Are there several types of bills of lading?

The answer is yes! In the previous article we saw what a Bill of Lading is; now we will understand what types of bills of lading exist and how they are chosen.

Classification of bills of lading

Bills of lading are usually classified according to:
1) how the rightful holder is designated;
2) the shipment of the goods;
3) the condition of the goods;
4) how they are drawn up;
5) how the sea transport is performed;
6) the person who issues the bill of lading;
7) the route and the transport distance covered.

According to how the rightful holder is designated, bills of lading are divided into:

▪ straight (named) bill of lading – a bill of lading issued in favour of a person whose name is expressly stated. It cannot be transferred by endorsement. The named holder is the only person entitled to demand delivery of the goods. The words “not to order” may also be inserted. The advantage of this type of bill of lading is that its holder does not bear the consequences of losing the original. The disadvantage lies in the impossibility
of transferring it by endorsement. This makes it difficult to negotiate.

▪ order bill of lading (to order) – issued to the order of a person who can endorse the bill of lading to another person. That person thereby becomes the holder of the document of title and of the goods shown in this document. In other words, this type of bill of lading is issued to the order of a person (the consignee of the goods, the shipper or a bank). That person can then endorse the bill of lading to another person. Through this endorsement, the latter becomes the rightful owner of the goods and can dispose of them.

For the holder of the bill of lading to be able to exercise the rights arising from it, the holder must establish entitlement through an unbroken chain of endorsements. It begins with the endorsement written by the person named as beneficiary of the bill of lading and runs up to the person who presents the bill of lading at discharge. At destination, the master must check that the chain of endorsements is not broken. The master is not also obliged to verify the authenticity of the signatures.

The text of the bill of lading contains the words “to order”. Under this wording, its holder can dispose of the document by ordering payment to another person. The transfer order may be a blank endorsement, if the person to whom it is transferred is not designated, or a special (full) endorsement, if the holder of the bill of lading designates the person to whom it is transferred. A bill of lading endorsed in blank circulates like a bearer bill, without becoming a bearer document, because its holder can complete the blank endorsement at any time.

▪ bearer bill of lading (to bearer) – does not show the rightful holder. Its holder is regarded as the owner of the goods. It contains the words “to bearer” and circulates without any formality. In practice such documents are rarely used, because they can also entitle an unlawful holder to claim delivery of the goods.

According to the shipment of the goods, bills of lading are divided into:

▪ “shipped on board” bill of lading (shipped on board) – this type of bill of lading indicates that the goods have been loaded on board the ship.
Most contracts of sale and letters of credit require, as a payment document, a bill of lading bearing the notation “shipped on board”. The buyer has the assurance that the goods entered in the bill of lading have been loaded and are in practice on their way to the port of destination.

▪ “received for shipment” bill of lading (received for shipment) – issued when the carrier has received the goods that it undertakes to carry at a later time.

It happens quite often that the goods are handed over to the carrier before being loaded on the ship. In this case, the carrier issues a bill of lading bearing the notation “received for shipment” for goods which have not been loaded but which have been taken over under its responsibility. This type of bill of lading is issued mainly in liner shipping. It represents a firm obligation to carry the named goods, in the quantity described, to the named port of destination and to deliver them to the consignee. Bills of lading of this type are accepted in banking practice as negotiable documents, unless this is expressly prohibited or unless a “shipped on board” bill of lading is required by the contract or the documentary credits.

According to the condition of the goods, bills of lading are divided into:

▪ clean bill of lading (clean) – implies that there is no irregularity concerning the goods or the packaging. It contains statements noting that the goods and the packaging are in proper condition, and the carrier's exemption from liability
for risks connected with the nature of the goods. It includes statements by which the carrier does not assume liability for the contents, on the grounds that they are unknown to it.

▪ claused or foul bill of lading (dirty) – contains express statements about the unsatisfactory condition of the goods or of their packaging.

According to how they are drawn up, bills of lading are divided into:

▪ bill of lading signed under protest – if the ship's master finds irregularities concerning the goods or their packaging at loading, and the sender refuses to accept a foul or claused bill of lading and the goods are not unloaded for this reason, the master has the option of issuing a clean bill of lading signed under protest. In this situation, once the bill of lading has been signed under protest, the master will be obliged to draw up a protest concerning the condition of the goods. The master must lodge it with the local notary, in which case liability will rest with the sender.

▪ split bill of lading – if a single bill of lading has been issued for a large quantity of goods and the goods have been sold to several buyers in smaller quantities, the bill of lading is split so that the goods can be sold and the price collected before the goods reach the port of destination. After the shipper returns the initial bill of lading to the carrier, the carrier issues the shipper with several
bills of lading. Each of them is the document for one fraction of the goods that were covered by the initial bill of lading. These new bills of lading are negotiable documents of title, which may be straight, to order or to bearer.

According to how the sea transport is performed, bills of lading are divided into:

▪ conventional bills of lading – goods carried by tramp ships, under charter contracts, are also accompanied by bills of lading called conventional or customary. These reproduce, in whole or in part, the clauses agreed in the charter contract.
▪ liner bills of lading – in their case, the conditions of issue and the clauses are harder to change than for conventional bills of lading.

According to the person who issues them, bills of lading are classified into:

▪ bills of lading issued by carriers (Master Bill of Lading) – as a rule, carriers issue bills of lading through the masters of their ships. The chief mate supervises the loading of the goods and issues a receipt called the “mate's receipt”. This certifies the quantity of goods loaded or taken into custody to be loaded later. The mate's receipt is not a document of title, but only the preliminary document on the basis of which the bill of lading is issued.

▪ bills of lading issued by the carrier's agents (Master Bill of Lading) – in some ports, carriers have representatives (loading agents) who take over the goods from the shipper and issue bills of lading in exchange on behalf of the carrier they represent. For these, carriers bear the same liability as if they had issued them themselves.

▪ bills of lading issued by multimodal operators or by international freight forwarders (House Bill of Lading) – cover the entire transport chain, that is, the total door-to-door distance.

Honexpres offers complete sea freight services. From the shipper’s door to your door, including inland transport and customs procedures.

We are not only a freight forwarder providing professional services in organising domestic and international transport and advice on insurance. Honexpres also brings you essential information and relevant news from the world of freight transport!