The Bill of Lading (normally referred to as BOL or B/L) is perhaps the oldest commercial document used for international shipping trade. The first of that on record was created on 24th April 1248, for carriage of ‘twelve full loads of brazil wood and nine of pepper and seventeen and a half of ginger’ from Toulouse to Provence, for a freight of four pounds and fifteen solidi in Vienne currency. 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. While the seafarers cast off with cargo worth millions of dollars out into the oceans, BOL is the only document in the hands of the cargo owners to prove their title of ownership to goods. This topic is elaborate, covering the liabilities, responsibilities, rights and immunities of shipper and ship owner.
The relevant provisions have evolved through deliberations in several international conventions ie. Hague Rules, Hague-Visby Rules, Hamburg Rules, Brussels Protocols etc. and legislations like Bills of Lading Act, The Carriage of Goods by Sea Act and The Multimodal Transportation of Goods Act. Because of the world wide acceptability of electronically transmitted documents, the relevance of BOL is also undergoing resultant changes. These days, the negotiations and transactions pertaining to the carriage of goods are directly carried out by ship owners and shippers and/or through their agents at different ports of origin/destination. Therefore, the topic is very briefly introduced, for the information of seafarers who are yet to learn commercial aspects of shipping.
The BOL has four functions:
(a) It is a memorandum of the contract of carriage. (Note the word ‘contract’ precedes the word ‘carriage’). It speaks of the contract entered into between the shipper and the ship owner prior to the issue of BOL. In legal parlance, BOL is a receipt for goods stating the terms on which they are to be received and carried by the ship, and it is an excellent evidence of the preceding contract between shipper and ship owner.
(b) It is a receipt issued by the ship owner acknowledging that goods as described therein have been received onboard a particular ship for shipment to a specified destination. When the Master signs a BOL acknowledging the receipt of a specific quantity of goods in a specific condition, the ship owner is bound to deliver the same quantity in the same condition.
(c) It is a document to claim the goods and without production of the original BOL goods are normally not delivered. As per mercantile custom, possession of BOL is as good as possession of goods mentioned therein. Even a true owner cannot demand delivery of goods from the Master, if he does not produce the BOL. 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.
(d) It is a quasi-negotiable instrument which entitles its holder to transfer the ownership of goods during transit, by way of indorsement. The word ‘quasi’ means – seeming to be but not really so. The holder of BOL who indorses it to an indorsee, cannot provide a better title than he himself has as the goods are in transit and not in physical possession. A BOL, though transferable, is not a negotiable instrument as per negotiable instruments act.
Unless specifically mentioned in the ‘contract of carriage’, the ship owner will be liable for any damage the goods may sustain whilst in his custody, excepting only that are attributable to (a) acts of god – ie flood, earthquake, fire etc (b) acts of war and (c) inherent vice – ie tendency of material to deteriorate due to the essential instability of components or interaction among components. The ship owner is at liberty to restrict his liabilities from terms that are mentioned in the standard form of BOL, and this he may do by entering into special contracts as terms, conditions and exceptions to the standard form of BOL.
The shipper prepares the BOL when he ascertains the exact cargo he wishes to ship by the vessel and lodges with the shipping company. The shipping company may also undertake this business for the shipper. Though sets of the BOL are made as desired by the shipper and shipping company for banking, insurance etc., the original BOL is a document proper. At the foot of other copies of the set, the term – ‘In witness whereof the master or agent hath affirmed … (number of copies) bills of lading all of this tenor and date, the one of which being accomplished the others stand void’ is endorsed. The BOL is signed at the foot by, or for, the Master and a copy is retained onboard.
The opening phrase on a BOL is ‘Shipped (or received) in apparent good order and condition onboard the vessel ………’ This phrase means that the outward condition of the goods on being received by the ship is in good order. The ship owner in effect states: ‘I can only judge by exterior proof as to the soundness of goods received, and apparently they are in good order.’ To earn his freight, the carrier is only bound to carry the goods and deliver them in the same order in which he received them. If they were in apparent good order, on shipment, it is his duty to deliver them in like apparent good order and condition.