BILL OF LADING

Authored by Divyansh Nayar and Sandeep Golani

What is a bill of lading? To an average citizen the query suggests a printed form, bearing more or less illegible pencil scrawls, which is thrust at him by a preoccupied freight clerk in exchange for his package.[1] In other words, simply put a bill of lading is required for the shipment of goods.

Dividing the study about the bill of lading in three forms, the bill acts as an evidence of contract for carriage, receipt of goods and document of title to the goods.[2] As an evidence of contract, the bill of lading acts as a proof that the contract of carriage was entered into between ‘Ship owner’ and ‘Carrier’ for the transportation of goods. If the goods are damaged before their delivery to the Consignee, the Carrier can claim damages on the basis of bills of lading, an evidence of contract.Starting from the quantity of goods to the discharge port, a bill of lading mentions everything. It also mentions the date on which the goods were received by the carrier. Thus, we can say that a Bill of lading is issued by the carrier to the ship owner as a receipt of goods. It acts as a proof that the carrier has received the goods from the ship owner in good and reasonable condition.Last but not least, the bill of lading also acts as a title to the goods. By way of bill of lading one can claim the title on goods and can freely transfer or exchange the same as one deems fit.  What makes bill of lading a document different from others is the fact that upon surrender of bill of lading the rightful owner of the goods get the title to such goods.

Types Of Bills Of Lading

1. Straight bill of lading

The bill indicates that the goods are assigned or specified to one person or consignee. Secondly, that person or consignee cannot further transfer or negotiate such bill.[3] In other words, the cargo cannot be sold by transferring the bill to another party’s name. Thus, the bill is also called as non- negotiable bill of lading.

2. Order bill of lading

This is the most used or common bill of lading. The Order bill is the one which is negotiable at the option of consignee as the title to the goods can be freely transferred.[4] Consignee can order the shipment to someone else by endorsing the bill to such party.

3. Bearer bill of lading

When there is no mention of Consignee in the original bill of lading then the bearer of such bill or the holder of such bill is the actual owner of the goods. In that case, Bearer bill of lading is used. It can also be negotiated by physical delivery. The bad part in using this bill is that there are risks involved in the misuse of such bills as the name of Consignee is not at all mentioned in such bill. Lastly, as the title to goods can be transferred such bill fall under the category of negotiable instrument.

4. Multimodal or combined bill of lading

Multimodal or combined bill of lading is a bill which involves atleast two modes of transport to complete the shipment of goods.[5] For e.g. using Ocean, rail and land while transporting the goods.

5. Through bill of lading

When there is usage of only one mode of transport but in different phases, the bill of lading used is through bill of lading. For e.g., instead of using Ocean and Rail, if sea and inland waterways are used the bill involved is through bill of lading. [6]Multimodal bill of lading is different from through bill in the sense that the former involves usage of atleast two different modes of transport while the later deals with using only one mode of transport yet in different legs.

6. Express bill of lading

A bill to expedite the release of goods from the Carrier as there is no need to physically present the bill of lading. In this bill the carrier releases goods only to the expressed Consignee.[7] The express bill of lading is a non-negotiable instrument

7. Clean bill of lading

Clean bill of lading is a type of bill in which there is no mention of any remarks or notations or clauses. Usually a shipping company mentions clauses relating to package, shipment, condition and quantity of the goods. But, in a clean bill of lading there is no such mention. Such bill of lading is issued by Shipping Company when it does not have any say on the defect in services or Cargo or its packaging.

8. Received Bill of lading

Such bill of lading which is issued by Carrier to the Consignor as an acknowledgement of the goods is known as received bill of lading.[8] Such bill does not certify the placement aboard the ship. In addition to that, such bill of lading is not considered a complete bill of lading as further a shipped on board bill of lading takes its place.

9. Claused bill of lading

When the goods are not received in good condition or where goods are damaged we use claused bill of lading. It simply means that when promised things are not provided there the bill is claused.

10. Charter Party bill of lading

When the goods are transported some shippers or usually a group of shippers charter vessels to transport such goods from Consignee to the Consignor.[9] Thus, to acknowledge that goods are received a charterer issues charter party bill of lading. Such bill also acts as a receipt to the goods shipped.

Functions of Bills of Lading

1. Bill of Lading as evidence of contract of carriage:

Bill of lading can be considered as an evidence of contract of carriage in the hands of the shipper. Further, in landmark judgments it has been held that a bill of lading is not a contract per se, rather it considered only as an evidence of contract.

2. Bill of lading as document of title:

When it comes to the possession of the goods, the transfer of bill of lading is deemed to be constructive possession of the goods. This also helps when third parties are involved in the transaction. The buyer can sell the goods on while they are at sea to the third party by simply endorsing the bill of lading and delivering it to the third party and then the third party can demand the delivery of the goods on arrival.

3. Bill of lading as a receipt:

When the shipper has the possession of the bill of lading, it becomes the receipt for the quantity of the goods received, the condition of the goods received and leading marks.

Therefore, Bills of lading therefore plays a very important role when it comes to international trade. Through this article we have tried to give a brief description about the complicities and functions of the bill of lading.

About the Authors

Divyansh Nayar is the Co-convenor of Centre for Maritime Law, NLUO. Since last 2 years he has been working with the centre and has contributed in research and publications in the field of Maritime law.

Sandeep Golani is one of the members of Centre for Maritime Law, NLUO. He has researched with his Professor on various facets of Maritime law in India. The same phenomenon incited him to pick up the gauntlet i.e. ‘Researching on Maritime Law.

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[1]Chester B. McLaughlin, Jr.,The Evolution of Bill of Lading, The Yale Law Journal, Vol. 35, No. 5 (Mar., 1926), pp. 548.

[2]T. H. Cobbs, Bills of Lading Given for Goods Not in Fact Shipped [Munson Prize Thesis]The Yale Law Journal, Vol. 7, No. 4 (Jan., 1898), pp. 169.

[3]Capt Rajeev Jassal, Different types of bill of ladings My Sea Time

<https://www.myseatime.com/blog/detail/different-types-of-bill-go-ladings> accessed on 12.06.2019.

[4] 8 Common Types of Bills of Lading by Transportation Mode,Flexport<https://www.flexport.com/help/223-bills-of-lading-by-transportation> accessed on 13.06.2019.

[5]Samir Mankabady, The Multimodal Transport of Goods Convention: A Challenge to Unimodal Transport Conventions,The International and Comparative Law Quarterly, Vol. 32, No. 1 (Jan., 1983), pp. 120.

[6]Types of Bill of Lading, India Fillings<https://www.indiafilings.com/learn/types-of-bill-of-lading/> accessed on 13.06.2019.

[7]Express bill of lading, Flexport<https://www.flexport.com/glossary/express-bill-of-lading> accessed on 13.06.2019.

[8]H. C. Gutteridge, The Law Relating to “Received for Shipment” Bills of LadingEconomica, No. 4 (Jan., 1922), pp. 17-18.

[9]Soumyadipta Chanda, A Comparison of Rights and Liabilities under a Charter Party and a Bill of Lading, 24 U.S.F. MAR. L.J. 65 (2011).