Bill of lading, its kinds and functions

by • 07/01/2013 • GeneralComments (0)569

Q7. Define bill of lading and explain kinds and functions of bill of lading.


This is the most important document whenever goods are sent by ship. It normally states the quantity and provides the value description and the shipping marks of goods sent by ship. It also gives the name of the ship, the part of departure and the destination of the goods.

Bills of lading are normally issued in a set of two or more transferable copies, all of which must be signed by the master of the ship who makes a note on the bills of lading, of the number of copies issued and any damages of goods taken often board. He then keeps one copy for reference. The other copies are sent to the foreign importer by separate mail or returned to the exporter (consignor).

However, if the exporter has changed for the importer to open documentary credit in the exporters favour in a local bank, then the bills of lading together with the other shipping documents such as the invoice the consular invoice, the marine insurance policy and a certificate to origin must be lodged by the exporter at the local bank, together with the bill of exchange.


The exporter will be paid immediately, if the bill of exchange is a rights bill or he will be able to get the bill discounted since it has been accepted shipping documents to its branch in the importer’s country. The bill of lading is released to the importers either against payment or against acceptance. According to the instructions given to the bank by the importer, in the letter of hypothecation. The letter is the document held by the bank as evidence of its rights to return the bill of lading as security against which it has granted the documentary credit.



(a) The bill of lading acts as an advice note indicating the quantity and description of goods sent by a named ship.

(b) It is a receipt of good condition on board signed by the master of the ship. Any damage to goods is noticed.

(c) It is evidence of a contract of carriage between the shipper and the ship owner.

(d)(i) It is a document of title to goods described therein. This means that a holder of the bill of lading can claim the goods when he hands it over to the part authority at the part of


(ii) When delivery of goods has taken place all other copies of the bill of lading are rendered invalid.

(iii) However, it goes not really possess the characteristics of a full negotiable instrument, since it does not transfer a better title of ownership than the possessed by the transferor. This means that the transfer of the bill of lading transfers ownership of the goods only. If there is no defect in the transferors titles to them.

(e) It can be sued as a basic for negotiating for documentary credit form the bank.

(f) It informs the customs authorities of the type of imports/ exports and the country of origin or destination respectively.

(i) It allows the customs to see at a glance wheter the imports or exports are taxable.

(ii) It helps in the recording of statistics.



A bill lading may either be:

(1) Clean bill of lading

(2) Qualified bill of lading

(3) Through bill of lading



When the master of the ship acknowledges the receipt of goods by stating that the goods are shipped in good order and contains, it is called as clean bill of lading”.



When the master of ship declared that the goods received are tin a bad condition, the bill of lading is called qualified bill of lading.



A through bill or lading is that which is issued for the carnage of goods up to a certain part by one ship owner and for the remaining part of the journey by another ship owner. A through bill of lading is also used where the goods are to be carried partly in ship and remaining part by land for an inclusive freight.



Following are the implied warranties, which are not mention in agreement:

1. The ship is reasonably fit to meet the ordinary perils of the sea, which may occur during the journey.

2. The ship follow the agreed a customary route except when it becomes necessary to ensure safety of the ship, human tile, or to protect ship from further damage.

3. The ship will start the journey within a specified time or reasonable time and ft shall be carried with all reasonable care.

4. The charter shall not ship any restricted goods.

5. The shipper shall not ship the dangerous goods without bringing them to the notice of the ship captain.

6. The shipper should avoid to any restricted place.



Following the effects of breach of contract:

1. The owner of goods can set aside the contract if the ship is found unfit for journey.

2. The owner of goods can claim compensation for the loss caused to him, if the defect is discovered after the start of the voyage.

3. The shipper can cancel the contract and claim damages if the shi does not start voyage within reasonable time.

4. The shipper as liable to pay damages for any loss suffered by other party due to deviation of route.

5. The shipper is liable to pay damages for shipping dangerous goods without knowledge of ship captain.


Was really very ignorant, came out of the very strength of his.
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