog hundi, Jawabee hundi, Jokhami hundi, Firman-jog hundi, etc. Source: Scribd.com