The Legal Nature of the Bill of Lading
From a legal perspective, a bill of lading has several distinct dimensions:
- It serves as strong evidence of the existence of a contract of carriage, though not of the content of that contract, since the contract is usually concluded before the bill of lading is issued.
- It constitutes a receipt for the goods shipped and includes acknowledgment of certain specific matters relating to the quantity or condition of the goods at the time they are received on board the vessel.
- It operates as a document of title to the goods, such that delivery of the goods is generally not possible without presentation of the bill of lading.
The bill of lading differs entirely from a charterparty in its second and third functions, while in its first function, it shares certain similarities with a charterparty.
A charterparty is always a contract and nothing more. Where the charterer is also the shipper, the bill of lading is usually regarded merely as a receipt for the goods and a document of title. In no circumstance can a bill of lading be deprived of its character as a document of title.
The Evidentiary Role of the Bill of Lading in Carriage Disputes
The Bill of Lading as Evidence of the Contract
Where the charterer is also the shipper, the rights and obligations of the shipowner and the charterer are governed solely by the charterparty, in such cases, the bill of lading cannot differ from the charterparty nor add terms beyond those contained in it, unless the charterparty expressly authorizes such additions.
However, where the charterer carries goods belonging to third parties, the contract of carriage in each case is that evidenced by the issued bill of lading, irrespective of the charterparty, unless there is an express agreement to the contrary. Furthermore, if the shipper is aware of the existence of the charterparty, the relationship between the shipper and the charterer is governed by their mutual agreement. In such circumstances, the shipper may bring a claim against the charterer or be subject to a claim by the charterer.
If the shipper is unaware of the charterparty, the contractual relationship is with the shipowner, since the bill of lading is signed by the master of the vessel acting as the shipowner’s representative.
Where a shipper shipping goods on a chartered vessel endorses the bill of lading in favor of the charterer, the relationship between the shipowner and the charterer continues to be governed by the charterparty. In all cases, the master is authorized to sign the bill of lading only to the extent that it does not conflict with the charterparty.
When a charterer endorses a bill of lading for the purpose of transferring the rights and obligations embodied in it, the transferee does not benefit from the terms of the charterparty unless those terms, in whole or in part, are expressly and clearly incorporated into the bill of lading. Even where a bill of lading contains a clause suggesting incorporation of the terms of a specific charterparty, this must not be interpreted as transferring charterparty obligations that relate directly to loading, carriage, or delivery of the goods and that bind the charterer solely in its capacity as charterer. Any interpretation that transforms the charterer into the consignee or holder of the bill of lading, whether or not a liability termination clause exists, is incorrect.
Exemption clauses are sometimes added to bills of lading. A recurring question in contract law is the extent to which a party accepting an additional clause contained in a standard form is bound by it. This issue frequently arises in relation to tickets that limit the carrier’s liability. The established rule is that the accepting party is bound by such clauses, whether or not they have read them, provided that reasonable notice has been given. If a shipowner seeks to include in a bill of lading a new and unusual clause exempting liability for general average, it must not only be expressly stated. Still, it must also be clearly and prominently incorporated into the document in such a manner that an ordinary and reasonable person would notice it.
The Bill of Lading as a Receipt for the Goods
Today, bills of lading are usually signed by an agent of the carrier and sometimes by the master of the vessel to confirm the quantity and condition of the goods at the time of loading.
The legal effects of acknowledging the quantity and condition of the goods are of considerable importance, since the vessel is obliged to deliver what it has received, unless it is relieved from liability by virtue of statutory exemptions relating to maritime risks.
A bill of lading may refer to the identifying marks placed on the goods or to statements regarding their quality. In this context, the bill of lading may serve as:
- A receipt for the quantity of the goods.
- A receipt for the goods in an apparent and specified condition.
- A receipt identifying the goods by their distinguishing marks.
- A receipt confirming a specified quality of the goods.
The Bill of Lading as a Document of Title
In many respects, possession of a bill of lading is treated by law as equivalent to ownership of the goods. The bill of lading entitles its holder to take delivery of the goods at the port of destination. It enables the holder to transfer the goods during the voyage by transferring the bill of lading to another party.
These rules are particularly important in CIF contracts.
Unlike a bill of exchange, a bill of lading is not a negotiable instrument in the full legal sense. A holder who transfers a bill of lading by endorsement does not place the transferee in a better position than the holder’s own. Accordingly, a person who lacks title cannot transfer ownership to another.
Where the term transferable is used in a bill of lading, it merely indicates that the document itself is transferable. It remains unresolved whether a bill of lading expressly marked as non-transferable can transfer title at all.
Frequently Asked Questions on the Legal Role of the Bill of Lading
A bill of lading functions as a receipt for the goods and as a document of title. It may also serve as evidence of the existence of a contract of carriage. However, the contract is usually concluded before the issuance of the bill of lading.
The bill of lading confirms the quantity, quality, and apparent condition of the goods at the time of loading. The vessel is obliged to deliver the same goods it has received, except where statutory exemptions from maritime liability apply.
The holder of a bill of lading may take delivery of the goods at the port of destination or transfer title to another party by endorsing the bill of lading. In CIF contracts, possession of the bill of lading is particularly significant for obtaining delivery of the goods.
A bill of lading may be transferred by endorsement unless it is expressly stated to be non-transferable. Even where it is described as transferable, ownership of the goods passes only to the extent permitted by law, and a holder without title cannot transfer ownership.
No. A bill of lading may be connected to a charterparty in limited circumstances, but the contract of carriage is generally concluded before the issuance of the bill of lading, and the bill of lading cannot introduce new terms unless there is express agreement between the parties. What roles does a bill of lading play in maritime law and transportation?
What is the function of the bill of lading as a receipt for goods?
How is a bill of lading considered a document of title?
Is a bill of lading transferable?
Can a bill of lading replace a charterparty?
