In international trade, the goods move from the warehouse of the exporter to the warehouse of the importer. The goods may move by land water or air or a combination of one or more of these modes. In international trade, such transport documents are more in number and it is very important to know the significance of each type of document and its nomenclature, etc. One of the important aspects to be remembered with regard to any transport document is that it must show the name of the carrier.
1. Bill of Lading
This is a transport document, which represents the movement of goods by water. A Bill of Lading is a formal receipt given by a ship owner or their authorized agents stating that the goods mentioned therein (quantity, quality, description etc.) are shipped on a specified date and vessel and are deliverable to the person mentioned therein or to his order after payment of all dues of the shipping company.
Some features of a Bill of Lading are:
- A Bill of Lading is a memorandum of contract of carriage because it contains detailed terms and condition on which the carrier has accepted the goods for shipment (Carriage) from the shipper.
- A Bill of Lading is a receipt for the goods because the ship owner or their agents, who have issued the same, declare that the goods described therein are received from the specified person for shipment to a named port. Thus, it is an evidence of receipt of goods by the carrier.
- A Bill of Lading is a document of title to goods because it states that the goods received for shipment by the carrier are deliverable to the named person or his order.
There are three main functions of a Bill of Lading:
- It is a receipt for the goods,
- It is an evidence of contract, and
- It is a document of title to goods.
A unique feature of the Bill of Lading is that it belongs to the restricted class of documents, which possess some of the qualities of a negotiable instrument. Hence, it is called a “QUASI Negotiable” instrument. Though the title to the goods covered by a Bill of Lading can be transferred by endorsement and delivery of the instrument, it is still not a fully negotiable instrument like a Bill of Exchange, the simple reason being that it represents the title to goods and is governed by a Sale of Goods Act, whereas a Bill of Exchange represents title to money and is governed by the Negotiable Instrument Act. As per the Sale of Goods Act, when goods are transferred from one person to another, the transferee gets no title to the goods than that of the transferor, whereas under Negotiable Instruments Act the transferee gets a better title than the transferor has, provided that he takes it in good faith and for due consideration.
Generally, Bill of Lading are issued in a set of two or three. The exact number of originals issued is indicated on each Bill of Lading. These are called Negotiable Bills of Lading and presentation of any one of them will entitle the holder to claim the goods thereunder and render the other negotiable copies void. Production of one copy of negotiable Bill of Lading is a must for claiming the goods.
There are various types of Bills of Lading. Some of them are described here under:
i) Received for Shipment Bill of Lading
It is a Bill of Lading, which merely acknowledges that Ship owners or their agents for shipment have received the goods. The B/L of this type generally contains a clause reading “Received in apparent good order and condition (or otherwise) for shipment by _______ or the next following vessel”. The goods received might be stored in a ship or warehouse of ship owner/ his agents and there is no guarantee that the ship named there under will carry the goods. It is not considered as a safe document since it may not be considered to be a good delivery under a sale contract.
ii) On Board Bill of Lading
This Bill of Lading acknowledges the goods having been put on board a ship for shipment. Hence, this type of B/L is a safer document for the importer (since it is an assurance that the goods are being carried by the named ship) and is a good delivery under sale contract for an exporter. Hence, in international trade generally, only On Board Bills of Lading are called for. This B/L will have a notation “Shipped on Board” or words to that effect. A received for shipment B/L can also be inscribed with such notation with proper authentication and date. In such a case that B/L will be considered as On Board (or Shipped) B/L. An On Board B/L must specify the name of the vessel.
iii) Short Form Bill of Lading
One of the functions of a Bill of Lading is that it evidences the underlying contract of carriage. Thus, a B/L should have the terms and conditions of carriage printed on it. But in case of a short form B/L, such terms and conditions will not be stated on the B/L and even if stated, it may be by reference to other documents or sources. Thus, a Short Form B/L is one which merely states the name of shippers, name of ship, date of shipment, etc. and no terms and conditions of carriage are mentioned. Generally, charter party Bill of Lading is of this nature, since terms and conditions of charter party and not liner B/L terms and conditions govern them.
iv) Long Form Bill of Lading
This is converse of Short Form Bill of Lading. In this case, the terms and conditions of carriage are given on the B/L.
v) Clean Bill of Lading
A clean Bill of Lading is one that bears no super-imposed clause or notation, which expressly declares the defective condition of the goods or packing. This B/L indicates that, “The carrier has received the goods in apparent good order and condition.” Since the carrier acts as bailee of the goods, by issuing a clean B/L, he has to deliver the goods in the same good order and condition.
vi) Claused Bill of Lading
This is also called as Foul B/L or Dirty B/L. It is the opposite of a clean B/L and contains super-imposed clauses or reservations declaring the defective nature of goods, its packing, etc. When a claused B/L is issued, the ship owners or their agents can disclaim their liability to deliver the goods in a good order and condition. This type of B/L is neither good for the seller nor for the buyer (so also Banker).
vii) Through Bill of Lading
A Bill of Lading is issued for the entire voyage covering several modes of transport and (or) trans shipments is called a Through B/L. This is used generally when the goods have to take more than one mode of transport. In this type of B/L there is no guarantee of carriers for the safe carriage of goods.viii) Straight Bill of Lading
It is a B/L that is issued directly in the name of the consignee, is called a Straight B/L. In this case the goods will be delivered to the named consignee. This B/L does not require any endorsement either in blank or otherwise by the shipper. From the banker’s point of view this type of B/L is not safe.
ix) Charter Party Bill of Lading
It is a Bill of Lading that is issued to the charter parties i.e. those parties who have hired the space in the vessel either in full or in part. Charter party B/L is issued subject to the terms and conditions agreed upon by the hirer of the ship / ship space and ship owners and is not subject to Liner B/L terms and conditions. Charter may be:
- Time Charter (i.e. specific time)
- Voyage Charter (i.e. for one or more voyages)
- Mixed Charter (i.e. for specified time and voyage)
The charter party bills of lading are generally not acceptable because Sea charters are full of problems and the ship owners may exercise lien over the goods in case the charters do not pay hire charges.
x) Container Bill of Lading
It is a B/L which indicates that the goods are carried in a container as one unit of cargo. The containers in which the goods are locked – in are generally numbered in a systematic manner in a string of letters and figures. These numbers indicate the ownership, type of container, size of container and identification number of the container.
xi) Combined Transport B/L or Multi modal B/L
A Combined Transport B/L very much resembles a Through B/L. It is a B/L issued by a shipping company or their agents who act as multi-modal transport operators and carry the goods all through (from start to finish) accepting the liability for performance of carriage and for losses or damages to the goods wherever they occur (on land, sea or air). The essence of a combined transport B/L is that the shipping company or their agents act as principal carriers (called as contractual carriers) guaranteeing the safe conduct of goods from start to finish. In a through B/L no such guarantee of carrier is available.
xii) Lash Bill of Lading
It is a B/L issued by operators stating that the goods received and put on board a barge to be carried and put on a parent vessel. Thus, a B/L issued by a Lash operator is the same as received for shipment B/L until it bears a clause stating that the barge is put on board the parent vessel (then becomes an on-board B/ L and becomes acceptable like a regular B/L)
xiii) House Bill of Lading
This type of B/L is one issued by generally an association of forwarding agencies or non-vessel owning carriers (shipping people) who combine their resources to acquire and operate expensive transport vessels, for example, FIATA. Such bills of lading are safe only when they are issued subject to ICC Rules. But the liability of carriers in this case is limited.
2. Airway Bill
This is the second type of Transport document after Bill of Lading. Airway Bill is an acknowledgement issued by an airline company or their authorized agents (and not forwarding agents) stating that they have received the goods detailed therein (number of packages, quantity and nature of goods) for dispatch by au to the named consignee at the address stated therein. Unlike a B/L, Airway Bill is not a document titled to goods because it is merely an acknowledgement of goods. When it is not a title of goods, naturally it is not a negotiable document.
Since an Airway Bill is not a document of title to the goods, it is not necessary for a consignee to process the AWB for taking delivery of goods. Thus, for shippers the AWB is not as safe a document as a B/L. Further, in case of Airway Bill it is obligatory on the part of airlines to notify the consignee on arrival of goods and they will normally deliver the goods to the consignee or his order on proper identification.
- Air Consignment Note: It is otherwise known as Air Receipt. Forwarding agents issue this generally. This document shows the departure and the destination stations as well as the name of the shipper and the addressee. It must also indicate the forwarding station and date stamp. This document also gives the description of goods etc. and their apparent good order and condition (or otherwise).
- House Airway Bill: House Airway Bill is a receipt for goods issued on the same lines as Airway Bill by cargo consolidating agents. When air cargo is shipped under consolidation, the airline company issues an Airway Bill called Master Airway Bill to the consolidating cargo agent and he in turn issues his own House Airway Bills to individual shippers. Thus, House Airway Bill is a receipt for goods issued not by the actual carriers or their agents but an intermediary cargo-consolidating agent. A House Airway Bill is not safe as a document as an Airway Bill. In case the consolidating agents fail to pay the freight, the carriers will have the right over the goods and the holder of House Airway will not get his goods.
3. Postal Receipt
The third type of transport document, as the name indicates, is a receipt issued by postal authorities. It can be a Sea Mail receipt or an Airmail receipt depending upon the mode by which they are sent. Postal receipt is also an acknowledgement of receipt of goods for delivery to a named consignee, hence it is not a document of title to goods nor is it a negotiable instrument. Though the postal receipt is not a must for taking delivery of goods, in certain countries a receipt must be shown to the Customs and postal authorities for clearance and delivery. Postal regulations in certain countries allow senders to issue and authenticate their own certificate of posting. Considering all these, it is not considered a safe document from the banker’s point of view.
4. Courier / Expected Delivery Service
Another transport document is, it is a courier/Service document that evidences receipt of goods for delivery and should appear on its face to indicate the name of the courier/service and should be stamped/signed or otherwise authenticated by such courier/service. This document should also indicate the date of pick-up or receipt. If no name of courier/service is stated in the letter of credit, the bank can accept the document issued by any courier/service.
5. Multimodal Transport Document
This document is issued when the movements of goods involve more than one mode of transport. Hence, this is also called as “intermobile transport document (ITD)” or “Combined Transport Document (CTD)”. In simple words it is defined as a document evidencing contract for performance and procurement of performance of combined transport. Thus, in a multimodal transport document the carriers (called as Multimodal Transport Operators (MTO)) take the liability for safe conduct of transport of goods by various modes of transport from the place of receipt of goods to the place of delivery. In most respects it has the characteristics of a Bill of Lading. It is a document evidencing receipt of goods and not shipment on board. It is also a negotiable document and issued in sets. MTD is a safe document than a Through Bill of Lading (which serves the same practical purpose) in the sense, that it has the guarantee of M.T.O. for the safe conduct of goods right through.