Charter Party Bill of Lading

How to Determine Date of Shipment on a Charter Party Bill of Lading?

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How to determine date of shipment on a Charter Party Bill of Lading?

Date of shipment is one of the key definitions in a letter of credit transaction. It is used to determine

  • whether shipment made on time or not (in other words a late shipment has been effected or not)
  • whether documents presented within the presentation period or not (in other words a late presentation has been effected or not)
  • maturity date of the time draft
  • maturity date of a deferred payment letter of credit.

Date of shipment can be determined in two ways on a Charter Party Bill of Lading.

  • In the first scenario we will face a situation where Charter Party Bill of Lading does not contain any date of shipped on board notation.
  • In the second scenario we will be having a Charter Party Bill of Lading which contains a dated shipped on board notation.

Option 1 => There is no shipped on board notation exists on the Charter Party Bill of Lading:

  • The date of issuance of the Charter Party Bill of Lading will be deemed to be the date of shipment.

Option 2=> Charter Party Bill of Lading indicates, by stamp or notation, a date of shipped on board: Notation date will be deemed to be the date of shipment as specified below:

  • Date of shipped on board notation/stamp => this date will be deemed to be the date of shipment

Example: On the below figure you can see a shipped on board notation which is located on the bottom of a Charter Party Bill of Lading.

As there is a dated on board notation exist on the Charter Party Bill of Lading, date of shipment will be deemed to be this shipped on board notation date which is 30.December.2012.

charter party bill of lading date of shipment

What are the Differences Between a Bill of Lading and a Charter Party Bill of Lading?

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What are the Differences Between a Bill of Lading and a Charter Party Bill of Lading?

Under the current letter of credit rules and international standard banking practices, if a letter of credit calls for a marine bill of lading, then banks do not accept a charter party bill of lading in lieu of a marine bill of lading.

On this article I will try to answer the question “Why a charter party bill of lading is not acceptable in place of a marine bill of lading?” by clarifying the main differences between each transport documents.

Differences Between a Charter Party Bill of Lading and Marine Bill of Lading:

Charter Party Clause: Charter party bill of lading contains a clause stating that it is subject to a charter party. Marine bill of lading does not contain such a clause or similar wording.

Signatures:

  • Marine bills of lading can be signed by;
    • the carrier or a named agent for or on behalf of the carrier, or
    • the master or a named agent for or on behalf of the master.
  • Charter party bills of lading can be signed by;
    • the master or a named agent for or on behalf of the master, or
    • the owner or a named agent for or on behalf of the owner, or
    • the charterer or a named agent for or on behalf of the charterer.

Usage:

  • Charter party bills of lading will be used mainly for big bulk shipments such as 20.000 mtons of soybean transportation from a US port to a Chinese port.
  • Marine bills of lading mostly used for containerized cargo that is transported by regular line container vessels.

Examples of Charter Party Clauses:

Below indications could turn a marine bill of lading into a charter party bill of lading. (Source : www.commerzbank.com)

  • “Prepayable freight paid as per charter party dd. …”
  • “Freight payable as per charter party dd. …”
  • “Freight as agreed”
  • “Bill of lading to be used with charter parties”

What is Congenbill Bill of Lading?

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congenbill

Congenbill is a type of charter party bill of lading which is widely used in international transportation.

Congenbill 2007 is the latest version of standard charter party bill of lading which is issued and approved by the BIMCO’s Documentary Committee.

BIMCO is a well established international shipping association and its long form is also known as “The Baltic and International Maritime Council”.

Congenbill 2007

  • According to the UCP 600 rules a bill of lading which contains an indication that it is subject to a charter party will be classified as a charter party bill of lading. Congenbill 2007 Bill of Lading indicates on its face “To be used with charter parties”. This makes Congenbill 2007 a charter party bill of lading according to the letter of credit rules.
  • The Congenbill Charter Party Bill of Lading can be used wide range cargo that does not need special handling. Because of this reason it is one of the most popular Charter Party Bill of Lading (CPBL) in use.
  • Sample Congenbill 2007 bill of lading is reachable from this link.

There are other charter party bills of ladings that have been issued by BIMCO. These are specific charter party bills of lading suitable for limited niche charter party operations.

Some examples of specific charter party bills of lading issued by BIMCO:

  • AUSTWHEAT BILL
  • BIMCHEMVOYBILL 2008
  • CEMENTVOYBILL 2006
  • INTANKBILL 78
  • GRAINCONBILL

What Does Full Set of Bills of Lading Mean?

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What does full set of bill of lading mean?

Under an ordinary letter of credit, the issuing bank demands a full set of clean shipped on board ocean bills of lading from the beneficiary.

But what is a full set of bill of lading according to the letter of credit rules? How does a beneficiary make sure that he presents a full set of bills of lading?

Most of the transport documents, that is subject to international transportation, issued in more than one originals.

For example, a CMR road consignment note is issued in 3 original copies. The first copy for the exporter, the second to accompany the goods; and the third for retention by the carrier. (1)

Understanding the Reasons Behind the Issuance of Multiple Original Transport Documents:

International transport documents can be classified under two main groups: Negotiable transport documents and non-negotiable transport documents.

 

Multiple Original Transport Documents

Negotiable transport document is a title of goods, such as an original bill of lading, which can be transferred to another party by endorsement.

At least one original negotiable transport document must be surrendered to the carrier by the consignee at the place of destination to collect the goods.

Negotiable transport documents are issued in more than one originals in order to prevent lost of documents.

Non-negotiable transport document is a not a title of property and the consignment is placed at the disposal of the stipulated consignee against a proof of identity without further need to surrendering any original transport document.(2)

Non-negotiable transport documents are issued in more than one originals mainly for operational purposes as some of the original copies of these documents are traveling with the goods.

Full Set of Ocean Bills of Lading Under a Letter of Credit

According to the letter of credit rules, a bill of lading is to indicate the number of originals that have been issued and all of the originals stated on the bill of lading have to be presented by the beneficiary to the issuing bank, unless otherwise indicated in the credit.

For example, container carriers issue bills of lading in a set of 3 original and 3 copies as an established tradition for decades.

The letter of credit rules taking into account only the original bills of lading as a transport document by disregarding the non-negotiable copies.

Example:

  • A letter of credit issued asking for a full set of clean ”shipped on board” negotiable bill of lading showing freight prepaid made out/endorsed to the issuing bank, notifying the issuing bank and the applicant with full address.
  • The bill of lading indicated that it has issued in 3 originals.
  • The beneficiary has presented all of the 3 originals as a full set of bills of lading.

Important Note: The beneficiary could have presented 3 originals and 3 copies of the bills of lading without any problem.

Letter of Credit Rules:

UCP 600 – Article 20 – Bill of Lading
iv- Be the sole original bill of lading or, if issued in more than one original, be the full set as indicated on the bill of lading.

ISBP 2007 – Full set of originals Paragraph 93
As per UCP 600 article 20 transport document must indicate the number of originals that have been issued. Transport documents marked “First Original”, “Second Original”, “Third Original”, “Original”, “Duplicate”, “Triplicate”, etc., or similar expressions are all originals. Bills of lading need not be marked “original” to be acceptable as an original bill of lading. In addition to UCP 600 article 17, the ICC Banking Commission Policy Statement, document 470/871(Rev), titled “The determination of an ‘Original’ document in the context of UCP 500 sub-Article 20(b)” is recommended for further guidance on originals and copies and remains valid under UCP 600. The content of the Policy Statement appears in the Appendix of this publication, for reference purposes. (Please keep in mind that ISBP 2007 has been updated and is not the effective version as of July 2013.)

References:

  1. The CMR Convention, The British International Freight Association (BIFA) Website, Retrieved: 21.06.2018
  2. Shipping and Incoterms, Practice Guide, UNDP Practice Series, Page:50

Charter Party Bill of Lading

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charter party bill of lading

On this page I will try to explain you “Charter Party Bill of Lading” and its applications in letters of credit transactions.

Charter Party Bill of Lading is one of the transport documents that is specifically governed by the letter of credit rules.

The international shipping industry is responsible for the carriage of around 90% of world trade.

Shipping is the life blood of the global economy. Without shipping, intercontinental trade, the bulk transport of raw materials, and the import/export of affordable food and manufactured goods would simply not be possible.(1)

International sea transportation can be divided into 3 main cargo groups:

  • containers,
  • liquid bulk cargo (or “wet” trades such as crude oil, petroleum products and gas) and
  • solid bulk cargo (or “dry” trades such as coal, iron ore and grain).(2)

sea transportation sub-groupes

Maritime container transportation is carried out by container ship operators, who produce negotiable bill of loading or non-negotiable sea waybill as transport documents.

Unlike container transportation, bulk cargo shipment requires special types of vessels and is not suitable for liner services.

As a result, bulk cargo transportation is carried out via hired vessels. In maritime glossary, hiring a vessel is called “Charter Party”.

Definition of Charter Party and Charter Party Bill of Lading

Charter Party Bill of Lading is the transport document of the shipments, which made via vessels subject to charter party contracts.

How to Use Charter Party Bill of Lading in Letters of Credit Transactions:

Charter party bill of lading is covered under article 22 of UCP 600.

A bill of lading, however named, containing an indication that it is subject to a charter party (charter party bill of lading), must appear to:

  1. be signed by:
    – the master or a named agent for or on behalf of the master, or
    – the owner or a named agent for or on behalf of the owner, or
    – the charterer or a named agent for or on behalf of the charterer.

Any signature by the master, owner, charterer or agent must be identified as that of the master, owner, charterer or agent.

Any signature by an agent must indicate whether the agent has signed for or on behalf of the master, owner or charterer.

An agent signing for or on behalf of the owner or charterer must indicate the name of the owner or charterer.

2. indicate that the goods have been shipped on board a named vessel at the port of loading stated in the credit

3. indicate shipment from the port of loading to the port of discharge stated in the credit. The port of discharge may also be shown as a range of ports or a geographical area, as stated in the credit.

4. be the sole original charter party bill of lading or, if issued in more than one original, be the full set as indicated on the charter party bill of lading.

A bank will not examine charter party contracts, even if they are required to be presented by the terms of the credit. (source : UCP 600)

Special Hints Regarding the Charter Party Bill of Lading From ISBP (International Standard Banking Practice):

  1. If a credit requires presentation of a charter party bill of lading or if a credit allows presentation of a charter party bill of lading and a charter party bill of lading is presented UCP 600 article 22 is applicable.
  2. A transport document containing any indication that it is subject to a charter party is a charter party bill of lading under UCP 600 article 22.
  3. If a credit does not state a notify party, the respective field on the charter party bill of lading may be left blank or completed in any manner.

References:

  1. International Chamber of Shipping, http://www.ics-shipping.org/shipping-facts/shipping-and-world-trade (Retrived: 06.April.2018)
  2. Dry bulk cargo shipping — An overlooked threat to the marine environment? Matthias Grotea, Nicole Mazureka, Carolin Gräbscha, Jana Zeilingerb, Stéphane Le Flochc, Dierk-Steffen Wahrendorfd, Thomas Höfera, https://www.sciencedirect.com/science/article/pii/S0025326X16303861 (Retrived: 06.April.2018)

Letter of Credit Documents

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letter of credit documents

After reading this post, you should understand why documentation is very important under letters of credit.

Additionally, most frequently used document links have been supplied on later parts of this article.

There are many important points in a typical letter of credit transaction that need to be taken care of professionally.

However, documentation is much more important than any other aspects of the letters of credit transactions, because the documentation forms the backbone of the letters of credit structure.

In order to understand the importance of the documentation, please assume that you are an exporter, whom has just shipped an order.

How can you prove to the issuing bank that you have make the shipment according to the letter of credit terms?

Which means that;

  • you have shipped the goods on time, not late
  • you have shipped the right goods, not wrong ones
  • you have shipped the goods in good condition, no apparent defect on the packing
  • you have delivered the goods to the carrier for transportation from port of loading to the port of discharge indicated in the credit etc.

In order to prove above points to the issuing bank, you have to supply a relevant transport document.

Furthermore, let us also consider that the delivery term was CIF Incoterms 2010, which obligates the exporter, which is you, to arrange and pay the insurance for the shipment.

Once again, you have to supply an insurance policy to fulfill your insurance responsibility.

The examples can be extended, but perhaps the main idea is very clear. Letters of credit transactions are related to the documents only, not actions.

importance of letter of credit documentation

The importance of the documentation is stated in UCP 600 article 5 as follows:

Banks deal with documents and not with goods, services or performance to which the documents may relate.

In addition, every condition stated in the letter of credit must be connected to a document. This point is also clearly indicated in UCP 600 article 14 as below.

If a credit contains a condition without stipulating the document to indicate compliance with the condition, banks will deem such condition as not stated and will disregard it.

Documents Most Frequently Used Under Letters of Credit Transactions:

Transport Documents:

Insurance Documents:

Financial Documents:

Commercial Documents:

Official Documents: