A bill of lading is firstly a receipt: the carrier
acknowledges that the goods have been received for carriage. But it is also
evidence of the contract of carriage. The contract commences at the time the
freight space is booked. The subsequent issue of the bill of lading confirms
this and provides evidence of the contract, even though it is signed by only one
party: the carrier or its agents.
A bill of lading is also a transferable document of
title. Goods can be delivered by handing over a bill of lading provided the
shipment was consigned 'to order' and all the subsequent endorsements are in
order. (See 04, Contracts.)
If a bill of lading is lost, or does not arrive in
time for the receiver to take delivery, for example when transit times are
short, then the carrier will usually be able to assist by delivering the goods
against receipt of a guarantee. The guarantee safeguards the carrier in case the
claimant is not the rightful owner of the goods. Wrongful delivery would
constitute a breach of contract and the carrier will therefore insist on a
letter of indemnity (LOI) from the receiver backed by a bank guarantee whose
wording meets the carrier's specifications, usually for an amount of 150% to
200% of the actual CIF value of the goods, valid for one to two years. Although
there is no express time limit beyond which the holder of a bill of lading can
no longer claim the goods, a guarantee good for one or possibly two years should
adequately cover the carrier's obligations.
However, carriers are not obliged to deliver goods
against guarantees. That decision is entirely at their discretion and the
receiver may have to negotiate the terms with the carrier, who may wish to
consult the original shipper. Note that ECF contracts clearly state that buyers
are under no obligation to take delivery under their guarantee and if 28
calendar days after arrival the bill of lading is not available then the buyer
may declare the seller to be in default. The remedy here would be for the
exporter to provide the guarantee instead. GCA does not specifically refer to
missing documents and leaves settlement of any unresolved claim or dispute in
this regard entirely to arbitration.
Different types of
bills of lading
The carrier's responsibility commences on the
physical acceptance of the goods for carriage.
If this occurs at an inland point a combined transport bill of lading will be
issued. If the handover is in a port then a port-to-port bill of lading will be
issued.
The term 'through
bill of lading' should not be used, as it means that the issuing
carrier acts as principal only during the carriage on its own vessel(s) and acts
as an agent at all other times. This implies that the responsibilities and
liabilities may be spread over more than one carrier under different (possibly
unknown) conditions at different stages of the transport chain.
Under a combined transport bill of lading the
carrier accepts responsibility, subject to the normal stipulations in the bill
of lading, for the whole carriage, inland and marine: from door to door, or from
door to container yard or container station. The carrier arranges both the
marine and the inland transport, but it should be noted that marine and overland
transport are governed by different international conventions. This can have an
effect on the settlement of claims - the financial liability of the carrier for
inland carriage is not necessarily the same as it is for the marine voyage (on
board ship, i.e. 'from tackle to tackle'). Usually the carrier will assist in
any claims procedure initiated by the receiver and/or insurance company, but
will not necessarily accept responsibility for settlement if the damage occurred
during the overland stage. For example, a truck is stopped at gunpoint and the
driver is asked to 'disappear': no liability. Or an accident occurs because of
driver negligence: liability may exist depending on local jurisprudence.
Obviously, large receivers will find it easier to
solve such matters than will smaller companies. Note that for contracts 'free on
truck' it is the buyer's responsibility to lodge the necessary claims under
their insurance policy, and insurance cover should therefore commence at the
inland point of loading.
Whether a bill of lading is of port-to-port or
combined transport depends on whether the box 'place of receipt' (or 'place of
delivery') has been filled in.
Waybills
Like a bill of lading a waybill is a receipt and
evidence of a contract of carriage. But a waybill is not a document of title.
Unlike bills of lading, waybills cannot be issued 'to order' and they cannot be
endorsed. The advantage of a waybill is that there is no need to transmit paper
documentation to the point of destination to secure delivery because delivery is
made, automatically and only, to the named consignee. Waybills can be used when
payment does not depend on the submission of documents, for example because the
shipment is between associated companies or because payment has been made in
advance. Thus waybills can facilitate paperless transactions. (See 06,
E-commerce and supply chain management.)