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BILL OF LADING UNDER INTERNATIONAL COMMERCIAL LAW

Author: Disha Negi, pursuing BALLB from Delhi Metropolitan Education, Noida


ABSTRACT

“The Bill of Lading” is one of the most important credit documents under International Commercial Law.A Bill of lading is a form of the contract formed between the shipper and the carrier regarding the goods transportation. Throughout the article, we will discuss the functions, and importance of the Bill of Lading. There are four types of BOL: Straight, order, bearer, and switch Bill of Lading.When it comes to international trade, along with the Seaway bill, the bill of lading is also one of the most important documents. This bill provides a safeguard to the exporters as well as the importers in terms of receiving the payment and the goods.


INTRODUCTION

A legal document called the Bill of lading is a document that is used by the shipper and carrier which used to clarify the kind and destination as well as the quantity of the goods needed to be carried. This legal document is used as a receiptfor shipment when the goods were delivered by the carrier at the predefined destination. It must be signed by an authorized representative from the carriers, shipper, and recipient.


Bill of lading goes along with the Bill of Exchange under the Letter of Credit. This legal document can be used as a piece of evidence showing that exporters have dispatched goods, and now title will be given to the importer concerning the goods. This is done so that he can claim them when they arrive

The bills of lading are transported by land, sea, and air.


One of the most significant forms of transportation paperwork is a bill of lading. The carrier will sign this legal document, under which it has been mentioned that the goods will be:

  • Carried from one location to another onboard a specific ship; and

  • Delivered to the specific party listed in the bill of lading.[i]


“BILLS OF LADING” IMPORTANCE

After shipping the goods, physical custody of the products passes from the exporter to the carrier after they have been dispatched. At this time, it may be possible that no payment is received by the exporter.Through this, it can be understood that the BOL is very important for making transactions. Under international commercial law, to transit, the goods the exporter will pass the packages containing the good to the carrier, and through exporter will gain an amount of controlover the goods that are being transited.[ii]


When it comes to the shipment of the goods, the bill of lading is very crucial because it affects various forms of activities that are taking place. Various important details are provided under this document, including the shipment destination and how many packages are there in the consignment, etc.So basically, we can say that the “Bill of lading” is a form of the contract formed between the shipper and the carrier regarding the goods transportation.


THE “BILL OF LADING'S” FUNCTIONS

  • There must a kind of proof that will help during the matter of dispute to show that an agreement was formed between both the parties.

  • Presence of receipt showing that exported has loaded the goods- This receipt will be sent to the seller or his agent after being properly verified.

  • Documents showing “Title of The Goods”- It is the duty of the buyer to verify that he had received the goods by checking the “title of the goods”. The discharge of the bill of lading is a document of title.[iii]


BILL OF LADING CONTENTS (BL)

Following are the contents which you will find under the Bill of Lading:

1. The shipping line's name and contact information

at the name of the shipper and the receiver must be mentioned along with their address


2. Along with the important information, the legal documents will also contain the special direction, which will include the terms and conditions as necessary and also carriers’ reminders


3. A description of commodities presents in shipment, including unit dimensions, weight, and content information.


4. Shipping information will provide details about the packaging and usage of shipping containers, boxes, barrels, and cylinders.


5. Hazardous shipment sign, if appropriate


6. Freight category, which influences the cost of the cargo.


DISCUSSING THE “NEGOTIABLE BILL OF LADING” AND THE “NON-NEGOTIABLE BILL OF LADING.”

NEGOTIABLE BILL OF LADING: In this sort of bill, unambiguous instructions are given to deliver the goods only to those who will be having the original copy of this legal document. A “Person” having this copy will be having control over the cargo. The term “Person” will include the buyer as well as the receiver’s agents, who are required to be present at the port. Along with this copy of the BOL. And if there is a situation where the buyer or the receiver is not having the original copy, then the cargo will not be given to them or the cargo will not be discharged.[iv]


NON-NEGOTIABLE BILL OF LADING: This instrument does not require the presence of an original copy with the buyer for discharge of cargo. It only says that the cargo will be given to the person whose name has been mentioned under the bill of lading. When the identity of the buyer and receiver is confirmed, then the goods will be dispatched to them.


“BILL OF LADING” TYPES

I. STRAIGHT BILL OF LADING

This legal document will be issued when a customer had already paid for goods in advance and is to be known as a straight “bill of lading”. After then, the buyer has the right to get the products directly. They can't, however, distribute the products to anybody else. As a result, this will fit under the category of non-negotiable instruments. Through this, the buyer can directly get the product.


II. ORDER BILL OF LADING

If we talk about this kind of bill, we can say that it is a negotiable instrument because it gives the buyer the option to sell the goods to anybody else. This bill is divided into the following sections:


a) TO GET A BLANK ENDORSEMENT

When you request a blank endorsement, it indicates that the providing firm has left out the name of the items' purchaser. If the providing firm does not have a buyer at the time of delivery, the buyer section might be marked as 'to order.


b) TO MAKE A BANK ORDER

The bank is normally the guardian of the goods in this sort of order bill of lading. It gives the providing firm a document called a Letter of Credit, which details the instructions that must befollowed. The bank then signs the “Bill of Lading” and pays the other bank acting on behalf of providing firm.


III. BEARER BILL OF LADING

Under the bearer, Bill of lading bill of lading's bearer is the cargo's owner and the bill of lading has no consignee. This type of bill of lading is extremely uncommon, given there are significant hazards associated with its abuse. The Order bill of lading is a negotiable document since the title (ownership) of the bill of lading may be transferred.


IV. SWITCH “BILL OF LADING”

When the Bill of lading of a cargo that had already been issued is duplicated, then it is called the switch or “Duplicate Bill of lading”. It is the consignee who asked for this BOL from the owner of the Port. The reason behind this is that the consignee does not want the new buyer to get knowledge about the shipper’s identity.[v]


CASE LAWS

I. LEDUC VS WARD (1888)

In this case, there was a diversion in the passage off the ship due to which the goods were damaged. The endorsee of the BOL litigated the shipowner for the damaging goods. The shipowner claimed that they were not responsible since the shipper was aware of the diversion of the ship at the time of shipping. The court determined that anything that occur between the shipper and the shipowner that was not reflected in the bill of lading had no bearing on the endorsee.[vi]


II. HAUHAEA VS LAURABADA SHIPPING SERVICES LTD [2005]

There were two occasions when the plaintiff made arrangements with the defendant’s firm to send his items. But on both days the plaintiff did not receive the portion of the said package and it was speculated that the portion is lost during transit. Since the goods were lost the plaintiff asked for damages as mentioned under the contract given under BOL. But the defendant said that when he was loading the goods and discharging them, the goods were their only. The loss of goods occurs after discharging them, so he should not be held liable for this.


It was held that under clause 6 of the “Bill of Lading” it has been specified that the defendant will be liable if the goods were lost at the time when they were on the ship.As a result, the plaintiff bears the burden of proving that the loss happened when the goods were being loaded on the ship till the time they were unloaded. This is mentioned under the Sea Carriage of Goods Act 1951.[vii]


CONCLUSION

The usage of a bill of lading is fairly common nowadays. However, there has been a move away from the conventional paper format and toward digitalization. Electronic bills of lading have simplified and streamlined the shipping procedure. Although the medium may change with time, these notions will endure as long as sea trade exists.

[i]Bill of lading: Nature and Function, available at: Bills of Lading: Nature And Functions - Transport - Lebanon (mondaq.com) (last visited on March 15, 2022). [ii]Bill of lading in shipping: Importance, Purpose, and Types, available at: Bill of Lading in Shipping: Importance, Purpose, And Types (marineinsight.com) (last visited on March 18, 2022). [iii]Bill of lading: Nature and Functions, available at: Bills of Lading: Nature and Functions - Al Tamimi & Company (last visited on March 20, 2022). [iv]Bill of lading- Meaning, Types, and Purpose in Shipping, available at: Bill of Lading (BL) - Meaning, Types & Purpose in Shipping | Drip Capital (last visited on March 23, 2022). [v]Types of bills of lading, are available at: Different Types of Bill of Lading in Shipping - India Filings (last visited on March 27, 2022). [vi] Leduc v Ward [(1888) 20 QBD 475] [vii]Hauhaea v Laurabada Shipping Services Ltd [(2005) PGDC 31]