LESSON 17

Bill of Lading
•A bill of lading (sometimes abbreviated
as B/L or BoL) is a document issued by
a carrier which details
a shipment of merchandise and
gives title of that shipment to a
specified party.
• Bills of lading are one of three important documents used
in international trade to help guarantee that exporters receive
payment and importers receive merchandise. A straight bill of
lading is used when payment has been made in advance of
shipment and requires a carrier to deliver the merchandise to
the appropriate party. An order bill of lading is used when
shipping merchandise prior to payment, requiring a carrier to
deliver the merchandise to the importer, and at the
endorsement of the exporter the carrier may transfer title to
the importer. Endorsed order bills of lading can be traded as
a security or serve as collateral against debt obligations.
• A bill of lading is a standard-form document. It is
transferable by endorsement (or by lawful
transfer of possession) and is a receipt from
shipping company regarding the number of
packages with a particular weight and markings
and a contract for the transportation of same to
a port of destination mentioned therein.
• In the case of Coventry v Gladstone, Lord Justice Blackburn
defined a Bill of Lading as "A writing signed on behalf of the
owner of ship in which goods are embarked, acknowledging
the receipt of the Goods, and undertaking to deliver them at
the end of the voyage, subject to such conditions as may be
mentioned in the bill of lading." A bill of lading is a key
document used in the transport of goods. As a document of
title, it is also an important financial instrument.
• A bill of lading is a document generated by a shipping line or
its agent, giving details of a shipment of merchandise.
Alongside this principal purpose, the bill of lading also
certifies that the goods have been shipped aboard a vessel
(and in some cases certifies the condition of the goods at the
point of loading), assigns title to the goods, and requires the
carrier to release the merchandise to the holder of the title
or a named party at the destination port.
As cargo receipt
• The principal use of the bill of lading is as a
receipt issued by the carrier once the goods have
been loaded onto the vessel. This receipt can be
used as proof of shipment for customs and
insurance purposes, and also as commercial
proof of completing a contractual
obligation, especially under Incoterms such as
CFR (cost and freight) and FOB (free on board).
As evidence of the contract of carriage
• The bill of lading will rarely be the contract itself, since
the cargo space will have been booked previously,
perhaps by telephone, email or letter. The preliminary
contract will be acknowledged by both the shipper
and carrier to incorporate the carrier's standard terms
of business. If the Hague-Visby Rules apply, then all of
the Rules will be automatically annexed to the bill of
lading, thus forming a statutory contract.
As title
• The bill of lading confers prima facie title over the
goods to the named consignee or lawful holder. Under
the "nemo dat quod non habet" rule ("no-one may
give what he ain't got"), a seller cannot pass better
title than he himself has; so if the goods are subject to
an encumbrance (such as a mortgage, charge or
hypothec), or even stolen, the bill of lading will not
grant full title to the holder.
• Bills of lading have a number of additional attributes,
such as on-board, and received-for-shipment. An on-
board bill of lading denotes that merchandise has
been physically loaded onto a shipping vessel, such as
a freighter or cargo plane. A received-for-shipment bill
of lading denotes that merchandise has been received,
but is not guaranteed to have already been loaded
onto a shipping vessel. Such bills can be converted
upon being loaded.
• For many years, the industry has sought a
solution to the difficulties, costs and
inefficiencies associated with paper bills of
lading. The obvious answer is to make the bill an
electronic document. Electronic bill of lading or
eB/L is the legal and functional equivalent of a
paper bill of lading.
•An electronic bill of lading (eB/L) must
clearly replicate the core functions of a
paper bill of lading, namely its functions
as a receipt, as evidence of or containing
the contract of carriage and, if
negotiable, as a document of title.