Claims Guides Bills of Lading 1 - Functions of a Bill of Lading

Owners’ obligations regarding the receipt, carriage and delivery of the cargo are closely related with the functions of the bills of lading. Below is a general overview of the functions of bills of lading from an English law perspective. Bills of lading have three main functions, as follows:

Evidence of the contract Receipt of the goods It is therefore important for the of carriage by the carrier owner or charterer member that the bills of lading are issued to describe The bill of lading is evidence of The bill of lading records the date on accurately the goods received on the contract of carriage, it is not which the full quantity of goods were board. It is also important that a the contract of carriage itself. That received by the carrier, evidence of record is made of the cargo condition contract between the carrier and the the apparent condition and quantity at the time of receipt by the carrier – shipper is created when the goods of the goods on receipt including for example, if the goods were loaded are loaded on board the ship and will marks, number, quantity or weight (the in good condition but damaged shortly therefore already exist before the bill “figures”), place of issue and the load afterwards by rain, the bill of lading of lading is issued. If the cargo were and discharge port(s). should be issued clean. to damaged before issuing the bill English law incorporates the Hague- of lading, the shipper will be able to Sometimes the bill of lading will not Visby Rules (“HVR”) by the Carriage claim under the contract of carriage be claused but will have reference of Goods by Sea Act 1992. Article as if the bill had been issued. As to a survey report. This will not III Rule IV of the HVR provides that between a carrier and a consignee, be sufficient for the purposes the figures on the bill of lading will the bill of lading will be the actual of protecting the carrier and the be conclusive evidence between the contract of carriage. surveyor’s comments will not be carrier and a third party receiver (who deemed as incorporated into the bill The contractual carrier under the bill has been transferred the bill of lading of lading, unless the survey report is of lading may be the physical carrier in good faith). attached to all the bills of lading and (ship owner or demise charterer) or the pages are numbered so that they another party (such as the charterer, form part of the bill of lading together or sub charterer). with the bill of lading number stamped on the report. Claims Guides

Bill of lading as a document The relationship between About the Author of title charterparty and bills of lading Christina Anderson Associate The rightful holder of a bill of lading The bill of lading functions are has the right to take possession and important to bear in mind whenever T +852 2863 4546 delivery of the goods upon surrender a charterer is asking the master to E Christina.Anderson of an original bill of lading. This means do something regarding delivery of @westpandi.com a bill of lading is different to other goods and changing details on the bills Christina is an Associate in the West of transport documents, such as straight of lading in exchange for a letter of England’s Hong Kong office, handling P&I bill, which cannot be transferred, indemnity (LOI). and FD&D matters for Members in the or a sea waybill, where only proof Asia Pacific region. She is a dual qualified The master must think not only about of identification is required to take solicitor in both England & Wales and in the owners’ obligations under the delivery. The HVR does not apply to Hong Kong, specialising in marine and charter party, but also the carrier’s international trade disputes. Christina sea waybills. separate obligations to cargo interests practised commercial litigation and It should be noted that the right to under the contract of carriage and arbitration at two international law firms for 7 years and was based in both London take delivery of the goods under a whether charterers’ orders could result and Hong Kong prior to joining the Club bill of lading (which the ship owner in a cargo claim. in 2015. is concerned about) is not the same as taking ownership of the goods. Potential liability as a physical Get in touch Ownership is determined by the sale carrier under the bill of lading West of England Insurance Services (Luxembourg) S.A. contracts (to which the contractual The ship owner’s primary concern is carrier is unlikely to be a party). not the sale contract, but his liability Hong Kong Office Sometimes a cargo claimant demands under the contract of carriage as the 1302 China Evergrande Centre 38 Gloucester Road delivery of the goods at a discharge physical and/or contractual carrier. In Wanchai Hong Kong port under a bill of lading and it turns some jurisdictions a physical carrier may T +852 2529 5724 out they are only a party to a sale be held jointly liable as the contractual contract, which determines they carrier even if the bill of lading is issued London Office may be the owner of the goods, but naming charterers or another party as One Creechurch Place they are not the consignee under the the contractual carrier. Creechurch Lane original bill of lading. In such a case, a London EC3A 5AF party who only has a right under a sale T +44 20 7716 6000 contract but is not the lawful holder March 2018 E [email protected] of a bill of lading is not entitled to take W www.westpandi.com delivery of the goods.

© West of England Insurance Services. All rights reserved. The opinions expressed in this publication are those of the authors. This note is intended for general guidance only and should not be relied upon as legal advice. Should you require specific advice on a situation please contact us.

The West of England Ship Owners Mutual Insurance Association (Luxembourg)

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