Checking the bill of lading

A Bill of Lading is a receipt for the goods carried on a ship, or – when technically put – is an evidence of contract between the shipper and the carrier. It is a documented title for the goods, signifying that the holder of the Bill of Lading is the legal owner of the goods it states. These days even on ships loading oil in bulk, the ship’s masters are required to sign the Bill of Lading (B/L). As a general rule, the Master has the authority by law to sign the Bill of Lading on behalf of the Ship Owner. The Bill of Lading also needs to be carefully checked when (un)loading goods at a Port Facility. Generally, there are separate departments looking after the cargo documentation and the authorization for cargo contracts.

Sometimes the legal jargon mentioned on the Bill of lading can be unclear and confusing. It is therefore essential that the owner’s representative should thoroughly go through and if required be advised systematically before signing the bill of lading.

Following are the points that must be considered before signing the bill of lading. These are also good points to check whether the bill of lading is filled out correctly:

The Shipper’s Identity
The shipper is at a contract with the carrier which means that any information provided by the shipper if untrue could make the carrier liable. The shipper has to indemnify the carrier and may also have to back freight in this respect. Therefore it is essential that the name, identity and addresses are clearly mentioned on the Bill of Lading.

Port and Date of Loading
The date of loading should coincide with the date as stated in the Mates’ receipt. This provides an indication of the origin of goods and is at times crucial to determine the customs duty structure or permissibility of the goods into a country.

Port of Discharge
Unless the charter party for a port to be nominated after the vessel sails to avoid deviation charges, the ship must precede with all dispatch to the port of discharge as said. The master must ensure that this falls within the charter party limits. And the Port of Discharge should check it’s correctly stated.

Condition of the Goods
Confirm that the goods have indeed actually or physically been shipped from the Port Facility on board the ship, vice versa. Check accordingly that an accurate description of the goods is present on the Bill of lading, whether any short-loading or dead-freights are correctly mentioned. Ensure that all of the conditions must be in lieu with the Mates’ receipt and the Bill may have a clause to reflect the actual condition of the goods.

Quantity and Description of Cargo Loaded
Prior to endorsing the Bill of lading, you should ensure that the quantity and description of the goods is true to its correct value of that loaded on or of board. This can be done by counter-checking the Mates’ receipt along with the other cargo documents.

Ensure that the Bill of Lading is not marked “Freight Paid” or “Freight Prepaid”, as in certain cases, if not true. The master or agent must confirm and verify the factual position of the freight with the ship owner or shipper. It is also recommended to get a written confirmation from either of the two.

Conflicting terms
No clause of the Bill of Lading should ever conflict with that of the charter party terms. If the Bill has to be claused as per the charter party terms then such references must be clear and unambiguous.

Document set
Check to see whether the number of original Bill of ladings are in the set provided as stated.

Make sure the document is signed!

Do you know any other important points that must be considered when checking the bill of lading? Let us know!

Based on “What Precautions Should be Taken Before Signing the Bill of Lading? By Bikram Singh | In: Maritime Insight Guidelines