2. BILLS OF LADING : KEY LEGAL & COMMERCIAL FEATURES
Chris Grieveson
Ince & Co

3. The Functions of the Bill of Lading
1. It is a receipt for the goods;
2. It is a contract of carriage;
3. It is a document of title;
(i) it represents the goods;
(ii) it transfers constructive possession;
(iii) it may transfer property in the goods.

4. Seawaybill It is :- (1) a receipt for the goods and
(2) Contract of Carriage of goods
but
(3) is not a document of title

5. Problems Seller does not know financial status of Buyer
Buyer can not inspect cargo at sea
Cargo sold on while at sea
Buyer needs to be sure cargo meets description

6. Problems Holder has right to demand delivery of goods on discharge
Seller can withold delivery dox buyer needs til seller is paid
Buyer protected as in most cases seller must obtain clean bill

7. Solutions Transfer document of title representing cargo
Negotiable bill can be forwarded ahead of goods to buyer

8. Solutions Holder has right to demand delivery of goods on discharge
Seller can withold shipping dox buyer needs for delivery til seller paid
Buyer protected as in most cases seller must obtain clean bill

9. Clean bill Clean = shipped in ‘apparent good order and condition’
NO qualifications eg ‘wet’, ‘rusty’ etc.
Transfer to 3rd party = carrier is bound by description (art iii r4)

11. Hague-Visby Rules Article III
4. Such bill of lading shall be prima facie evidence of the receipt by the carrier of the goods as therein described in accordance with paragraph 3(a), (b) and (c).
However, proof to the contrary shall not be admissible when the bill of lading has been transferred to a third party acting in good faith.

12. Clean Bill
Inspection of the bills = best assurance on loading condition
Clean bills are required for most transactions
Received for shipment = no evidence of condition on shipment

13. Condition vs quality
Rep of carrier goes ONLY to conditon (physical) not quality
No rep on invisible condition
Cf Athelviscount

14. Quality or weight
Unless ‘weight unknown’/‘said to be’- weight is fixed on transfer
Master may refuse to sign bill with figures he considers incorrect – artIII r3 proviso

15. Provided that no carrier, master, or agent of the master shall be bound to show…..any marks number, quantity or weight which he has reasonable grounds for suspecting not accurately to represent the goods actually received….

16. Cif, c&f ,fob – clausing
Cargo owner needs to know when he can demand clean bill
Cif- bill procured on shipment – show shipment within time

17. Hague-Visby Rules Article III
3. After receiving the goods into his charge the carrier or the master or agents of the carrier shall, on demand of the shipper, issue to the shipper a bill of lading showing among other things :-
(b) Either the number of packages or pieces, or the quantity, or weight, as the case may be, as furnished in writing by the shipper.
(c) The apparent order and condition of the goods.

18. Claused bills Generally is timing relevant?
No clause on load condition- BUT
clause can be post shipment
See Galatia

19. Indemnity? clean bill not clean cargo
Where no doubt = fraud, no indemnity
Doubt= may be valid

20. On demand Weight/ quantity unknown
Art III r 3 carrier obliged to give details
No demand= no obligation for evidence of weight quantity

21. Condition unknown
Does not qualify ‘shipped in apparent good order and condition.
Unknown relates only to unapparent condition

22. Weight unknown /said to be
Generally statements of weight etc NOT evidence of weight at all if claused
BUT Sirina

23. Status of statements in B/L
Estoppel not contractual promise
Or Misrepresntation
Date – rep or warranty

24. Contract of carriage Which is the governing contract of carriage?
Vessel chartered and bill issued to Charterer =bill mere receipt
Bill issued to shipper but endorsed to Charterer = receipt

25. Bill issued to shipper not charterer or endorsed by charterer to others = Bill is governing contract

27. The Charterparty
Shipowner
C I F or
C & F
B/L
B/L
C/P
Charterer Shipper Seller
Receiver Buyer
Sale Contract

28. The Charterparty
Shipowner
F O B
C/P
B/L
Shipper Seller
Charterer Buyer
Sale Contract

29. Incorporation of bill terms
2 problems
Where there is more than one charter – to which does the bill refer
Are the words of incorporation sufficient

30. Shipowner
C/P
B/L
Time Charter
C/P
Voyage Charter
Receiver/Buyer

31. Parties to the B/L contract
1. Bill of lading signed by or on behalf of the Master bind the shipowners as Carriers
Except :
When the vessel is demise chartered, in which case it is the demise charterer who is the Carrier.
2. Bill of lading signed by the charterers or their agents otherwise than “for” or “on behalf of” the Master bind the charterers as Carrier.

32. Conlinebill 17. Identity of Carrier
The contract evidenced by this Bill of lading is between the Merchant and the Owner of the vessel named herein (or substitute) and it is therefore agreed that said shipowner only shall be liable for any damage or loss due to any breach or non-performance of any obligation arising out of the contract of carriage, whether or not relating to the vessel’s seaworthiness. If, despite the foregoing, it is adjudged that any other is the Carrier and/or bailee of the goods shipped hereunder, all limitations of, and exonerations from, liability provided for by law or by this Bill of Lading shall be available to such other.

33. “INES” 1. Bill on Charterers Form
2. Bill included “identity of carrier” clause
3. Signature :
“Signed as agents for
the carrier, Maras Linje”
Held : Owners’ Bill

34. “HECTOR” 1. Bill on Conline Form
2. Bill included “identity of carrier” clause
3. Bill signed by charterers’ agents :
“For the Master”
4. Bill included stamp on its face :
“Carrier : US Express Lines”
Held : Charterers’ Bill

35. “FLECHA” 1. Bill on Charterers’ Form
2. Bill included “identity of carrier” clause
3. Signature :
“As agents for the carrier,
Conti Pacific Lines”
Held : Owners’ Bill

36. Held : Charterers’ Bill
“STARSIN”
1. Bill on Charterers’ Form
2. Bill included “identity of carrier” clause
3. Signature :
“As agents for the carrier,
Conti Pacific Lines”
Held : Charterers’ Bill

37. Starsin Court of Appeal
Owners bill where:-
On face of bill it appears owner is issuer
underlying facts show owner NOT issuer
BUT issuer had owners authority= Owners Bill

38. Only parties to a contract can sue and be sued under that contract.
THE TRADITIONAL RULE
Only parties to a contract can sue and be sued under that contract.

39. The Problem A
No Contract
Contract C B
Contract

40. T/T S/O Basic Relationship C/P or ship’s bill Through B/L Tort Claims
Consignee
Shipper

41. Effect of Contracts (Rights of Third Parties) Act on Bills of Lading
1. It will not apply to bills issued before 11th May 2000
2. It enables third parties to rely on exclusion and limitation clauses but not on other clauses (i.e. shield not sword)
3. Third party must be identified by name or as member of class or by description