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Principles of Commercial Law

Principles of Commercial Law

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Published by: khayalfaroosh on Sep 03, 2011
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The bill of lading has three functions: to act as evidence of the contract of
carriage; to act as a receipt for the goods; and as a document of title.

Evidence of contract of carriage

The bill of lading is evidence of the contract of carriage but is not the
contract itself. The reason for this is that the contract will have been formed
before the bill of lading is issued. In practice, however, its terms will often
constitute the contractual terms, either because the shipper will be regarded
as knowing the terms by virtue of a course of dealing, or as agreeing to the
goods being carried on the terms of the bill of lading whatever they are.
However, where the bill of lading is transferred by indorsement to a third
party, it is clear that the contractual relationship between the third party and
the shipowner is governed by the bill of lading (Leduc v Ward(1888)).

Receipt for goods

Since the bill is (typically) signed on behalf of the owner, it is evidence
against him that goods were shipped as described. Thus, if the goods do not
arrive, or arrive damaged, the inference will be that they were lost or
damaged on the voyage.

Document of title

Atransfer of the bill of lading acts as a transfer of rights in the goods
(Lickbarrow v Mason(1784)). What rights are transferred? Strictly speaking, it
is not necessary to transfer the bill of lading in order to transfer ownership.
In practice, however, the transferee would have difficulty in collecting the
goods off the ship without a bill of lading with appropriate indorsements.
What the bill of lading transfers, therefore, is the right to possession.
Possession is usually being transferred as part of the act of transferring
ownership but not necessarily so.

Principles of Commercial Law


The bill of lading as a transferable contract

The transfer of a bill of lading may transfer the goods, but it does not, at
common law, transfer the contract of carriage. Hence, the Bill of Lading Act
1855 provided that the transferee of the bill of lading could sue and be sued
on the contract contained therein as if it had been made with himself.
However, the wording of s 1 of the 1855 Act, because it only transferred the
contractual rights where the property in the goods passed by consignment
or indorsement, and so did not apply where it passed before consignment or
indorsement (for example, on shipment) or after (as where there is a bulk
cargo not separated until arrival). Most of these difficulties have been
removed by the Carriage of Goods by Sea Act 1992.

Other documents used for sea carriage

Other documents which are used for sea carriage include the following:

(a)short form bills of lading;

(b)mate’s receipts;

(c)delivery orders;

(d)through and combined transport bills of lading;

(e)non-negotiable sea waybills.



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