What is a bill of lading (B/L)?

There are two types of document, the Charter Party and the Bill of Lading, which embody the contract of carriage by sea. They differ from each other in their subject matter and in the relationships they govern within the transport concerned.

General points about the Bill of Lading

In everyday usage, Bill of Lading is abbreviated to B/L or BoL.
Under the provisions of the Hamburg Rules, a bill of lading means a document which evidences a contract of carriage by sea and the taking over or loading of the goods by the carrier. By it, the carrier undertakes to deliver the goods against surrender of this document. Such an undertaking is constituted by the express provision in the document that the goods are to be delivered to the order of a named person.

The bill of lading

The bill of lading is a document issued by a carrier to a sender (shipper, supplier or consignor). This document confirms that the goods have been received in an acceptable condition and are ready to be shipped. They will then be delivered by the carrier to a recipient (consignee or buyer).

A bill of lading is in essence a contract of carriage between the sender, the consignee and the carrier. It sets out the terms and conditions of carriage.

It must not be confused with the contract of carriage by sea, although the bill of lading is evidence of it.

The form of the bill of lading

It has the value of a representative document of title. It is drawn up in writing, on printed or standard forms, in line with the practice of the various liner shipping companies.

The functions of the bill of lading

1. Evidential function

The bill of lading certifies that the goods have been loaded on board the ship and evidences the conclusion of the contract of carriage. As long as the bill of lading is in the shipper's possession, the particulars it contains stand as evidence until the contrary is proved. Such proof is not admissible against third parties who have acquired the
bill of lading. Proof to the contrary by the carrier is not admissible if the bill of lading has been transferred to a third party, including a consignee, who has acted in good faith in reliance on the description of the goods contained in the bill of lading.

If the bill of lading accompanies a pre-existing charter contract, its issue proves that performance of the charter contract has begun. If a charter party was not first drawn up between the shipowner and the shipper, the bill of lading takes the place of the contract, since it sets out the clauses of the contract in summary form, stipulating the rights and obligations of the parties.

The bill of lading is useful to the ship's master because, depending on the particulars it contains, the master will take the necessary measures during the voyage or will collect the sums due for the carriage.

It gives the consignee the right to claim the goods at destination and is the main supporting document vis-à-vis the customs authorities.

2. Function as a document of title

Lawful possession of the bill of lading is equivalent to ownership of the goods being carried. If the holder of the bill of lading transfers this document, the holder also transfers ownership of the goods mentioned in it. If the holder of the bill of lading pledges it in order to obtain credit, the creditor becomes a pledgee of the goods.

For the purposes of the voyage, the ship's master is the one who has possession of the goods, holding them for whoever presents the bill of lading at destination as the document of title to the goods.

The contents of the bill of lading

The mandatory particulars of the bill of lading are set out in the United Nations Convention on the Carriage of Goods by Sea of 1978 (the Hamburg Rules).

1. The bill of lading must include, among other things, the following particulars:

a) the general nature of the goods, the leading marks necessary for identification of the goods, an express statement, if applicable, as to the dangerous character of the goods, the number of packages or pieces, and the weight of the goods or their quantity otherwise expressed, all such particulars as furnished by the shipper;
b) the apparent condition of the goods;
c) the name and principal place of business of the carrier;
d) the name of the shipper;
e) the consignee, if named by the shipper;
f) the port of loading under the contract of carriage by sea and the date on which the goods were taken over at the port of loading;
g) the port of discharge under the contract of carriage by sea;
h) the number of originals of the bill of lading, if more than one;
i) the place of issue of the bill of lading;
j) the signature of the carrier or of a person acting on its behalf;
k) the freight, to the extent payable by the consignee, or other indication that freight is payable by the consignee;
l) the statement that the carriage is subject to the provisions of this Convention, which nullify any stipulation derogating
from it to the detriment of the shipper or the consignee;
m) the statement, if applicable, that the goods will or may be carried on deck;
n) the date or the period of delivery of the goods at the port of discharge, if expressly agreed between the parties;
o) any increased limit or limits of liability, where agreed.

2. After the goods have been loaded on board, the carrier must issue to the shipper a “shipped” bill of lading, which must state that the goods are on board a named ship or ships, and the date or dates of loading.

If the carrier has previously issued to the shipper a bill of lading or other document of title with respect to these goods, the shipper must surrender that document to the carrier. In exchange it will receive a “shipped” bill of lading. The carrier may amend any previously issued document in order to meet the shipper's demand. The condition is that the document as amended contains all the information required in a “shipped” bill of lading.

3. The absence from the bill of lading of one or more particulars does not affect the legal character of the document as a bill of lading, provided nevertheless that it meets its definition in the Convention.

The carrier or the issuer of the bill of lading may enter reservations concerning the contents of the bill of lading. It will do so if it has grounds to believe that the goods loaded on board the ship do not correspond to the particulars stated.

The reservation clauses will contain details of the discrepancies between the goods declared and those on board, or the grounds for suspecting discrepancies and the absence of sufficient means of checking them. If the carrier does not enter reservations concerning the apparent condition of the goods, the consequences for the carrier are significant: the goods are deemed to have been in apparent good condition.

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