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Bill of Lading- BL

What is Bill of Lading?

 Bill of Lading is commonly used as BL. It is a transport document. A carrier issus the bill of lading. It is a guarantee document to their customers for their goods handed over to the carrier for the purpose of delivering to the desired destination. The BL number is a unique number and will not duplicate for five years from the issues date. Issuing a BL to the shipper is a guarantee that the carrier has shipper’s cargo. Every BL has the same legal value.

BL has two sides. The front side of the BL has:

  • Terms of the contract of carriage
  • Carrier’s & Shipper’s rights and obligations

The reverse page has the cargo details, shipper, consignee details etc. Basically we fill the reverse side with the cargo details.

What are the key functions of BL?

BL has three functions

Document of Title  

BL shows the owner of the cargo. Whoever has the duly endorsed BL poses the authority to receive the cargo. This represents the ownership of the cargo. Whoever holds the duly endorsed BL has the right to possess the cargo.  Issuing cargo to a person while the proper endorsement has broken is a fraud. This function is not applicable to sea waybills.

Receipt for Cargo

BL act as a receipt issued by the carrier to the Shipper. Further is guarantee the quality and the condition of goods

Evidence of Contract  

Remember BL is not a contract. Because it is only signed by the Shipper. But there is evidence to say carrier and Shipper had some kind of agreement since the carrier has Shipper’s cargo and BL contains details of Shipper and Consignee which are only available with Shipper and BL is prepared by the carrier. Further in order to load cargo Release order is issued by the carrier to their customer.

What is clean BL

Clean BL issue if the shipping good are not damaged and in a good condition. BL itself says cargo in good condition when shipper handover the goods to the carrier. Hence, it is the carrier’s utmost responsibility to handover cargo in god condition to the consignee. If consignee receives damaged cargo with a clean BL consignee can sue the carrier for the damage.

What is Clause BL

This is the opposite BL type to clean BL. If the carrier receives damaged cargo for shipping carrier issue clause Bill of lading. When the BL has a clause by mentioning received cargo are damaged, BL become a Clause Bill of Lading

What will happen if a clean BL is issued for damaged cargo?

As per the BL function “Receipt for Cargo” Cargo should deliver to its rightful owner in the same quality and condition carrier has received from the Shipper. Description of goods in BL mention based on the quality and condition of the received cargo. If carrier issue a clean BL for damaged cargo consignee has the utmost power to demand the cargo which is in the BL. Describing the same further, the consignee can demand the loss from the carrier.

Hence carrier should not issue clean BLs for damaged cargo as Consignee has the right to the held carrier responsible for the damaged cargo when the BL is clean.

What is S.T.C comes under cargo description

This stands for “Said To Contain”. Shipping agent put this clause under the description of goods in BL. That means they have mentioned the description and quantity off goods as instructed by the supplier. When the shipment is LCL even supplier is given the instruction to BL if any fraudulent activity has happened carrier will not get full legal protection with the clause and they will be held liable.

The reason is if cargo FCL, shipper pack them and bring the container to the port for loading. If cargo LCL, shipper handover the cargo to the carrier for stuffing. Hence, as per the law carrier should know what carrier stuff in the container. Hence, the carrier will not get full protection from the law by mentioning STC in the BL if something goes wrong.

Types of Bill of Lading

Master BL (MBL)

Shipping line. Or the first BL issued to cover all shipments when there are one or few intermediary parties between shipping line and final consignee(ultimate owner of cargo)

House BL (HBL)

Also known as SeaQuest BL. BL issued by the Intermediary party (co loader, freight forwarder) in between Shipper and shipping line.

Is it Possible to have Few HBLs to One MBL

YES, IT IS…  Consider yourself as a Shipper. You ask your freight forwarder to arrange the transport for your LCL shipment. If your Forwarder doesn’t have cargo to fill a container, they will hand over the cargo to a NVOCC. In such case shipping line issue the MBL to the NVOCC and NVOCC will issue a HBL to your freight forwarder. Your freight forwarder will issue a HBL to you. Hence there has been two HBL for one master.

What is Surrendered Bill of Lading

If the shipper has already taken the original BL from the shipping agent and wishes to provide a copy of BL to their buyer for clearance instead of sending original BL shipper has the right to request from shipping line to surrender the BL. Original BL should submit to the shipping agent in order to surrender the BL. Once shipping agent gets the original BL, they will stamp the BL with “BL surrendered at Origin”. This meanwhile they should send the surrender message to their counterpart at the destination. So, the counterpart get the information that they can release the DO without the original BL

When the BL is Surrendered only requires having a copy of BL to collect the DO. Further Surrendered BL does not hold the function “Document of Title “. Having a Surrendered BL is a lot easier as it eliminates the waiting time for original BL.

What is Ocean BL and Multimodal BL

The ocean B/L uses for the ocean freight. Or for the cargo move from one port to another port. If a few transport modes involve multimodal B/L issue for such cargo.

How the Payment Arrange to Carrier?

There are two payment types. freight prepaid and freight postpaid. If freight prepaid, the carrier has to collect the BL charges from shipper before issuing the BL. If payment is freight postpaid, consignee arranges the payment. The carrier have to make sure and collect the payment from consignee before issuing the delivery order(DO).

What is the difference between BL and Manifest?

The BL and the manifest have almost the same details. But the formats are different. BL is a document between the career and shipper. Career submit the manifest to customs and port authority of the port which the vessel is sailing.

Bill of Lading is Not a Contract, But Evidence of Contract. Explain using the “Ardennes Case”.

Daily Logistics

If we consider the Ardennes case, carrier & shipper came to an oral agreement to carry the shipper’s mandarin orange from Spain to England before 30th November. Thus, the carrier has failed to perform his duty and arrived in England on 5th December. Due to the late arrival of the ship, the shipper had to bear an additional cost for import tax as the government has imposed a new tax from 1st December onwards. Due to the situation shipper has sued the carrier for the carrier’s irresponsibility. The carrier refused to pay the claim by pleading the clause in BL, which allows the carrier to deviate his voyage from the promised date.

The shipper handed over his cargo with utmost faith in the carrier’s service. Further, C.J Lord Goddard clearly mentioned, the agreement between carrier and shipper came into existence before the bills of lading sign. Also, only the carrier signs the BL. Shipper receives the BL only after cargo onboard. Further, the BL date is the same as the vessel sailing date. This also confirms shipper finds out about the “deviation clause” being very late. If the shipper gets to know it earlier besides their oral agreement, the shipper may ask for the cargo back. But, as the vessel has already sailed at the time shipper receives the BL shipper has no chance to ask for the cargo back.

Further, the shipper is not a party to the preparation of the Bills of Lading. Further, shipper did not sign it. Hence, B/L cannot consider as a contract.

Through the process, shipper contacted the carrier for booking. Being cargo onboard also confirm shipper and carrier had a discussion on freight charges as well. Moreover, the carrier provides the container/ container space to the shipper for loading the shipper’s cargo. The carrier has no idea on consignee, but shipper does. Most importantly, shipper provides the details of the consignee to the shipper when filling the Bills of Lading.

If the shipper and carrier didn’t have close contact above points will not take place.

Hence, we can conclude Bills of Lading is not a contract. But evidence of a contract

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