Bill of Lading Definition for shipping clothing or textiles presented by Apparel Search 

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A bill of lading is a document issued by a carrier, e.g. a ship's master, acknowledging that specified goods have been received on board as cargo for conveyance to a named place for delivery to the consignee who is usually identified. A through bill of lading involves the use of at least two different modes of transport from road, rail, air, and sea. The term derives from the noun "bill", a schedule of costs for services supplied or to be supplied, and from the verb "to lade" which means to load a cargo onto a ship or other form of transport.

Short statement of principles

The standard short form bill of lading is a part of the contract of carriage of goods and it serves a number of purposes:

  • it is evidence that a valid contract of carriage exists and it incorporates the full terms of the contract between the consignor and the carrier by reference (i.e. the short form simply refers to the main contract as an existing document, whereas the long form of a bill of lading (connaissement int
    ) issued by the carrier sets out all the terms of the contract of carriage);
  • it is a receipt signed by the carrier confirming whether goods matching the contract description have been received in good condition (a bill will be described as clean if the goods have been received on board in apparent good condition and stowed ready for transport); and
  • it is also a document of transfer, but not a negotiable instrument, i.e. it governs all the legal aspects of physical carriage but, unlike a check or other negotiable instrument, it does not affect ownership of the goods actually being carried. This matches everyday experience in that the contract a person might make with a commercial carrier like FedEx is separate from any contract for the sale of the goods to be carried.

Main types of bill

Straight bill of lading

This bill states that the goods are consigned to a specified person and it is not negotiable free from existing equities, i.e. any endorsee acquires no better rights than those held by the endorser. So, for example, if the carrier or another holds a lien over the goods as security for unpaid debts, the endorsee is bound by the lien although, if the endorser wrongfully failed to disclose the charge, the endorsee will have a right to claim damages for failing to transfer an unencumbered title.

Also known as a non-negotiable bill of lading.

Order bill of lading

This bill uses express words to make the bill negotiable, e.g. it states that delivery is to be made to the further order of the consignee using words such as "delivery to A Ltd. or to order or assigns". Consequently, it can be endorsed by A Ltd. or the right to take delivery can be transferred by physical delivery of the bill accompanied by adequate evidence of A Ltd.'s intention to transfer.

Also known as a negotiable bill of lading.

Bearer bill of lading

This bill states that delivery shall be made to whosoever holds the bill. Such bill may be created explicitly or it is an order bill that fails to nominate the consignee whether in its original form or through an endorsement in blank. A bearer bill can be negotiated by physical del

Other terminology

A waybill is a non-negotiable receipt issued by the carrier. It is most common in the container trade either where the cargo is likely to arrive before the formal documents or where the shipper does not insist on separate bills for every item of cargo carried (e.g. because this is one of a series of loads being delivered to the same consignee). Delivery is made to the consignee who identifies himself. It is customary in transactions where the shipper and consignee are the same person in law making the rigid production of documents unnecessary.

The U.K.'s Carriage of Goods by Sea Act 1992 creates a further class of document known as a ship's delivery order which contains an undertaking to carry goods by sea but is neither a bill nor a waybill.

A sample of the issues

In most national and international systems, a bill of lading is not a document of title, but does no more than identify that a particular individual has a right to possession at the time when delivery is to be made. Problems arise when goods are found to have been lost or damaged in transit, or delivery is delayed or refused. Because the consignee is not a party to the contract of carriage, the doctrine of privity of contract states that a third party has no right to enforce the agreement. However, whether this is a problem to the consignee depends on who owns the goods and who holds the risks associated with the carriage. This will be answered by examining the terms of all the relevant contracts. If the consignor has reserved title until payment is made, the consignor can sue to recover his or her loss. But if ownership and/or the risk of loss has transferred to the consignee, the right to sue may not be clear in contract, although there could be remedies in tort/delict (the issue of risk will have been most carefully considered to decide who should insure the goods during transit). Hence, a number of international Conventions and domestic laws specifically address when a consignee has the right to sue. The legal solution most often adopted is to apply the principle of subrogation, i.e. to give the consignee the same rights of action held by the consignor. This enables most of the more obvious cases of injustice to be avoided.

In the municipal law of the U.S., the issue and enforcement of bills which may be documents of title, is governed by Article 7 of the Uniform Commercial Code. However, since bills of lading are most frequently used in trans border, overseas or airborne shipping, the laws of whatever other countries are involved in the transaction covered by a particular bill may also be applicable including The Hague Rules, The Hague/visby Rules and The Hamburg Rules at international level for shipping, The Warsaw Convention for the Unification of Certain Rules for International Carriage by Air 1929 and The Montreal Convention for the Unification of Certain Rules for International Carriage by Air 1999 for air waybills, etc. It is customary for parties to the bill to agree both which country's courts shall have the jurisdiction to hear any case in a forum selection clause, and the municipal system of law to be applied in that case choice of law clause. The law selected is termed the proper law in private international law and it gives a form of extraterritorial effect to an otherwise sovereign law, e.g. a Chinese consignor contracts with a Greek carrier for delivery to a consignee based in New York: they agree that any dispute will be referred to the courts in New York (since that is the most convenient place the forum convenes) but that the New York courts will apply Greek law as the lex causae to determine the extent of the carrier's liability.


Less Than Truckload (LTL)

Semi Trailer

Logistics Definition

Delivery Order

The above article is licensed under the GNU Free Documentation License. From Wikipedia, the free encyclopedia (  12/27/05


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