Business

What are the various Types of the Bill of Lading

What are the various features of the bill of lading

A bill of lading is a document issued by the shipping company or its agent acknowledging receipt of goods for carriage which are deliverable to the consignee or his assignee in the same condition as they were received. It contains full details of the goods and distinct markings on the packages, the terms and conditions under which the goods are accepted for shipment, the ports of shipment and arrival, freight and other charges, etc. The shipping company is, however, not responsible for the actual contents of the package.

A bill of lading can be transferred by endorsement and delivery and the transferee for value and in good faith can sue in his own name. Thus, it has the features of a negotiable instrument. But the transferee acquires his right subject to any defect in the title of the transferor. Therefore, a bill of lading is often termed a quasi-negotiable instrument.

Where a bill of lading is tendered under a letter of credit, the following aspects  would be examined by the bank:

1. Full set. The bill of lading is usually drawn in sets of more than two negotiable  copies, goods deliverable against any one of the copies surrendered to the shipping company duly discharged. The number of negotiable copies prepared would be mentioned on the bill which would also provide that “one of the copies of the bill being accomplished, the others to stand void”. It is, therefore, essential that the bank obtains all the copies of the bill of lading.

2. Description of goods. The description of goods in the bill of lading should not contradict the description in the letter of credit. Article 37 (c) of the UCP provides: “The description of the goods in the commercial invoice must correspond  with the description in the credit. In all other documents the goods may be described in general terms not inconsistent with the description of the goods in the credit.”

It is, therefore, clear that full description of the goods is not necessary in the bill of lading, since it would not be feasible to include the description, some-times running into a few pages, in the bill of lading. If the description generally agrees with the wordings of the letter of credit, it would be accepted.

3. Clean and claused bill of lading. Article 32 (a) states: “A clean transport document is one which bears no clause or notation which expressly declares a defective condition of the goods and/or the packaging.”

Therefore, a clean bill of lading is one which either states that the goods are received in good condition or does not make any remark about the defective condition of the goods or packing. A claused or dirty or foul bill of lading contains an adverse remark about the goods or packing, such as “packages torn”, etc. A claused bill of lading would not be accepted by the bank unless the specific remark is acceptable as per the terms of the letter of credit. Article 32 (b) provides:

“Banks will not accept transport documents bearing such clauses or notations unless the credit expressly states the clauses or notations which may be accepted.”

4. On board and received for shipment bill of lading. An ‘on board’ bill of lading is one which states that goods to be carried are actually on the board of the ship. Sometimes the goods may be delivered to the shipping company but may not be put into the ship because of non-availability  of space or non-arrival of the vessel. In such cases the shipping company will issue a ‘received for shipment’ bill of lading whereby it acknowledges that goods have been received by it for carriage and will be carried by the next available vessel or a specified vessel.

When the goods are subsequently put on the board of the ship, it will be stamped with the Nation ‘on board’. It is as good as any on board bill of lading. Generally letters of credit require an on board bill of lading; received for shipment bill of lading is not accepted unless the credit specifically provides for it.

5. Shipped on deck. Goods carried on the deck of the ship are subject to the risk of damage and, therefore, if the bill of lading mentions that the goods are carried on deck it is not accepted under a letter of credit unless the credit authorities it. Nevertheless, banks will accept a transport document which contains a provision  that the goods may be carried on deck, provided it does not specifically state that they are or will be loaded on deck (Article 31 (1)]

6. Through bill of lading. Where the goods are to be carried by two or more ships or partly by ship and partly by rail, the bill of lading providing for the continuous responsibility of all the shipping companies or the shipping company. and the railway company is called a through bill of lading. Where issued by a railway company, it serves as a railway receipt for transport up to the port and as a h of lading for the sea voyage. Since it does not specify that the goods are on board the ship, it is similar to a received for shipment bill of lading. Unless otherwise specified by the credit, a through bill of lading ‘issued by shipping companies or their agents will be accepted even though they cover several modes of transport.

7. Straight bill of lading. A bill of lading the goods covered by which are deliverable to a named consignee is known as a straight bill of lading as against an order bill of lading which provides that the goods are deliverable to a named person  or his order. A straight bill of lading is not a negotiable instrument and is normally taken in the name of the consignee. Presentation of bill of lading may not be necessary for delivery of goods under a straight bill of lading if the consignee is known to the shipping company. Goods will be delivered to him against his receipt . The exporter or the bank cannot have any right over the goods once it is shipped, since the bill of lading is taken in the name of the consignee to whom the title passes. Therefore, a straight bill of lading may not be accepted by banks under a letter of credit.

An order bill of lading is normally taken in the name of the shipper or his order. The title over the goods is transferred by endorsement and delivery of the bill of lading. The goods are deliverable to the last endorsee. Normally the letter of credit would require an order bill of lading with shipper’s name as consignee and endorsed to the order of the bank or blank endorsed. The bank should verify that the requirement is fulfilled.

8. Stale bill of lading. Article 43 of the UCP provides that credits must also stipulate a specified period of time after the date of shipment during which presentation  must be made in compliance with the terms and conditions of the credit. If no such period of time is stipulated in the credit, banks will not accept documents presented to them later than 21 days after the date of shipment. A bill of lading presented beyond this period will be considered a stale bill of lading.

9. Charter party bill of lading. A complete ship may be made available to a shipper for a particular voyage or for a specified period of time. The document containing the terms and conditions of this contract is known as the charter party. The shipper who has chartered the ship may agree to carry the goods of others in the ship and issue bill of lading for this purpose. The bill of lading thus issued is subject to the terms and conditions of the charter party. Unless specifically authorised in the credit, bills of lading which are issued under and are subject to the conditions of a charter party will be rejected.

10. Mate’s receipt. Where the ship cannot come to the quayside goods may be carried to the ship in small boats When the goods are so carried their receipt is acknowledged by issuance of document by the Mate (the officer next to the captain of the ship) The acknowledgement is known as the Mate’s receipt. A mate’s receipt is not a substitute for a bill of lading. The transfer of a mate’s receipt does not pass the title in the goods. It should not, therefore, be accepted. The mate’s receipt should later on be submitted to a shipping company in exchange for a regular bill of lading.

11. Shipment by sailing vessel. Unless otherwise stipulated in the credit, a bill of lading which indicates that the carrying vessel is propelled by sail only is not acceptable.

12. Liner bill of lading. A liner vessel is a ship operating on a fixed route between two ports or series of ports. It operates a regular scheduled service and the freight charged can be quoted from a fixed schedule. A conference is an agreement  between liners operating on the same route to avoid unhealthy competition among themselves. A liner bill of lading or a conference liner bill of lading ensures  regular service and is welcomed by shippers. As against liner vessel is a tramp which is a chartered ship prepared to carry anything anywhere. The freight charges vary and the regularity of service is also not definite.

13. Container bill of lading. Containers are large and strong boxes (40′ x 8′ 8′ or 20′ x 8′ x 8′) which can be easily placed on and loaded into specially built trucks or railway wagons. All the merchandise to be transported are put into the container which is lifted from the factory and carried to the port by a truck or by rail. At the port entire container is lifted and loaded into the ship as a single piece. The bill of lading covering carriage of goods by containers is a container bill of lading. It is more appropriately a combined transport document, covering both land transport and sea voyage.

14. Payment of freight. If the contract is on FOB basis, the freight is payable by the importer. In such cases the bill of lading will be a ‘freight to pay’ bill of lading on which freight is payable at the destination. If the contract is on CIF or CFR basis, the price quoted includes freight and, therefore, the exporter has to pay the freight in advance. In such cases the bill of lading will be a ‘freight paid’ bill of lading.

15. LASH bill of lading. LASH refers of Lighter Aboard Ship. The barges are themselves loaded into and carried by the ship during ocean voyage; they are dis-charged at sea ports where from the barges carry on the inland water journey. Similar  to a container bill of lading, LASH bill of lading is a species of combined transport document.

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