What is a Bill of Lading and its purpose?
Bill of Lading (abbreviated to B/L) is one of the MOST important documents in the whole shipping and freight chain. The B/L is the EVIDENCE of the contract of carriage entered into between the “Carrier” and the “Shipper or Cargo Owner” in order to carry out the transportation of the cargo as per the sales contract between the buyer and the seller.
B/L has 3 basic purposes or roles. Let’s examine these roles in more detail as follows:
- Evidence of Contract of Carriage
- Receipt of Goods and
- Document of Title to the goods
1) Evidence of Contract of Carriage – emphasis on the term “Evidence“..
Many people has a perception as follows;
- a B/L is a Contract between the Seller and the Buyer
- a B/L is a Contract of Carriage between the Carrier and Shipper
Both above notions are wrong.
The contract between a buyer and seller was already established when the buyer placed the order with the seller and they both discussed and agreed (verbally or in writing) the what, where, when, how and how much of the transaction in detail..
The contract between a shipper and the carrier was already established when the shipper or his agent made a booking with the carrier (shipping line) to carry the cargo from A to B.
The B/L is the EVIDENCE of the contract of carriage entered into between the “Carrier” and the “Shipper or Cargo Owner” in order to carry out the transportation of the cargo as per the sales contract between the buyer and the seller..
2) Receipt of Goods – emphasis on the term “Receipt“..
A B/L is issued by the carrier or their agent to the shipper or their agent in exchange for the receipt of the cargo.. The issuance of the B/L is proof that the carrier has received the goods from the shipper or their agent in apparent good order and condition, as handed over by the shipper..
3) Document of Title to the goods – emphasis on the term “Title“..
It means that the goods may be transferred to the holder of the B/L which then gives the holder of the B/L, the rights to claim the goods or further transfer it to someone else.