Bill of lading

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Bill of lading

The Bill of Lading is a document of title of goods, transferable by endorsement and is a receipt from shipping company regarding the number of packages with a particular weight and markings and a contract for the transportation of same to a port of destination mentioned therein.[1] In the case of Coventry v Gladstone, Lord Justice Blackburn defined a Bill of Lading (sometimes abbreviated as B/L or BOL) as "A writing signed on behalf of the owner of ship in which goods are embarked, acknowledging the receipt of the Goods, and undertaking to deliver them at the end of the voyage, subject to such conditions as may be mentioned in the bill of lading." A bill of lading is a key document used in the transport of goods. As a document of title, it is also an important financial instrument.

Description[edit]

A Bill of Lading is a document generated by a shipping line or its agent, giving details of a shipment of merchandise. Alongside this principal purpose, the bill of lading also certifies that the goods have been shipped aboard a vessel (and in some cases certifies the condition of the goods at the point of loading), assigns title to the goods, and requires the carrier to release the merchandise to the holder of the title or a named party at the destination port.

Name[edit]

Bills of Lading are sometimes wrongly called "Bills of Loading"; while the words loading and lading are both derived from the Old English word hladan,[2] lading specifically refers to the loading of cargo aboard a ship..

History[edit]

While there is evidence of the existence of receipts for goods loaded aboard merchant vessels stretching back as far as Roman times,[3] and the practice of recording cargo aboard ship in the ship's log is almost as long lived as the ship itself, the modern Bill of Lading only came into use with the growth of international trade in the medieval world.

The growth of mercantilism (which produced other financial innovations such as the bill of exchange and the Insurance policy[4]) produced a requirement for a title document that could be traded in much the same way as the goods themselves. It was this new avenue of trade that produced the bill of Lading in much the same form as we know today.

The current regulations on bills of lading were codified by the Hague Rules in 1924.

Uses[edit]

As a receipt[edit]

The principal use of the bill of lading is as a receipt issued by the carrier once the goods have been loaded onto the vessel. This receipt can be used as proof of shipment for customs and insurance purposes, and also as commercial proof of completing a contractual obligation, especially under Incoterms such as CFR ( Cost and freight ) and FOB-(free on board)

As title[edit]

The bill of lading confers title to the goods to the consignee noted on the bill. The bill of lading may also be made out "To Order", which confers title to the goods to the holder of the bill of lading

As a negotiable document[edit]

Because the bill of lading represents title to the goods detailed upon it, it can be traded in much the same way as the goods may be, and even borrowed upon if desired. This is a very important and common document used in export and import trade globally.

Sea Waybills and Electronic Document Interchange (EDI)[edit]

In recent years, the use of bills of lading has declined, as they have been replaced in the most part with the sea waybill. The main difference between these two documents is that the waybill does not confer title of the goods to the bearer, and as a result there is no need for the physical document to be presented for the goods to be released. The shipping line will automatically release the goods to the consignee once the import formalities have been completed. This results in a much smoother flow of trade, and has allowed shipping lines to move towards Electronic document interchange which greatly eases the flow of global trade.

However, for letter of credit and Documentary Collection transactions, it is important to retain title to the goods until the transaction is complete. This means that the bill of lading still remains a vital part of international trade.

Electronic Bill of Lading[edit]

For many years, the industry has sought a solution to the difficulties, costs and inefficiencies associated with paper bills of lading. The obvious answer is to make the bill an electronic document. Electronic Bill of Lading or eB/L is the legal and functional equivalent of a paper bill of lading. [5]

An electronic bill of lading (eB/L) must clearly replicate the core functions of a paper bill of lading, namely its functions as a receipt, as evidence of or containing the contract of carriage and, if negotiable, as a document of title. [6]

See also[edit]

References[edit]