What is a bill of lading?

A typical bill of lading is a document which acknowledges that goods have been shipped by a particular person, normally attesting to their apparent order and condition upon shipment, upon a particular ship, for carriage to a particular place, for delivery to another person ‘or order’ or ‘or assigns’. There usually follows a large space for particulars of the goods and a space for signature preceded by a statement that the master has signed a number of originals of the bill, ‘one of which being accomplished the other shall stand void’. The reverse is usually covered by contractual terms in small print.

Evidence of contract of carriage

It is usually said that, as between the shipper of the goods and the ship-owner, the bill of lading is evidence of the contract of carriage but is not the contract itself. The reason for this is that, because of standard offer and acceptance principles, the contract will have been formed before the bill of lading is issued. The bill of lading is normally issued shortly after the ship has set sail. Clearly, there will be a contract by then because the goods will be safely on board. The contract will have been formed either when the goods are tendered to the ship on the docks and accepted for loading by being allowed on board, which was, historically, the usual analysis or, perhaps, when space is booked on the ship as would nowadays be much more usual.

Receipt for goods

Since the bill is (typically) signed on behalf of the owner, it is therefore evidence against him that goods were shipped as described. Thus, if the goods do not arrive, or arrive damaged, the inference will be that they were lost or damaged on the voyage. Not all statements on the bill, however, do more than raise a prima facie case against the owner; some statements, for example, as to quality, are inserted by the shipper and refer to matters as to which the owner cannot attest. He may, therefore, on a subsequent dispute, prove that the goods on loading were not as indicated. However, it has long been established that the owner is ‘estopped’, that is prevented, from denying statements as to the apparent order and condition on loading, at any rate against an indorse of the bill who has no knowledge of the circumstances of loading and takes up the bill on the assumption that what it says is correct.

Document of title

In the great case of Lick barrow v Mason (1784), the courts recognized that by commercial custom bills of lading had become documents of title. This notion of the bill of lading as a document of title is central to the understanding of international sales law. It means that, by transferring the bill of lading, the transferor can transfer rights in the goods. What rights are transferred? Strictly speaking, it is not necessary to transfer the bill of lading in order to transfer ownership. If I have a cargo of 1,000 tons of Western White Wheat on board the SS Chocolate Kisses which is in mid-Atlantic on route to Liverpool, I can sell it to you and, if we agree, property can pass by agreement, provided that the goods are ascertained. In practice, however, you would have difficulty in collecting the goods off the ship when it arrives at Liverpool.

The bill of lading as a transferable contract

The transfer of a bill of lading may transfer the goods but it does not, at common law, transfer the contract of carriage. Thus, a position could arise where the transferee, at whose risk the goods were, was not able to sue the ship-owner, with whom he had no contract, when the goods were lost or damaged in transit. There was some possibility of the transferor doing so, but this might not be easy to procure, and the argument was always possible that he had suffered no loss. Hence, the Bill of Lading Act 1855 provided that the transferee of the bill of lading could sue and be sued on the contract contained therein as if it had been made with himself.

Finally Comment

These vary enormously in their format. Some are simply ordinary bills of lading with provisions for trans-shipment and forwarding. Some are issued by an organization which itself undertakes combined transport. If the organization acts as carrier, the legal results are easier to analyses, though difficulties are still caused by the fact that the modes of transport involved have different regimes (CIM, CMR, Hague-Visby Rules) and efforts at harmonization have not so far had much success. It should, however, be possible to establish (though this has not yet been done) that such a document is a document of title: and, perhaps, that it is a bill of lading for the purposes of the 1855 Act. Other types of document cause much more trouble and it is necessary to scrutinize each document carefully to see what it purports to achieve.

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