Bills of lading and Bank loans Srinath Keshavan www.traderiskconsulting.com

References Gard Guidance on Bills of Lading www.parliament.uk (Standard Chartered Bank v Oakprime) http://www.brookes-and-co.co.uk/News%20and%20Reviews/TT003.htm (Brookes & Co.) - Consequences of Master clausing bills of lading http://pntodd.users.netlink.co.uk/cases/cases_a/ardennes.htm (Ardennes case regarding prevalence of contract of carriage over bill of lading) Gencon charterparty terms

An international trade transaction Contract Intent Counterparties Goods Price INCOTERMS Title Liabilities/Duties Governing law Jurisdiction for dispute resolution Movement of goods Packing units Time of delivery Mode of transport Banking arrangements Payment conditions (time & mode of payment) Currency Documentation Invoice Determination of Quality, Quantity Origin Transport Insurance

An international trade transaction Shipment LC Beneficiary (Seller) LC Applicant (Buyer) Contract LC advised LC application Payment LC issued Advising Bank LC Issuing Bank Shipment documents

Functions of a bill of lading Receipt for the goods loaded Evidence of the contract of carriage Document of title

Bill of lading as a receipt for goods loaded The function of receipt applies to all bills of lading whether negotiable or not The bill of lading will normally be evidence of when goods were received and their status on receipt in terms of marks (to identify the goods), apparent order and condition (Mate’s Receipt, too), quantity and/or weight Consequences of inaccuracy in respect of state of goods at time of loading Exposure to claims Loss of the right to limit liability Loss of P&I cover Loss of the right of indemnity from the charterer Criminal prosecution of the carrier and/or Master Antedating of bill of lading Standard Chartered Bank (SCB) v Oakprime International Ltd, SCB v MD of Oakprime, SCB v Pakistan National Shipping Corp + owner’s shipping agent

Discharge of cargo Master clausing bill of lading David Agmashenebeli case Discharge of coal in India

Bill of lading as evidence of a contract of carriage The bill of lading also acts as evidence of the contract of carriage between the carrier and the shipper. This is a function of bills of lading whether negotiable or not The carrier may be the owner, charterer or freight forwarder and is the party who enters into a contract of carriage of goods with the shipper Deviation from contract of carriage Ardennes case

Bill of lading as a document of title Title in the context of bills of lading means right to possession of the goods from the carrier. It does not mean right to ownership – the sales contract usually determines this If the right to possession of the goods from the carrier is determined by the possession of a document such as a bill of lading, then that document is a document of title A received for shipment bill of lading does not evidence shipment of goods by the carrier. It has a limited function as a document of title, and in any event will only so function if it has been issued by or for (with the necessary authority) the carrier

Bill of lading as a document of title

Bill of lading as a document of title Closely connected with the function of document of title is negotiability. If the bill of lading is negotiable it can be transferred from an entity with title to an entity without title, for example from a consignee named in a bill of lading to a consignee not named in the bill of lading Negotiable bills of lading allow goods to be traded several times during the voyage A straight bill of lading is not issued in a negotiable form. It requires the carrier to deliver goods only to the consignee designated on the bill of lading Soybean meal to China

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