Notify party means a person that should be notified by the carrier along with the consignee when the shipment arrives at port of discharge.
Notify party has no effect on the title of goods, which determines delivery of the goods to the consignee.
Notify party is mostly importer, importer’s forwarder or importer’s customs broker.
Notify Party Examples:
Notify Party is the Importer:
Under an advance payment terms a Belgium dessert exporter makes a shipment to an importer located in Saudi Arabia.
The importer pays the contract amount full in advance before shipment takes place.
The goods have been shipped under FOB trade terms and shipment takes place between Antwerp Port, Belgium and Dammam Port, Saudi Arabia.
As freight will be paid by the buyer the freight notation that is mentioned on the bill of lading is Freight Collect.
The bill of lading consigned to the importer company. The bill of lading is not issued in negotiable form, but in straight form.
Notify Party is the Importer’s Forwarder:
Under a letter of credit payment a German machinery exporter makes a shipment to an importer located in Hong Kong.
The letter of credit is payable at sight.
The goods have been shipped under CFR trade terms and shipment takes place between Hamburg Port, Germany and Hong Kong Port, Hong Kong.
As freight will be paid by the seller the freight notation that is mentioned on the bill of lading is Freight Prepaid.
The bill of lading consigned to order of the issuing bank. The bill of lading is issued in negotiable form.
Points of Consideration When Filling Out Notify Party Field:
Notify party has no connection with the title of goods.
Selected payment method may affect notify party field completion.
Under open account, cash in advance and cash against documents payment methods notify party field is usually filled out by the shippers without any restrictions.
Under letters of credit payment methods notify party field must be completed according to the letter of credit terms and conditions.
The way that consignee field is completed can affect how the goods are to be transferred from shipper to consignee.
There are three possible consignee field instructions available on a bill of lading.
Straight Bill of Lading: Bill of lading states the consignee’s actual name. Depending on the commercial law of the destination country, consignee may clear the goods with or without needing to present an original bill of lading.
Straight bills of lading may create a risk factor for the shippers if they have not received the payment in advance of the shipment.
Especially under letters of credit and cash against goods payment methods, this option should be used with caution.
Negotiable Bill of Lading: Negotiable bills of lading are the ones that are consigned to order of a named party such as to order of the shipper, to order of the issuing bank or to order of the importer etc.
Title of the goods can be transferred through endorsement by stamp and signature.
Negotiable bills of lading generally used under letters of credit and cash against documents payment methods.
Bearer Bill of Lading: This option states that the goods must be delivered by the carrier to the party,whose in possession of the original bills of lading.
Bill of lading is a transport document covering the carriage of goods by sea.
Letters of credit rules define 4 different types of bills of lading:
Multimodal Bill of Lading: (UCP 600 article 19) A type of bill of lading covering at least two different modes of transport such as sea shipment + road transportation.
Bill of Lading: (UCP 600 article 20) In general it refers to the transport document which is used in port to port containerized sea shipments, usually issued in negotiable form.
Sea Waybill: (UCP 600 article 21) Non negotiable bill of lading. Can not be issued in a negotiable form. Consignee can clear the goods at the port of destination by proving identity.
Charter Party Bill of Lading: (UCP 600 article 22) A bill of lading containing an indication that it is subject to a charter party contract. Used in bulk cargo shipments.
On this port I will explain how to complete a bill of lading as it is explained under letters of credit rules UCP 600 article 20.
Step 1 : Analyzing the Letter of Credit:
All documents must be issued according to the conditions of the letter of credit. Bill of lading is not an exception.
As a result a beneficiary who would like to submit a discrepancy free bill of lading must analyze the letter of credit at first instance.
Field 50: Applicant: Applicant is the importer. Usually issuing banks require that bills of lading show applicants’ details under notify party fields.
Field 59: Beneficiary: Beneficiary is the exporter. Although letters of credit rules state that the shipper or consignor of the goods indicated on any document need not be the beneficiary of the credit, it would be a wise move to mention exact beneficiary details under consignor / shipper fields of the bills of lading.
Field 43P: Partial Shipments: This field determines whether partial shipments are acceptable or not.
Field 43T: Transhipment: This field determines whether transhipment are acceptable or not.
Field 44E: Port of Loading/Airport of Departure: This field indicates the port of loading.
Field 44F: Port of Discharge/Airport of Destination: This field indicates the port of discharge.
Field 44C: Latest Date of Shipment: This field indicates latest date of shipment. Please be careful that date of shipment is a technical term in letters of credit rules. You should understand how date of shipment is determined on a bill of lading.
Field 45A: Description of Goods &/or Services: According to the letters of credit rules in documents other than the commercial invoice, the description of the goods, services or performance, if stated, may be in general terms not conflicting with their description in the credit.
Field 46A: Documents Required: One of the articles under this field usually determines the requirements of the bill of lading.
Field 47A: Additional Conditions: This field may include additional conditions that must be stated on the bill of lading.
Step 2 : Analyzing the Letters of Credit Rules:
Although all of the UCP 600 articles can be related to the document preparation one way or another, it would be meaningful to drill down to the UCP 600 articles that are directly regulating the bills of lading.
Understanding UCP 600 Articles Which are Related to the Bill of Lading
UCP 600 article 20 states that:
a. A bill of lading, however named, must appear to:
i. indicate the name of the carrier and 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.
Any signature by the carrier, master or agent must be identified as that of the carrier, master or agent.
Any signature by an agent must indicate whether the agent has signed for or on behalf of the carrier or for or on behalf of the master.
ii. indicate that the goods have been shipped on board a named vessel at the port of loading stated in the credit by:
– Pre-printed wording, or
– An on board notation indicating the date on which the goods have been shipped on board.
The date of issuance of the bill of lading will be deemed to be the date of shipment unless the bill of lading contains an on board notation indicating the date of shipment, in which case the date stated in the on board notation will be deemed to be the date of shipment.
If the bill of lading contains the indication “intended vessel” or similar qualification in relation to the name of the vessel, an on board notation indicating the date of shipment and the name of the actual vessel is required.
If the bill of lading does not indicate the port of loading stated in the credit as the port of loading, or if it contains the indication “intended” or similar qualification in relation to the port of loading, an on board notation indicating the port of loading as stated in the credit, the date of shipment and the name of the vessel is required. This provision applies even when loading on board or shipment on a named vessel is indicated by pre-printed wording
on the 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.
v. contain terms and conditions of carriage or make reference to another source containing the terms and conditions of carriage (short form or blank back bill of lading). Contents of terms and conditions of carriage will not be examined.
vi. contain no indication that it is subject to a charter party.
b. For the purpose of this article, transhipment means unloading from one vessel and reloading to another vessel during the carriage from the port of loading to the port of discharge stated in the credit.
c.
i. A bill of lading may indicate that the goods will or may be transhipped provided that the entire carriage is covered by one and the same bill of lading.
ii. A bill of lading indicating that transhipment will or may take place is acceptable, even if the credit prohibits transhipment, if the goods have been shipped in a container, trailer or LASH barge as evidenced by the bill of lading.
d. Clauses in a bill of lading stating that the carrier reserves the right to tranship will be disregarded.
Step 3 : Make Sure That Data on Bill of Lading is not Conflicting with Data on Other Documents:
Data in a document, when read in context with the credit, the document itself and international standard banking practice, need not be identical to, but must not conflict with, data in that document, any other stipulated document or the credit.
For example description of goods, gross weight, net weight, product classification codes, shipping marks, packaging, quantity of goods etc. as stated on the bill of lading must not conflict with data in any other stipulated document.
Example: Letter of Credit and Presented Bills of Lading
Sample Letter of Credit
F50: Applicant
BAHRAIN ELECTRONIC MACHINES IMPORTING COMPANY W.L.L. P.O.BOX:33078 KINGDOM OF BAHRAIN
F59: Beneficiary
Name and Address:
ILKE MAKINA TAAHHUT MADEN SANAYI VE TICARET-LIMITED SIRKETI, OSTIM SANAYI SITESI BAGDAT CADDESI NO.392 OSTIM/ANKARA/TURKEY
F43P: Partial Shipments
NOT ALLOWED
F43T: Transshipment
ALLOWED
F44E: Port of Loading/Airport of Departure
TURKEY
F44F: Port of Discharge/Airport of Destination
BAHRAIN
F44C: Latest Date of Shipment
161115 2016 Nov 15
F45A: Description of Goods and/or Services
SPARE PARTS AS PER PROFORMA INVOICE REF: T16-100 CFR: BAHRAIN (INCOTERMS 2010)
F46A: Documents Required
ARTICLE 3- FULL SET OF SHIPPED (ON BOARD) MARINE BILLS OF LADING IN 3/3 ORIGINALS ISSUED BY SHIPPING CO’S ON IT’S LETTER HEAD FORMAT ISSUED TO THE ORDER OF THE HOUSING BANK FOR TRADE AND FINANCE, BAHRAIN BRANCH SHOWING FREIGHT PREPAID AND MUST INDICATE ONLY THE APPLICANT AS A NOTIFY PARTY AND MUST INDICATE NAME AND ADDRESS OF THE SHIPPING COMPANY’S AGENT IN BAHRAIN.
THE MARINE B/L MUST CLEARLY INDICATE THE NAME OF THE CARRIER AND CLEARLY STATES ITS FUNCTION/QUALITY IN THE FOLLOWING STRICT MANNER: ”THE CARRIER” AND NOT ”AS CARRIER” AND BILL OF LADING MUST SHOW PACKING OF THE GOODS IN SEAWORTHY PACKING AS PER ISO STANDARD.
B/L MUST SHOW THAT GOODS SHIPPED IN CONTAINERS.
F47A: Additional Conditions
ALL DOCUMENTS MUST BE DATED AND INDICATE THIS L/C NUMBER AND THE HOUSING BANK
FOR TRADE AND FINANCE,BAHRAIN BR. NAME AND ISSUANCE DATE.
B/L MUST SHOW THE CONTAINER(S) AND SEAL(S) NUMBER(S) ALWAYS WHENEVER SHIPMENT
EFFECTED BY CONTAINER(S).
B/L ISSUED AND/OR SIGNED BY FREIGHT FORWARDER IS NOT ACCEPTABLE.
SHORT FORM B/L IS NOT ACCEPTABLE.
SHIPPER OR CONSIGNOR OF THE GOODS INDICATED ON ANY DOCUMENTS MUST BE THE
BENEFICIARY OF THE CREDIT.
ALL REQUIRED DOCUMENTS MUST BE ISSUED IN ENGLISH LANGUAGE.
DOCUMENTS APPEARING DATE OF ISSUANCE PRIOR TO THAT OF THIS CREDIT ARE NOT
ACCEPTABLE.
ALL ORIGINAL TRANSPORT DOC’S REQUIRED UNDER THIS L/C MUST BE PRE-PRINTED
THE WORD ”ORIGINAL”
BILL OF LADING MUST APPEAR A SEPARATE NOTATION STATING ”CONTAINERS ACTUALLY LOADED ON BOARD+VESSEL NAME+PORT OF LOADING NAME+DATE”DULY SIGNED BY THE SAME SIGNOR OF THE BILL OF LADING ”
As a result importer and exporter can freely determine the contents of the bills of lading.
Under Cash Against Documents payment method banks do not check the documents, but how the bill of lading is completed is important in terms of delivery of goods.
Shipper: Shipper means a person that enters into a contract of carriage with a carrier. Shipper also known as consignor.
Under CFR, CIF, CPT, CIP, DAT, DAP and DDP Incoterms, exporter sings the contract of carriage with a carrier and becomes the shipper.
Although importer enters into a contract of carriage with the carrier under FCA, FOB and FAS incoterms, once again on the basis of “documentary shipper” term the exporter should be mentioned as a shipper on the bill of lading.
Rotterdam Rules explain documentary shipper as ”means a person, other than the shipper, that accepts to be named as “shipper” in the transport document…”
Consignee: Consignee means a person entitled to delivery of the goods under a contract of carriage or a transport document.
Consignee is one of the most crucial fields on a bill of lading. This field determines not only to whom the shipment is to be delivered, but also signifies the position of the bill of lading against the title of goods.
Especially under letters of credit and cash against documents payment methods, how consignee field is completed is very crucial.
How to Complete Consignee Field under Letters of Credit Payment Method?
Under letters of credit consignee field must be completed according to the letter of credit terms and conditions.
Issuing banks generally state bills of lading conditions under field 46-A.
In most cases issuing banks demand that the bill of lading should be issued to order of the issuing bank. Less frequently it is also possible that issuing banks demand bills of lading to be issued to order and blank endorsed.
In very rare situations, issuing banks may request bills of lading to be consigned to applicants. In these situations the beneficiaries must be alerted against various risks including fraud risk.
Example 1: A bill of lading issued under a letter of credit transaction: Issued to order of the issuing bank.
How to Complete Consignee Field under Cash Against Documents Payment Method?
Although it is not possible to consign a transport document to a bank without having the bank’s advance acknowledgement as per documentary collection rules (URC 522), it is a customary act to made out the bill of lading to order of the presenting bank.
Example 2: A bill of lading issued under a cash against documents transaction: Issued to order of the importer’s bank.
How to Complete Consignee Field of a Bill of Lading Under Cash in Advance or Open Account Payments?
Under cash in advance and open account payments, exporters and importers complete the transaction without interfered by a 3rd parties such as a banks.
Shipping documents are sent directly to the importer by the exporter via express courier or registered postal services.
As there is no 3rd party exists in the transaction, bill of lading may be made out to the name of the importer company under cash in advance and open account payments.
Example 3: A bill of lading issued under an open account transaction: Bill of lading consigned to the importer.
Notify Party: Notify party means a person that should be notified by the carrier when the shipment arrives at port of discharge.
Notify party has no effect on title of goods, which determines delivery of the goods to the consignee.
Notify party is mostly importer, importer’s forwarder or importer’s custom’s broker.
Examples:
On above Example 1: Consignee : To order of the issuing bank, Notify Party: Importer
On above Example 2: Consignee : To order of the importer’s bank, Notify Party: Importer
On above Example 3: Consignee : Importer, Notify Party: Importer
Carrier: Carrier means a person that enters into a contract of carriage with a shipper. The carrier shall carry the goods to the place of destination and deliver them to the consignee.
The carrier is bound before, at the beginning of, and during the voyage by sea to exercise due diligence to:
Make and keep the ship seaworthy;
Properly crew, equip and supply the ship and keep the ship so crewed, equipped and supplied throughout the voyage; and
Make and keep the holds and all other parts of the ship in which the goods are carried, and any containers supplied by the carrier in or upon which the goods are carried, fit and safe for their reception, carriage and preservation.
The carrier shall during the period of its responsibility properly and carefully receive, load, handle, stow, carry, keep, care for, unload and deliver the goods.
How to Complete Carrier Field under Letters of Credit Payment Method?
Letters of credit rules state that a bill of lading, however named, must appear to: indicate the name of the carrier and 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.
Any signature by the carrier, master or agent must be identified as that of the carrier, master or agent.
Any signature by an agent must indicate whether the agent has signed for or on behalf of the carrier or for or on behalf of the master.
Carrier’s Agent: Carrier’s agent means a person authorized to transact business for and in the name of the carrier.
Carrier’s agent is an optional field on bills of lading, because of the fact that the bill of lading could be signed by a carrier, a master or simply by a forwarder.
How to Complete Carrier’ Agent Field under Letters of Credit Payment Method?
When an agent signs a bill of lading for [or on behalf of] the carrier, the agent is to be named and, in addition, to indicate that it is signing as “agent for (name), the carrier” or as “agent on behalf of (name), the carrier” or words of similar effect.
When the carrier is identified elsewhere in the document as the “carrier”, the named agent may sign, for example, as “agent for [or on behalf of] the carrier” without naming the carrier again.
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.
In the first scenario we will face a situation where Non-Negotiable Sea Waybill does not contain any date of shipped on board notation.
In the second scenario we will be having a Non-Negotiable Sea Waybill which contains a dated shipped on board notation.
Option 1 =>No shipped on board notation exists on the Non-Negotiable Sea Waybill:
The date of issuance of the Non-Negotiable Sea Waybill will be deemed to be the date of shipment.
Option 2=> Non-Negotiable Sea Waybill indicates, by stamp or notation, a date of shipped on board:
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 Non-Negotiable Sea Waybill.
As there is a dated on board notation exists on the Non-Negotiable Sea Waybill, date of shipment will be deemed to be this shipped on board notation date which is 30.December.2012.
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 multimodal bill of lading according to the letter of credit rules.
In the first scenario we will face a situation where multimodal bill of lading does not contain any date of dispatch, taking in charge or shipped on board notation.
In the second scenario we will be having a multimodal bill of lading which contains a date of dispatch, taking in charge or shipped on board notation.
Option 1 =>There is no shipped on board or taking in charge notation exists on the multimodal bill of lading:
The date of issuance of the multimodal bill of lading will be deemed to be the date of shipment.
Option 2=> Multimodal bill of lading indicates, by stamp or notation, a date of dispatch, taking in charge or shipped on board: Notation date will be deemed to be the date of shipment as specified below:
Date of dispatched notation/stamp => this date will be deemed to be the date of shipment
Date of taken in charge notation/stamp => this date will be deemed to be the date of shipment
Date of shipped on board notation/stamp => this date will be deemed to be the date of shipment
Important Note: Only applies when the notation is in respect of dispatch, taking in charge or shipped on board at the place or port named in the credit for the commencement of the carriage.
Bill of lading, which is a transport document used in international trade, is an authentic receipt delivered by a carrier, confirming that the goods therein specified (markings, types of goods, number of packages, etc.) have been loaded or taken in charge for loading on a designated vessel for carriage to a specified port.
On this article you can find the definitions of “to order” and “blank endorsed” terms as used on bills of lading.
To order and blank endorse term is related to the consignee field of a bill of lading and determines if a letter of credit issued in a negotiable or straight form.
To order bill of lading is the one that consignee part of the bill of lading have been completed by writing “to order” only as can be seen on the below example.
“To order” means that the bill of lading has been consigned to order of the shipper. The shipper indicated on the bill of lading determines who should collect the goods at the port of discharge by surrendering at least one original copy to the carrier.
The shipper makes this determination with the help of the endorsement.
“Blank endorsement” means that the holder of the original bills of lading can claim the goods from the carrier at the port of discharge by surrendering at least one original copy of a bill of lading.
To order bill of ladings can be blank endorsed by putting Shipper Company’s stamp and signature on the reverse side of the bill of lading.
According to ICC experts a bill of lading issued to the order of a party can only be endorsed by the party stated in the “consignee” field of the bill of lading.
Only when the B/L is made out to order of the shipper is the shipper able to endorse in blank before presentation under the credit.
As a result,
Consignee: to order ==> shipper can endorse in blank
Consignee: to order of the shipper ==> shipper can endorse in blank
Consignee: to order of the issuing bank ==> issuing bank can endorse
Issuing banks often require an ocean bill of lading or a marine bill of lading under letters of credit as a transport document.
The question is whether the title of the bill of lading is important or not when checking the documents?
Letter of Credit Examples:
Ocean Bill of Lading Example
Full set of clean shipped on board ocean bills of lading drawn or endorsed to the order of issuing bank ltd, Sana’a Yemen showing freight prepaid and marked notify
a.applicant (giving full name and address).
b.issuing bank ltd Sana’a Republic of Yemen.
Marine Bill of Lading Example
Full set of clean on board marine bill(s) of lading issued or endorsed to the order of Issuing Bank PLC, notify applicant showing freight prepaid and showing full name and address of the shipping company agent or his representative in Bahrain.
Each shipping line has a pre-printed form of bills of lading.
Some shipping lines are using ocean bills of lading and others are using marine bill(s) of lading.
It is highly likely to be working with a shipping company who has a marine bill(s) of lading pre-printed form where credit calls for an ocean bill of lading or vice versa.
According to latest letter of credit rules
“A bill of lading need not be titled “marine bill of lading”, “ocean bill of lading”, “port‐to‐port bill of lading” or words of similar effect even when the credit so names the required document.”
As a result title of the bill of lading is not important when checking the documents under the letter of credit transactions.
