Bills of lading and Bank loans
Srinath Keshavan
www.traderiskconsulting.com
References
• Gard Guidance on Bills of Lading
• www.parliament.uk (Standard Chartered Bank v Oakprime)
• http://www.brookes-and-co.co.uk/News%20and%20Reviews/TT003.htm (Brookes & Co.) Consequences of Master clausing bills of lading
• http://pntodd.users.netlink.co.uk/cases/cases_a/ardennes.htm (Ardennes case regarding
prevalence of contract of carriage over bill of lading)
• Gencon charterparty terms
An international trade transaction
Movement of goods
Contract
Intent
Counterparties
Goods
Price
INCOTERMS
Title
Liabilities/Duties
Governing law
Jurisdiction for dispute resolution
Banking arrangements
Payment conditions (time & mode of
payment)
Currency
Packing units
Time of delivery
Mode of transport
Transaction
Invoice
Origin
Documentation
Determination of Quality, Quantity
Transport
Insurance
An international trade transaction
Shipment
LC Beneficiary
(Seller)
Contract
LC Applicant
(Buyer)
LC application
LC advised
Payment
LC issued
Advising
Bank
Shipment documents
LC Issuing
Bank
4
Functions of a bill of
lading
Receipt for the goods
loaded
Evidence of the
contract of carriage
Document of title
Bill of lading as a receipt for goods loaded
• The function of receipt applies to all bills of lading whether negotiable or not
• The bill of lading will normally be evidence of when goods were received and their
status on receipt in terms of marks (to identify the goods), apparent order and
condition (Mate’s Receipt, too), quantity and/or weight
• Consequences of inaccuracy in respect of state of goods at time of loading
•
•
•
•
•
Exposure to claims
Loss of the right to limit liability
Loss of P&I cover
Loss of the right of indemnity from the charterer
Criminal prosecution of the carrier and/or Master
Antedating of bill of lading
 Standard Chartered Bank (SCB) v
Oakprime International Ltd,
 SCB v MD of Oakprime,
 SCB v Pakistan National Shipping Corp
+ owner’s shipping agent
Discharge of cargo
Master clausing bill of lading
David Agmashenebeli case
Discharge of coal in India
Bill of lading as evidence of a contract of carriage
• The bill of lading also acts as evidence of the contract of carriage between the
carrier and the shipper. This is a function of bills of lading whether negotiable or
not
• The carrier may be the owner, charterer or freight forwarder and is the party who
enters into a contract of carriage of goods with the shipper
Deviation from contract of carriage
Ardennes case
Bill of lading as a document of title
• Title in the context of bills of lading means right to possession of the goods from
the carrier. It does not mean right to ownership – the sales contract usually
determines this
• If the right to possession of the goods from the carrier is determined by the
possession of a document such as a bill of lading, then that document is a
document of title
• A received for shipment bill of lading does not evidence shipment of goods by the
carrier. It has a limited function as a document of title, and in any event will only so
function if it has been issued by or for (with the necessary authority) the carrier
Bill of lading as a document of title
Bill of lading as a document of title
• Closely connected with the function of document of title is negotiability. If the bill
of lading is negotiable it can be transferred from an entity with title to an entity
without title, for example from a consignee named in a bill of lading to a consignee
not named in the bill of lading
• Negotiable bills of lading allow goods to be traded several times during the voyage
• A straight bill of lading is not issued in a negotiable form. It requires the carrier to
deliver goods only to the consignee designated on the bill of lading
Soybean meal to China
Thank you!
Questions, please?
Srinath Keshavan
www.traderiskconsulting.com