WHAT IS A BILL OF LADING?
A Bill of Lading is a document produced by a consignor or shipping company and signed by a carrier at the time of pickup, which acknowledges that certain products have been loaded on board as cargo for delivery to a defined consignee (or destination). It functions as a contract between the shipper, the owner of the goods, and the carrier for a variety of reasons:
The purpose of a Bill of Lading
It is the proof of a legal contract of carriage, and it may include all of the terms of the contract between the shipper and the carrier, such as payment periods, rates, product classification, descriptions, and other responsibilities and obligations.
It’s a receipt signed by the carrier indicating that items received are in good condition and matches the contract description (see SLC below). Pallet and/or piece count, weight, product description, and categorization could all be included in the data.
It is a receipt of goods received once signed by the consignee, providing final proof of the quantity and condition of the product received. Unless anomalies are detected at the time the BOL is signed, the consignee’s signature acknowledges that the items were received as specified on the BOL. The signed BOL is frequently used as a Proof of Delivery (POD) document and as a backup for the Freight Invoice.
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What are the two major types of bill of lading?
The two major types of bill of lading are Non-negotiable and Negotiable:
Negotiable BL (Signed)
This is a type of BL that can be transferred to a third party is a negotiable bill of lading. The carrier is instructed to deliver the items to whoever has the original endorsed bill of lading. The cargo will not be released from the port if the individual receiving the items does not have the original document.
Non-negotiable Bill of Lading (copy)
A non-negotiable bill of Lading is designated for specified purchasers, consignees, receivers, and agents, as well as anyone else to whom the items may be delivered. Because it does not represent the ownership of the commodities on its own, it must be accompanied by other paperwork procedures to be able to.
The bill of lading can be categorized based on the “mode of operation” and “how it is completed.”
- A straight bill of lading reveals that the goods have been consigned to a specific person and that it is not negotiable free of existing equities. It means that any endorsee will have no more rights than the endorser. Non-negotiable bills of lading are also known as non-negotiable bills of lading, and they are not safe in the eyes of banking. Military cargo is frequently paid with this form of a bill.
- Bill of Lading (Open Bill of Lading): The consignee’s name can be modified and therefore transferred with the consignee’s signature in this negotiable bill of lading. This can be copied and pasted several times. An open bill of lading is equally recognized as a switch bill of lading.
- A bearer bill of lading states that delivery will be made to the person who holds the bill. Such a bill may be created deliberately or it may be an order bill that, in its original form or by an endorsement in blank, fails to name the consignee. Physical delivery can be used to negotiate a bearer bill. They are used to transport bulk freight in small quantities.
- An order bill of lading is a bill that uses express language to make it negotiable. This signifies that delivery will be made to the consignee’s subsequent order, which is usually indicated by words like delivery to A Ltd. or to assigns or Order, Only the legitimate bill of lading holder receives the cargo, which must be verified by an agent who provides the delivery order and the verified bill of lading. Only the legitimate bill of lading holder receives the cargo, which must be verified by an agent who provides the delivery order and the verified bill of lading.
What is in the Bill of Lading?
The Bill of Lading contains the following:
- Shipper’s Name and Address
- Consignee’s Name and Address
- Description of Goods including pieces and weight
- NMFC Classification, Bill to Party (or Payment Terms)
- Appropriate load ID numbers, signatures, and initials of the officers involved are normally included in the Bill of Lading.
- In a company’s Routing Guide, specific needs are frequently written out.
When the items are loaded into the carrier’s equipment, the driver from the carrier will sign the BOL as a matter of procedure. The carrier must inspect the goods at this point to ensure that the amount and condition of the merchandise are as stated on the BOL. The BOL can be signed “Shipper Load and Count,” or “SLC,” depending on the shipper’s standards, which signifies the carrier has not been given the chance to check the items before loading where it is not possible or allowed. The consignor will frequently keep a copy of the signed BOL.
From pick-up to delivery, the original copy of the BOL will always be physically available with the shipment.
When does a bill of lading become a contract with the carrier?
Before issuing the bill of lading when the cargo is loaded on the ship, the carrier and the shipper have already entered a contract. This is done to protect the shipper if the cargo is damaged before it is loaded onto the vessel, as well as to assist the shipper with the claim framework. The bill of lading will serve as the actual contract of carriage for both the carrier and the consignee.
The following are some of the most commonly utilized customs and rules that apply to contracts of carriage for commodities transported by sea:
– Hague Rules
– Rotterdam Rules
– Hamburg Rules
– US COGSA
– Hague- Visby Rules
The carriage contract is usually governed by a convention that is specified on the first page of the bill of lading. When the consignee books space for shipping, the carrier provides a booking confirmation that includes the carrier’s Clauses and the terms and conditions that will guide the booking and shipping contract.
The receiving location will inspect the product as it is unloaded upon delivery to the consignee before signing the BOL acknowledging receipt. The consignee will indicate any damages or shortages on the BOL at that time. In general, if a consignee observes damages after delivery and nothing was mentioned on the BOL at the time of delivery, the shipper and carrier will not be held liable.
The consignee will keep an executed, final signed copy of the BOL as a receipt for the shipment delivered. A final copy of the Bill of Lading will also be kept by the carrier. For me information, please do not hesitate to contact us.