What is Bill of Lading?
Bill of Lading is commonly used as BL. It is a transport document issued on carrying goods by sea. A carrier issues 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 issued date. Issuing a BL to the shipper is a guarantee that the carrier has the 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 Bill of Lading?
BL has three functions
01. Document of Title
BL shows the owner of the cargo. Whoever has the duly endorsed Bill of Lading possesses 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 fraud. This function is not applicable to sea waybills.
02. Receipt for Cargo
Bill of lading acts as a receipt issued by the carrier to the Shipper. Further, it guarantee the quality and the condition of goods
03. 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, Bill of Lading contains details of Shipper, and, Consignee, which is only available with Shipper.
And BL is prepared by the carrier. Further, in order to get a container for the cargo loading, a Release order is issued by the carrier to their customer.
What is clean BL
A Clean BL is issued if the shipping goods are not damaged and in a good condition. Bill of Lading itself says cargo is in good condition when the shipper handover the goods to the carrier.
Hence, it is the carrier’s utmost responsibility to hand over cargo in good condition to the consignee. If the consignee receives damaged cargo with a clean BL, the consignee can sue the carrier, for the damage. This is where marine insurance comes into action.
What is Clause BL
This is the opposite BL type to clean BL. If the carrier receives damaged cargo for shipping, the carrier issues clause Bill of lading. When the Bill of Lading has a clause by mentioning received cargo are damaged, BL becomes 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, the carrier has received them from the Shipper. Description of goods in BL mentioned based on the quality and condition of the received cargo.
If a carrier issue a clean BL for damaged cargo, the 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 for delivering damaged cargo.
Hence carrier should not issue clean BLs for damaged cargo as Consignee has the right to hold the carrier responsible, for the damaged cargo when the Bill of Lading is clean.
What is S.T.C comes under cargo description
This stands for “Said To Contain”. The shipping agent put this clause under the description of goods in BL. That means they have mentioned the description and quantity of goods as instructed by the supplier.
When the shipment is LCL even the 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 is LCL, the shipper handover the cargo to the carrier for stuffing.
Hence, as per the law carrier should know what carrier stuff is in the container. Hence, the carrier will not get full protection from the law by mentioning STC in the Bill of Lading 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)
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 an NVOCC.
In such case shipping line issue the MBL to the NVOCC and NVOCC will issue an HBL to your freight forwarder. Your freight forwarder will issue an 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 the original BL shipper has the right to request from the shipping line to surrender the BL.
Original BL should submit to the shipping agent in order to surrender the BL. Once the 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 the original BL.
What is Ocean BL and Multimodal BL
The ocean B/L uses for ocean freight. Or for the cargo to move from one port to another port. If a few transport modes involve multimodal B/L issues for such cargo.
For example, if cargo delivers from port A to port B, an ocean BL could be issued. If the cargo is transported using a ship and a truck to deliver them from the origin to the destination, a multimodal BL will be issued.
How the Payment Arrange to Carrier?
There are two payment types. freight prepaid and freight postpaid. If freight is prepaid, the carrier has to collect the BL charges from the shipper before issuing the BL.
If payment is freight postpaid, the consignee arranges the payment. The carrier has to make sure and collect the payment from the 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 their formats are different. BL is a document between the carrier and shipper. Carrier submits the manifest to the customs and port authority of the port to which the vessel is sailing to.
Manifest is submitted including the cargo details. The shipping line and NVOCC, Freight forwarders involved for shipments should declare the manifest to customs. Each party submits one manifest including all cargo details.
Bill of Lading is Not a Contract, But Evidence of Contract. Explain using the “Ardennes Case”.
If we consider the Ardennes case, the 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 with 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.
Even the clause is on the BL, the shipper receives the BL after the vessel is sailed. 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 if the deviation of arrival date could make harm his/her business.
But, as the vessel has already sailed at the time shipper receives the BL, the shipper has no chance to ask for the cargo back.
Further, the shipper is not considered as a party to the preparation of the Bills of Lading. Further, the shipper did not sign the Bill of Lading. Hence, B/L cannot consider as a contract.
Through the process, the shipper contacted the carrier for booking. Being cargo onboard also confirms 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 about the consignee, but the shipper does. Most importantly, the shipper provides the details of the consignee to the shipper when filling the Bills of Lading. And provide consignee details to the carrier for coordination.
If the shipper and carrier didn’t have close contact, the above points will not take place.
Therefore, we can conclude Bills of Lading is not a contract. But evidence of a contract.
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