Each type of bill of lading has unique characteristics. Different types of bills of lading may not be able cover all functions.
As an example, non-negotiable bill of lading does not allow transfer of ownership of the goods.
Bill of Lading and the Contract of Carriage
If you look at the reverse side of a bill of lading, you will probably see a contract written in small font size. This contract known as the contract of carriage.
It is ordinary that a bill of lading contains the contract of carriage on the reverse side. Especially in container shipments.
Every container liner has a standard bill of lading contains the contract of carriage on the reverse side.
But some bills of lading are issued with empty reverse sides.
These kind of bills of lading are called Blank Back Bills of Lading or Short Form Bills of Lading.
Examples:
Long Form Bill of Lading Example:
Hapag-Lloyd Bill of Lading: Hapag-Lloyd is one of the biggest container carriers in the world. Hapag-Lloyd uses a standard bill of lading contains a contract of carriage printed on the backside of its bill of lading. It is also possible to see an excerpt of carriage terms on the right bottom of the front page.
BIMCO Blank Back Form of Non Negotiable Liner Waybill: BIMCO is the world’s largest international shipping association, with around 1,900 members globally. BIMCO produces ready to use shipping contracts.
BIMCO Blank Back Form of Non Negotiable Liner Waybill is a perfect example for a short form bill of lading.
Hiding the contract of carriage by carrier can attract some sort of unpleasant questions to the minds of the parties on a bill of lading.
The main risk may associate with a blank back bill of lading would be a third party interference on delivery of goods to the consignee, by claiming that his interests have not been fulfilled by the carrier.
Of course there must be a secret contract had to be signed between the third party and the carrier, on which the parties of the bill of lading have no information about.
Shipper means a person that enters into a contract of carriage with a carrier. Shipper also known as consignor.
In most cases shipper is the exporter.
What are the Roles and Responsibilities of the Shipper?
Shipper prepares the goods for sea carriage, makes sure that the goods are packed in seaworthy manner, loads the goods into containers if needed and send them to the carrier’s warehouse or terminals located at the port of loading.
All details regarding the shipment are given to the carrier by the shipper via Shipping Instructions.
Carriers can issue bills of lading with the data they have received from the shippers.
Under a cash against documents payment a Greek olive oil exporter makes a shipment to an importer located in Australia.
The importer agrees to pay the contract amount in full against presentation of documents.
The goods have been shipped under CFR trade terms and shipment takes place between Thessaloniki Port, Greece and Melbourne Port, Australia.
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 importer’s bank in Australia, which is ANZ (The Australia and New Zealand Banking Group Limited). The bill of lading is issued in negotiable form.
After production stage, shipper gets freight quotations from several container lines and freight forwarding companies in Greece, books the container and prepares the Shipping Instructions document.
Carrier states description of goods, number and kind of packages, consignee field, notify party field, shipping marks and remaining details as per shipper’s instructions.
Export formalities also are handled by the shipper.
Points of Consideration When Filling Out Shipper Field:
Shipper enters into a contract of carriage with the carrier.
Shipper informs almost all of the details stated on the bill of lading to the carrier. Any mistake at this stage may create painful problems.
Bill of lading is a transport document covering the carriage of goods by sea.
Consignee means a person entitled to take delivery of the goods under a contract of carriage indicated on a bill of lading.
Shipper means a person that enters into a contract of carriage with a carrier. Shipper also known as consignor.
On today’s post I explain the main differences between the consignee and shipper fields of bills of lading.
Differences Between Consignee and Shipper
Seller versus Buyer:
Usually consignor is the exporter and consignee is the importer in any shipping document used in international trade. Bill of lading is not an exception.
Position Against Goods:
Consignor hands out the goods to the carrier at the port of loading. Consignee takes delivery of the goods from the carrier at the port of discharge.
Title of Goods:
Consignee field determines how title of goods will be delivered from the shipper to the consignee.
Consignee field determines if the bill of lading issued in straight, negotiable or bearer format.
Shipper determines how consignee field is completed by giving necessary instructions to the carrier.
A bill of lading that is not presented within 21 days after shipment is called a Stale Bill of Lading.
In other words, stale bill of lading is a type of bill of lading which is presented to the nominated bank after the presentation period.
Stale Bill of Lading Example:
Let us try to understand the stale bill of lading term with an example.
An exporter in Malaysia signs a sales contract with an US importer for the sale of refined palm oil. The payment term is letter of credit. The importer have issued the letter of credit in favor of the exporter.
Letter of Credit Conditions:
Latest Date of Shipment: 10.March.2019
Expiry Date: 31.March.2019
Presentation Period: 21 days after shipment but withing expiry date
Date of Shipment and Presentation Date:
The exporter completes the production and makes the shipment. Shipped on board date indicated on the bill of lading is 01.March.2019.
The exporter presents the documents to the nominated bank on 25.March.2019.
Conclusion:
The exporter could not complete the presentation within allowed time frame after shipment. Late presentation discrepancy condition has been fulfilled.
The shipping documents and also bill of lading is stale.
The beneficiary of a letter of credit will receive the payment as long as he presents documents in comply with the terms and conditions of the letter of credit.
Some letters of credit especially the ones issued in Bangladesh request bills of lading that contain not one but multiple notify parties.
A textile fabric paint exporter in Italy signs a trade deal with an importer in Bangladesh.
According to the national law of Bangladesh all imports must be paid by letters of credit. As a result an issuing bank in Bangladesh issues a letter of credit against the proforma invoice of the Italian exporter.
The letter of credit contains a condition as below:
Full set original clean on board ocean bills of lading, plus three non-negotiable copies issued by the carrier or its agent drawn or endorsed to the order of Bangladesh Islamic Bank showing ”Freight Prepaid” marked notify applicant and the issuing bank.
On today’s post I explain the main differences between the consignee and notify party fields of bills of lading.
Differences Between Consignee and Notify Party
Delivery of Goods:
Carriers hand over goods to the entity stated on the consignee field. Notify party can not claim goods from the carrier under sea shipments.
Optional versus Mandatory Field:
Notify party can also be used as an optional field and need not to be completed. On the other hand consignee field is mandatory and needs to be completed in all occasions.
Title of Goods:
Consignee field determines how title of goods will be delivered from the shipper to the consignee. Notify party has no connection with the title of goods.
Consignee field determines if the bill of lading issued in straight, negotiable or bearer format.
Single versus Multiple Entries:
It is possible to enter multiple company names under the notify party field. On the other hand consignee field always completed with single entities.
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.
