Bills of Lading

Law and Contracts

Nicholas Gaskell

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351573818
• Edition: 1
• Topic: Law
• Subtopic: Law Theory & Practice
• Index: Law

Bills of Lading: Law and Contracts provides a detailed legal analysis of common standard form clauses in bills of lading (and waybills) which are in use in the maritime world, as well as a comprehensive examination of the legal principles which are applicable to them. Bills of Lading: Law and Contracts provides a detailed legal analysis of standard form clauses in bills of lading (and waybills) which are in use in the maritime world, as well as a comprehensive examination of the legal principles which are applicable to them.

Chapter 1

Introduction

1A Functions of Bills of Lading

1B Mandatory Sea Carriage Rules

1B.1 Hague Rules

1B.2 Hague-Visby Rules

1B.3 Hamburg Rules 1978

1B.4 Reform of carriage of goods by sea law

1B.5 Applicable legislation in the UK

1C Types Of Bill

1C.1 Commercial definitions

1C.2 Short form bills

1C.3 Straight bills and waybills

1C.4 Electronic shipping documentation

1D Comparison With Charterparty

1D.1 General distinctions

1D. 2 Charter-party bills

1E Layout of Bills

1F Development Of Standard Forms

1A Functions of Bills of Lading

1.1

The bill of lading is a document of great importance in international trade. In medieval times, merchants travelled with their goods and did not need to receive documentation from the carrier, or to give any to the buyer of the goods at the foreign port. A relic of this sort of trading pattern is echoed by provisions sometimes seen (more often in charterparties than in bills of lading) which give the cargo owner the right to appoint a “supercargo”, namely a representative who can travel with the cargo. When merchants began to trust carriers to deliver cargo to overseas agents it became necessary for them to have some sort of receipt from the carrier, acknowledging that a particular number, or weight, of identified goods had been received.¹ A bill of lading is literally a document that records certain goods as having been “loaded” on board a ship.² The expression used for bill of lading in other languages does not necessarily convey the same notion of “loading”, but may simply imply receipt: see, e.g., the French connaissement, derived from the Latin cognoscere.³ The distinction may have more importance when considering combined transport bills.⁴ The central function of the bill of lading as a receipt is still vital today and all bills of lading will contain spaces on their face for details to be entered.⁵ If the carrier fails to deliver the stated quantity there will be evidence to indicate that loss or damage occurred while the goods were in transit.

1.2

The bill of lading may be, however, more than a mere receipt. Where no express terms of carriage had been agreed between the parties, the courts would imply basic obligations, e.g. that the shipowner was to be treated as a common carrier but subject to exceptions such as Act of God and Queen’s enemies.⁶ Gradually, carriers began to include express terms on the bill itself.⁷ Today, these are mainly printed on the reverse of the bill, but there are still some important clauses on the face. Often, terms are to be found in other documents incorporated by reference, such as charterparties, ⁸ carrier’s standard conditions, ⁹ or in a carrier’s tariff.¹⁰ The bill of lading is normally described as containing evidence about the terms of the contract of carriage, rather than being the whole contract.¹¹ This is because the bill is nearly always issued after goods have already been received or loaded and there must have been a contract entered into before this, which the bill may later record.¹² English law allowed great freedom to carriers to include exemption clauses in bills of lading and this laissez-faire approach led directly to the enactment of the International Convention for the Unification of Certain Rules Relating to Bills of Lading 1924¹³ and its Protocol of 1968.¹⁴ Debates about the basic rights and obligations to be contained in a bill have continued ever since.¹⁵

1.3

Early bills of lading did not need to be negotiable in any sense as the shipper would only want the carrier to deliver according to its instructions, e.g. to an agent at the port of discharge. The modern bill of lading is traditionally spoken of as a document of title¹⁶ and its ability to be transferred gives it particular advantages when used as part of an international sale of goods contract. The bill may be used to enable a consignee to obtain constructive possession of the goods and a valid holder of the bill of lading will be able to require the carrier to deliver the goods to it at the port of destination. By indorsement, the bill may also be used to pass property in the goods, or to effect a pledge of them. Under the Carriage of Goods by Sea Act 1992, the lawful holder of a bill will have title to sue the carrier under the contract of carriage, even though it would not normally be in privity with that carrier, e.g. where the contract was made by the shipper and the holder is an indorsee.¹⁷

1.4

In summary, then, a bill of lading is a document issued by a carrier which acknowledges the receipt of cargo, contains terms of carriage and may operate as a document of title. Although a number of trade definitions of a bill of lading are given in Section 1C, below, there seems to be no complete legislative definition of a bill of lading. The Hague and Hague-Visby Rules do not contain a definition, nor do the Carriage of Goods by Sea Act 1971, the Bills of Lading Act 1855 or the Factors Acts. The Carriage of Goods by Sea Act 1992, s. 1 (2) defines the bill (for the purposes of the Act) in a negative way by excluding references to a document which is incapable of transfer either by indorsement or, as a bearer bill, by delivery without indorsement, but does include references to a received for shipment bill.¹⁸ Article 1(7) of the Hamburg Rules 1978 does define a bill of lading for the purpose of the Rules to mean “a document which evidences a contract of carriage by sea and the taking over or loading of the goods by the carrier, and by which the carrier undertakes to deliver the goods against surrender of the document A provision in the document that the goods are to be delivered to the order of a named person, or to order, or to bearer, constitutes such an undertaking”. However, as the Law Commissions noted in their Report, Rights of Suit in Respect of Carriage of Goods by Sea, ¹⁹ the bill of lading is usually identified by reference to its three functions: as a receipt, ²⁰ as evidence of the contract of carriage²¹ and as a document of title.²²

1B Mandatory Sea Carriage Rules

1B.1 Hague Rules

1.5

In the nineteenth century, carriers began to make more use of the bill of lading as evidence of the contract of carriage. The introduction of steam-powered vessels and the increase in international trade gave great commercial strength to shipowners, and to British shipowners in particular. The English courts were willing to apply laissez-faire notions of contract that allowed ocean carriers to exclude many of the basic obligations that would have been implied at common law. Cargo owners found that they were holding bills of lading subject to English law and jurisdiction, in which the carrier might exclude all liability for unseaworthiness, or for crew negligence.²³

Notions of freedom of contract may be used to justify the upholding of such terms where the parties bargain on equal terms. Similar assumptions are still applied today in respect of charterparties, where the contracts are largely unregulated on the basis that there is an active market and charterers are able to (and frequently do) bargain for terms more favourable to themselves. The same cannot always be said in respect of bills of lading, partly because individual cargo owners might not have the commercial muscle of a large charterer and also because an indorsee of a bill in a foreign port of discharge has had no opportunity to negotiate with the carrier.

1.6

Although most risks are covered by cargo insurance, ²⁴ the perceived injustice created by carrier’s ocean bills of lading led a number of cargo-importing countries to enact legislation creating basic minimum obligations on the carrier and restricting its ability to exclude liabilities. The US Harter Act 1893 was the most influential of the national legislation and was followed in a number of other States. Carriers realised that they would not be able to insist on wide exemptions in many trades and governments recognised that a degree of international uniformity was to be desired. Accordingly, the Maritime Law Committee of the International Law Association produced a model set of Rules in the Hague in 1921. ²⁵ At one stage it was thought that a set of clauses could be incorporated voluntarily by contract, in the same way as the York-Antwerp Rules, ²⁶ but it soon became apparent that some degree of legislative action would be required and that an international Convention would be needed. The International Convention for the Unification of Certain Rules Relating to Bills of Lading was eventually agreed in 1924.²⁷

1.7

In general terms, the Hague Rules 1924 followed many principles pioneered by the Harter Act 1893. The carrier was given obligations to take care of cargo during the carriage and was not entitled to exclude liability, e.g. for negligent stowage. In return, carriers were given a number of protections which, with hindsight, appear generous, but must be understood in the context of the previous practice of excluding virtually all liabilities. Carriers were still to be liable for unseaworthiness, but to the Harter Act standard of “due d...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• Preface
• Acknowledgements
• Authors
• List of Forms Used
• Bibliographical and Other Abbreviations
• Table of Cases
• Table of Legislation
• Table of International Conventions
• Table of Standard Forms
• 1 INTRODUCTION
• 2 TERMS OF BILL
• 3 THE CARRIER
• 4 THE MERCHANT'S TITLE TO SUE AND BE SUED
• 5 THE VESSEL
• 6 THE VOYAGE
• 7 THE CARGO
• 8 CARRIER'S LIABILITY FOR SEA CARRIAGE
• 9 CARRIER'S LIABILITY FOR COMBINED TRANSPORT
• 10 PARTICULAR LIABILITIES
• 11 FRUSTRATION, ABANDONMENT AND MATTERS AFFECTING PERFORMANCE
• 12 SUB-CONTRACTORS AND AGENTS
• 13 LOADING AND STOWAGE
• 14 NOTIFICATION, DELIVERY AND PRODUCTION OF BILL
• 15 MERCHANT'S RESPONSIBILITY
• 16 COMPENSATION
• 17 TIME LIMITS
• 18 LIENS
• 19 CHOICE OF LAW
• 20 JURISDICTION
• 21 CHARTERPARTY BILLS
• 22 WAYBILLS
• APPENDICES
• INDEX