What Is Bill of Lading?

Have you heard the word “bill of lading” but just let it pass from one ear to the other because you do not know exactly what that means? Some of us might get confused of bill of lading, waybill, general invoice, and general receipt.

We know all of these relates to the purchasing and acquisition of goods or services. In this article, we will be talking about one of the important documents in a shipment, which is the bill of lading. What is bill of lading? What exactly is the role and function of a bill of lading?

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Bill of Lading Defined

A bill of lading is a legal document that is issued by a carrier to the shipper as a general contract of carriage of goods that contains the details of the type, quantity, and destination of the items being shipped. It also serves as a receipt of shipment or transportation that must be presented for taking the items when the shipper delivers the items at the stated destination.

As a protocol, a bill of lading must accompany the shipped items or the cargo signed by an authorized representative from the carrier, shipper, and receiver.

Features of a Bill of Lading

A bill of lading, as a standard, must contain the following important information:

  • consignor’s and consignee’s name
  • name of the port of departure
  • name of the port of destination
  • name of the vessel
  • dates of departure and arrival
  • list of goods in the shipment with the number of packages and kind of packaging
  • numbers or marks on the packages
  • weight or volume of the cargo
  • freight charge or amount

Purposes of Bill of Lading

As stated above, a bill of lading is important because it serves as a contract of carriage and a receipt for the delivery of the cargo. Moreover, there are three main functions or purposes of a bill of lading that you must know for you to fully comprehend what is bill of lading. Each of them is discussed and explained below. You may also see billing invoice examples.

1. As a Receipt of Cargo

A bill of lading is primarily used as a receipt that is issued by the carrier to the shipper once the items to be shipped have been loaded onto the vessel of the carrier. The official receipt is important since it serves as a proof of shipment for customs and insurance purposes. It also serves as a commercial proof of completing a contractual obligation, especially under cost and freight (CFR) and free on board (FOB) shipping terms.

There are two types where this document can be used as a receipt of goods, and these are as follows:

  • Clean bill of lading – In this type of bill of lading, this is used when there is no discrepancy between the description filled by the shipper in the bill of lading and the actual items that are shipped on board. This indicates that the items have been properly loaded according to prima facie evidence, and enough evidence to prove something by pointing out basic facts, unless proven otherwise. If it is later found out by the carrier that the bill of lading is different from the one on the shipment, one must provide a contradictory evidence. However, once it is already transferred to the third party, it can no longer be rebutted. You may also like service invoice examples.
  • Claused bill of lading – This type of bill of lading is used when there is some discrepancy between the description filled by the shipper in the bill of lading and the actual items that are shipped on board. You may also check out payment invoice examples.

2. As an Evidence of the Contract of Carriage

A bill of lading can also be used as an evidence of the contract of carriage stating that the carrier has received the goods and would deliver them upon the receipt. While in the possession of the shipper, the bill of lading represents the contract, but it is not necessarily the simple contract of carriage; it merely evidences it. There may be other contract of carriage aside from the bill of lading.

However, when the bill of lading has already been transferred to a third party, it should not be treated as simply an evidence of the basic contract. Instead, it may be relied on by the third party as the contract itself. Note that the bill of lading can serve as a conclusive evidence of the bill of lading terms of the contract of carriage between the carrier and a bona fide endorsee.

3. As a Document of Title

The bill of lading confers prima facie title over the goods to the named consignee. Under the nemo dat quod non habet rule, or simply nemo dat rule, which states that no one gives what he doesn’t have, the purchase of a possession from someone who has no ownership right to it also denies the purchaser any ownership title of such items purchased. You may also see simple invoice examples.

Hence, the bill of lading will serve as a document of title for the goods, granting the buyer full title and ownership of the goods. There are two types of bill of lading that can perform as a document of title: straight bill of lading and order bill of lading. You may also like purchase invoice examples.

Ultimately…

A bill of lading is important in a shipment since it serves as a legal document binding the carrier and the shipper for the items being shipped. It functions as a receipt of cargo, an evidence of the contract of carriage, and as a document of title.

It contains important information of the items being shipped and other related information such as the names of the consignor and consignee, the names of the ports of departure and destination, name of the vessel, dates of departure and arrival, list of goods in the shipment, numbers, marks, and weight of the package or cargo, and the freight amount of the shipment. You may also check out construction invoice examples.

It is important that you will not forget to include this document in your shipment whenever you are going to have a shipment, as a carrier or a shipper, for your goods to be in due care.

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