Bill of lading According to free dictionary

“A document signed by a carrier (a transporter of goods) or the carrier's representative and issued to a consignor (the shipper of goods) that evidences the receipt of goods for shipment to a specified designation and person."

Introduction

Bill of lading is a multiple choice of document i.e. it acts as contract of carriage of goods by sea, as a formal receipt for the goods shipped and as a document of title.

The function attributed to bill of lading are based on ancient customs and usages followed by merchants in trade spheres which are largely regulated by their own law known as lex_marcatria law merchants.

Following is the brief analysis of law relating to bill of lading act i.e. contract of carriage of goods by sea act 1992,hague Visby rules, which has the force of law in the United kingdom by virtue of section 1 chapter 19 of sales of goods act 1971

2.1 The bill of lading is said to be

(1) Evidence of the contract of carriage of goods by sea

Unlike charter party, the contract of carriage of goods by sea in liner trade is evidenced by bill of lading which itself is not a contract of carriage of goods rather an evidence of an already concluded contract of carriage between shipper and carrier orally.

The terms and conditions apparent on reverse side of every standard bill of lading do not form a contract of carriage.

Thus if the terms and conditions mentioned in standard bill of lading are inconsistent with the oral commitment, the parties are at liberty to adduce evidence in support of their oral contract.

Under section 4 of the carriage of goods by sea act 1992

The bill of lading in the hands of lawful holder is the conclusive evidence of contract of carriage and the carrier is stopped by his words and conduct.

It is to be noted that whatever orally was agreed between shipper and the carrier, do not bind the lawful holder who acts in good faith.

Case Leduc and co v wards (1888) Q.B.D 475

Where the bill of lading contained a clause enabling the carrier to deviate from agreed route which caused the ship to be lost and delivery of goods was delayed.

The lawful holder sued the carrier. The carrier took the plea that the shipper knew about the deviation clause in the bill o f lading. Therefore no breach of contract whatsoever has been created.

However the court refused to accept the plea of carrier and held that

“Lawful holder who has no knowledge of any such commitment my not be made, bound to follow it"

2.1(2) Bill of lading is said to be formal receipt by the ship owner of the goods

The second function of bill of lading is that it is a formal receipt for goods shipped .historically it is the traditional function of bill of lading when the goods are delivered to the carrier for shipment, the carrier issues bill of lading which contains the detail information about quantity, packing and apparent good order and condition.

Article 3(3) of Hague Visby rules states that if the shipper demands, the carrier would issue bill of lading containing above mentioned detail regarding the goods.

The carrier must write the accurate information regarding quantity, packaging (apparent good order and condition) and leading marks .it is important from legal as well as practical point of view, if an incorrect quantity or their detail regarding goods is given and in case of any claim for damages or short fall, the responsibility would lie on carrier.

As according to section 4 of carriage of goods by sea act 1999

“As regard shipper and carrier bill of lading is prima facie evidence where as bill of lading in the hands of third party is conclusive evidence"

Article 3 (5) of Hague Visby rules

“There is a counter obligation on the shipper to provide correct information to the carrier regarding the goods.

2.1(3) Bill of lading is said to be a document of title enabling the goods to be disposed of by endorsement and delivery of it.

One of the characteristic of the bill of lading is document of title. A bill of lading in order to be a document of title must be negotioable which simply means it should be transferable.

A bill of lading in order to be transferable must be draw as delivered or assignee. a bill which is specifically drawn in the name of a particular receiver, would not fall within the category of negotioable instrument and would not be able to transfer title to goods in transit, such a bill is called is called “straight bill", the traders prefer “order bill of lading “for the reason that it enables them to sell/transfer goods while they are at high sea.

The nature of bill of lading as a document of title best seen in the light of following judgment of sanders bros. v Maclean (1883) 11 Q.B.D 327

“The law as to endorsement of bill of lading is as clear as in my opinion the practice of all European merchants is thoroughly understood cargo at sea while in the hands of carrier s necessarily incapable of physical delivery. During this period of transit and voyage, the bill of lading by the law merchant as universally recognized as its symbol, and the endorsement and delivery of the bill of lading operates as a symbolical delivery of the cargo. Property in the goods passes by such indorsement and delivery of bill of lading, whether its is intention of the parties that the property should pass, just as under similar circumstances the property would pass by an actual delivery of the goods"

Another reason for order bill of lading is, for issuance of documentary credit the banks requires order bill lading.

The order bill of lading passes through many hands before the goods are actually delivered and for that purpose it should be negotioable i.e. transferable by endorsement.

2.2 What is the practical reason for and legal effect of the following clauses in the bill of lading:

(1) Received ….in apparent good order and condition.

When the goods are delivered and received by the carrier for shipment he issues a receipt with writing" received for shipment in apparent good order and condition" Which is called “received bill of lading"

In a sense that in case of received bill of lading, goods have yet not shipped on board a vessel, where as shipped bill of lading is issued when the goods have actually been shipped on board of a vessel.

According to article (3) Rule (3) clause(c) of Hague Visby rules

The carrier is obliged to issue a bill of lading on demand of the shipper and mention about the “apparent good order and condition of the goods".

The word “apparent good order and condition" refers to “external condition or appearance of goods"

Such as packaging etc. if the apparent condition of the goods is not satisfactory i.e. if the packaging is damaged or there is any other apparent damage the carrier must note down this damage in bill of lading.

The peter der Grosse 18751 P.D 414

FACTS

A cargo was shipped from Russia to London. After arrival it had a bad smell although the contract was carrying a clean bill of lading. To avoid liability in respect of clean bill of lading. The carrier argued that “weight, content and value unknown in the bill of lading" meant that they could not be bound by the declaration that the goods were in good order in condition.

HELD

The court rejected the carrier’s defense on the basis that “stain would have been obvious to their agent and if as they alleged the damage was there pre shipment, they should have issued a clause bill of lading. They had not successfully rebutted the prima facie presumption indicated by their declaration that the goods were received and shipped in good order and condition. The court then went on to clarify the meaning of “good order and condition".

According to the judge sir roger phillimore “Apparent good order and condition must be taken as “that apparently, and so far as met the eye, and externally, the goods were placed in good order on board [the] ship."

In case of omission or negligence the carrier would be responsible and he would have no chance to deny the fact that he received the goods “apparent good order and condition" though he would be able to produce evidence of any damage to goods after shipment due to any accepted peril. Bill of lading as between the shipper and carrier is prima facie evidence, however in the hands of indorse eth bill of lading is conclusive evidence. Therefore the endorsee is entitled to receive the goods in the condition mentioned in the bill of lading.

If the carrier has mentioned in bill of lading that goods are received in apparent good order and condition, the receiver is entitled to receive goods in good order and condition and the carrier is stopped by his words (section 4 carriages of goods by sea act 1992).

When the carrier issues a bill of lading with notation regarding the goods, the bill of lading is called a “clause bill of lading".

2.2 (2) “delivered to order or assigns [Notify party]"

A bill of lading in order to be a document of title must be negotioable which simply means it should be transferable.

And in order to be transferable it must draw as delivered or assignee. A bill which is specifically drawn in the name of a particular receiver, would not fall within the category of negotioable instrument and would not be able to transfer title to goods in transit, such a bill is called is called “straight bill", the traders prefer “order bill of lading “for the reason that it enables them to sell/transfer goods while they are at high sea.

Order bill of lading is also important for another reason which is issuance of documentary credit for which banks requires order bill lading.

The order bill of lading passes through many hands before the goods are actually delivered and for that purpose it should be negotioable i.e. transferable by endorsement.

2.2(3) “Exemptions and immunities of all servants and agents of the carrier"

Under article 4(2) Hague Visby rules the defenses and immunities available to carrier are also available to his servants and agents in case an action for damage to goods is brought against them. Exemption and immunity clause is usually provided in bill of lading. This clause is also known as “Himalaya’s clause"

In modern time contract of carriage either of goods or passengers carries this clause. This practice begin after famous case of

Adler v Dickson (The Himalaya) [1954] 2 Lloyd's Rep 267, [1955]

Facts of the case

The claimant in this case is a lady who suffered serious injuries due to collapse of gangway of the ship, she was on board. The passenger ticket carried exemption from any such liability in favour of ship owner. This is why the claimant initiated proceeding against captain of the ship, who had no such immunity. The decided in favour of claimant and awarded her damages.

The court observed that" captain of the ship could also escape the liability had he been exempted in the ticket in the same manner as the ship owner was"

Since passing of this judgment the contract of transportation such as bill of lading etc carry this clause whereby not only carrier himself but his agents, servants are also provided immunities from any damage or loss.

2.3 “Unfortunately, almost all legislation on bill of lading, includes….the carriage of goods by sea act 1992…does not have clear provision on electronic bill of lading."

Ninety percent of international trade is carried out by sea routes, and mostly the shipping documents are prepared manually. The volume of international trade is increasing enormously and every day tens and thousands of ship sales across the high sea carrying goods, which involve a lot of paper work and manual labour to draw shipping document such as bill of lading etc which is time consuming and lengthy process. Not only the manual preparation of shipping document is at problem but there in time dispatch is also a cause of concern.

Some time it happens that goods arrive prior to arrival of complete and error free documents which cause delay in delivery of goods for the reason that goods can not be delivered unless proper document i.e. bill of lading to the carrier for the release of goods. For this reason it is desirable that there must be some fastest way of transfer of document and transmission of relevant information. This purpose can be achieved through electronic bill of lading.

Electronic bill of lading is based on computer and electronic device, whereby the shipping information is transferred to the concerned parties.

The present legislative in UK governing bill of lading is “carriage of goods by sea act 1992" which preceded bill of lading 1855.

Basically the carriage of goods by sea act 1992 introduced to remove the difficulties caused by its predecessors i.e. bill of lading act 1955.

Carriage of goods by sea act 1992 act transfers the contractual rights and obligations in favour of lawful holder/transferee of bill of lading.

It is true that 1992 act doesn’t contain any express provision on electronic bill of lading. The only section which can be found in 1992 act is S 1 (5) which provides that, secretary of the state may make provision for the application of this act to the cases where a telecommunication system or any information technology is used for effecting transactions regarding bill of lading or other shipping documents. However no such provision has been introduced so far. Thus the 1992 act do not contain any provision regarding electronic bill of lading.

Internationally at present CMI rules and BOLERO (bill of lading electronic registration organization) system are being used for electronic bill of lading. Though these systems are not perfect, however they are really step forward.

The defects of bill of lading is the element of fraud as the information may be altered or happened to come in unauthorized hands.

Secondly, since the bill of lading is a document is a document of title, for transfer of there must be some document in physical form. The question is whether the information held in a system or computer can be regarded as a document or not. Though the court has held that such information which is printable, does satisfy the permit of document. However still negotiability issue is to be resolved, whether an electronic bill of lading is transferable by endorsement.

Conclusion