Law of International Trade - Bill of Lading

Alex Lee Si Xian                          s9148743h                                   1st March 2015

“Documents have been recorded in past dating way back to the Mediterranean trading period of the 11th to 12th Century when there were archives of goods loading onto ships over long distances. The Bill of Lading was invented in the 13th century and its functions were gradually created by the practical needs of substantial and tangible evidence of contract for all primary parties alongside technical development over time. The importance of this document prevails up till now as the Bill of Lading is still being widely used for international trade in the 21st century.”

This paper will discuss at the importance of bills of ladings, describe the three main features and analyse the rationale for its implementation in international trade.

A Bill of Lading (BOL) is a document issued by the carrier or its agent to the shipper as a contract of carriage of goods. It is also a receipt for cargo accepted for transportation, which will usually contain a detailed list of a ship’s cargo, and must be presented for taking delivery at the destination. There is also a set of 3/3 original BOLs; one will be sent to the bank, one will be sent to the consignee and one will be kept with the shipper. Having 1/3 of the set would be sufficient to clear and possess the goods. Essentially, the BOL serves three main functions in international trade. Firstly, it is a receipt from the carrier of the goods. Secondly, it is the evidence of the contract of carriage. Lastly, it is a document of title.

Receipt from the carrier of the goods

The receipt function was the initial purpose of the BOL. It serves as a receipt because the carrier confirms the identity, quantity and condition of the cargo when it was received. This is proof that the carrier has received the goods from the shipper in apparent good order or condition^[1]. After the carrier signs on the BOL, he has taken upon the responsibility of the goods and acknowledges that the goods are of in a good condition as per received from the shipper. This places liability on the carrier, not the shipper, for any discrepancies in the goods, be it the quantity or condition of the cargo. Essentially, the receipt represents three items, which are the quantity shipped, their apparent condition and any leading marks.

In a claim arising due to shortage, loss or damage of cargo, one can use the BOL as a binding receipt and a basis of proof as it contains the descriptions of the goods shipped on board the carrier’s ship. As stated in The David Agmashenebeli, the BOL gives information to inform subsequent holders of the facts represented in it^[2], this empowers the consignee to use the BOL against the carrier if the goods delivered are discrepant.

In the case of Henry Smith & Co v Bedouin Steam Navigation Co Ltd [1896], the Master (who is an agent of the ship-owner) signed 2 BOLs, and had no way to check the quantity of the bales received on board as it was placed inside hatches. 1000 bales of jute had been shipped as stated in the 2 BOLs (500 each). However, upon discharge, there were only 988 bales of jute. The court held that the carrier could discharge the burden of proof only if he could prove that the 12 bales were not loaded onto the ship, and not of it being missing or lost at sea. From this case, it must be understood as evidence that “if accepted by the carrier, the burden will fall on him to prove the contrary.”