Cardiff University - Cardiff Business School

MSc in Marine Policy 2014/2015

BST331 International Trade and Sea Carriage Law
Professor: Dr. Rawindaran Nair
Student: Ioannis Mavrokefalos 1473023

Coursework

“Explain using case law, the key functions of the bill of lading with reference to
its role in international transport and trade by sea. You should also in your
answer, explain the law with regard to the extent that this document of sea
carriage differs from other documents such as the seaway bill and ship's delivery
order”.
Introduction

During the transportation of goods by sea, every cargo must be accompanied by

shipping documents that provide for its qualitative and quantitative evidence. Such records are
the Bill of Lading, the Delivery Order and the Waybill. The depiction of these three types of
records and their main functions is the purpose of this essay.
Nevertheless, due to its inclusive character, the Bill of Lading is the most important
out of the three aforementioned documents. In the analysis to follow there will be an attempt
to clarify the key functions of the Bill of Lading with reference to its role in international
transport and trade by sea as also an effort to combine the case law with the specific Articles
and Paragraphs of the Carriage of Goods by Sea Acts which are the main Conventions that
determine the unique and certain Rules of the Bill of Lading as amended by the Protocol
signed at Brussels on 23rd February 1968 and by the Protocol signed at Brussels on 21st
December 1979 (Carriage of Goods by Sea Act 1971/92).
The Bill of Lading is crucial for both parties involved in a cargo carriage. The buyer
who is the non-privy party of the carriage of goods by sea, needs a reassurance that his order
will be delivered in apparent good order and condition. As for the shipper and the carrier, the
privy parties of the carriage, the Bill of Lading is of vital importance for their economic and
commercial activity, as without it they cannot act and have a profit (The Stettin 1889).
The key functions of the Bill of Lading with reference to its role in International
Transport and Trade by Sea

First of all, its structure includes three functions which accompany the document,
namely, the receipt, the evidence of the contract of carriage and the document of title.
Secondly, it is handed from the carrier to the shipper (Baumwoll v Furness 1893, The Starsin
2001, The Rewia 1991) but as it is mentioned in the Article III par 3 of COGSA (Indira Carr
and Miriam Goldby 2013), the bill can be signed by the carrier’s legal representatives who are
eligible to sign in his place (The Atlas 1996, The Mata 1998). Furthermore, the bill can be
expounded in two types, which are the “order bill” and the “straight bill”. The sort of bill
depends on what is loaded on the vessel in order to be transferred and the final consignee of
the cargo (Todd 1988). The number of copies can vary but as a rule, two or more original
copies are created on shipper’s demand (Schmitthoff 2012).
‘The meaning of the term Bill of Lading would be defined as the guaranty record
which includes data on the load's quantity but also a depiction of it and its condition when
loaded on the vessel. The Bill of Lading is a security which comprises determining
entitlement characterized as to type, size and capacity’ (Mataragkas 1960).

The function of the Bill of Lading as a receipt

According to the previous definition and as indicated in the Article III par 4 of
COGSA the bill shall be a prima facie evidence of the receipt by the carrier of the goods
which is the most significant characteristic of the bill (Indira Carr and Miriam Goldby 2013),
as there is no chance for the other parties of the transfer to check the real loading of the goods
(Grant v Norway 1851), as well as to inspect their condition and check if they conform with
the report and the manner in which they are loaded on the ship. The carrier is liable for his
servants’ and agents’ fault statements when they sign in behalf of him (The Nea Tyhi 1982).
As far as the quantity of the products is concerned and as defined by the HVR (Hague
Visby Rules), if the freight delivered to the buyer is not as agreed in the contract, then the
latter can claim against the seller. It is the carrier’s responsibility to write a "report" about the
condition and quantity (Art III par 3 HVR) and in compliance with the data provided by the
shipper (Art III par 5) he must issue a bill of lading called ‘clean bill’ that the cargo is in
apparent good order and condition. On the contrary, if the carrier finds out that there is any
difference concerning the quantity and the quality of the cargo he must issue a ‘claused bill’
providing precise comments.
 Finally, the Article IV par 2 of the COGSA/71 gives exact details on whether and
when the carrier is responsible for any damage or loss caused to the cargo without his
liability. Unlike COGSA/71 and complementary to it, there was created the COGSA/92 which
gives the consignee the right to claim against the carrier if the cargo is faulty.

The function of the Bill of Lading as evidence of the contract of carriage

It is a fact that that Bill of Lading cannot be characterized as a contract because of the
conditions written on the rear page of it, however these conditions comprise simple proof of it
(Wilson 2011, Crooks v Allen 1879). As it is furthermore mentioned, the issue of the Bill of
Lading does not so much lead in the improvement of the contract which reflects the likelihood
of oral guarantees between the counterparties before the creation of the contract (Devlin J in
Pyrene v Scindia 1954). This was observed in a case (The Ardennes 1951) where it was
agreed that the carrier's oral guarantee was of more prominent vitality than the contract's
written terms (Debattista 1998, Girvin 2011).
On the other hand, as was held by Lord Esher in another case (Leduc v Ward 1888)
and while the s.1 of the Bill of Lading (Act of 1855) was in the stage of construction, it was
clarified that the bill consists a proof of the terms of the agreement of carriage even if there is
an oral guarantee (Wilson 2011). The right of renouncing the agreement, if there is a basic
infringement of it, is left to the consignee or the third party to whom the Bill of Ladingwas
given in good faith (Debattista 1998), notwithstanding the amended arrangements between the
carrier and the shipper (Hain v Tate & Lyle Ltd 1936).

The function of the Bill of Lading as a document of title

‘The Bill of Lading consists a negotiable document of title under common law’
(Debattista 1998) or ‘The bill of lading has the faculty of a negotiable record of title and
constitutes an image of the products themselves’ (Schmitthoff 2012). In addition to the
previous statements and because of the fact that the transit of the cargo by sea is a time-
consuming process, the cargo owners are sometimes obliged to buy and sell part of the cargo
during the vessel’s trip. Thus, the need of purchasing and selling part of the load while it was
transferred arose, and the right of trading cargo while being carried first appeared in a case
(Lickbarrow v Mason 1794). The previous case was based on the institutional framework was
created by Lord Hatherley in another case (Barber v Meyerstein 1870) where was established
the bill owner's legitimate proprietorship of the cargo.
Difference between the Bill of Lading and other Sea carriage documents

After having examined the key functions of Bill of Lading we may now proceed in
clarifying the main differences between the last and the other two sea carriage documents
examined in this essay which constitute substantially sub-indents of it (i.e. Seaway Bill,
Ship’s Delivery Order).

Bill of Lading vs Ship’s Delivery Order

The Ship’s Delivery Order is that type of delivery orders which serves best the
interests of the buyer. The definition of this document contains an undertaking by the
shipowner to transfer a certain quantity of cargo to a certain consignee. As defined in Article I
p 4 of COGSA 92, it is a document dissimilar with the Bill of Lading and the sea Waybill.
More specifically, the first difference is described in Bill of Lading Act of 1885 where
it is clearly stated that a Ship’s Delivery Order is not a Bill of Lading, as the person
recognized as the cargo holder could not base his right to delivery on the contract of carriage
between the shipper and the carrier. This rendered the buyer incapable to collect his cargo. As
a response came the case (Laurie and Morewodd v John Dudin and Sons 1926), where the law
recognized the consignee’s right to delivery, as the person identified in the paper had a right
to delivery on the acknowledgement of him by the carrier.
A second difference is that the Bill of Lading reaching the main consignee is only one,
while the Ship’s Delivery Orders’ number may vary depending on the number of parcels of
cargo. The shipper sends Ship’s Delivery Orders signed on behalf of the carrier to the
endorsees of the parcels. So, this difference is better explained as difference between the
numbers of documents issued (Todd 1987). If the shipowner has a land-based agent, a Bill of
Lading can be exchanged for as many Delivery Orders as needed (Cremer v General Carriers
S.A. [Dona Mari] 1974). In this case, Mr Justice Kerr did not accept the claim of the Dona
Mari’s owners finding as a fact that the Bill of Lading had been “claused” as had the Mate’s
Receipts. The first consignee could possibly have cooperated with the shipper and paid only a
lower price and would not have presented the papers to the second consignee, at all.
Moreover, each Delivery Order covers part of the cargo, while the Bill of Lading addresses to
the whole cargo. Although they are not technical documents, Ship’s Delivery Orders share
many of the features of the Bill of Lading and can be stipulated in its place.
Furthermore, the Ship’s Delivery Order is not, as appreciated, like a Bill of Lading,
since it does not constitute a “negotiable” instrument and so it does not give the buyer the
opportunity to claim against the ship-owner in cases of any destruction or loss of the cargo
(Kennedy 1959).
Finally, the Bill of Lading according to common law is considered “transferable” as a
possession with no attornment, while the Ship’s Delivery Order is not (Carven 2011).

Bill of Lading vs Sea Waybill

The Bill of Lading is a document similar to the Sea Waybill used in carriage of goods
by sea and their main difference is that the first is a “negotiable” instrument, in contrast to the
second one. This means that the holder of the Bill of Lading can transfer the title to anyone he
wishes. That does not happen with a Waybill, which must be sent merely to the party who has
been identified on the document as the consignee (Debattista 1998).
As a financial instrument, the Bill of Lading can be used as a guarantee, to obtain a
loan or credit line from a bank, since the title can be handed to them, whereas banks do not
accept Waybills as a guarantee. Hence, it performs only two of the three functions of the bill
of lading as it cannot constitute a “Document of Title”.
Another difference is that while the Bill of Lading transfers the title of the cargo, the
Sea Waybill is just an evidence that the buyer has contracted with the seller to transfer the
cargo to an certain port. A Waybill usually contains a list of the cargo’s content, the cargo’s
condition and buyer’s name.
At this point it would be useful to cite a paradigm where the Bill of Lading does not
reach the carrier’s hands. In this case the sea Waybill is used instead, as evidence that the
captain has loaded the appropriate cargo and has been contracted to deliver it to a certain
buyer. The captain will accept the Sea Waybill “in lieu” of the Bill of Lading and the goods
will be transferred to the buyer who has been identified on the contract.
Finally, a vitally important difference, is that Sea Waybills must inevitably have the
consignee’s name who will obtain the cargo. The purpose of this rule is that the existence of a
sea waybill facilitates the process of unloading when the vessel is at the destination port. As
the majority of times the official document of the Bill of Lading reaches the captain with
delay, the Sea Waybill permits the direct discharge of the cargo and reduces the possibilities
of damage when the last is vulnerable.
Bibliography/References

Carven (2011). Carven on Bills of Lading, 3rd edn. , Sweet & Maxwell.
Debattista, C. (1998). The Sale of Goods Carried by Sea. London, Edinburgh, Dublin,
Butterworths.
Girvin, S. (2011). Carriage of Goods by Sea. Oxford, Oxford University Press.
Kennedy (1959). CIF Contracts, 3rd edn. , London: Steven and Sons Limited.
Todd, P. (1987). Cases and Materials on Bills of Lading. Oxford, London, Edinburgh, BSP
Professional Books.
Wilson, J. F. (2010). Carriage of Goods by Sea. London, Pearson Education Ltd.

Case List used in the Assignment

Atlas, The [1996] 1 Lloyd's Rep. 642

Barber v Meyerstein [1870] L.R. 4 H.L. 317
Baumwoll v Furness [1893] AC 8
Cremer v General Carriers S.A. (Dona Mari) [1974]
Crooks v Allen [1879] 5 QB 38
Grant v Norway [1851] 10 C.B. 665; 138 E.R. 263
Hain v Tate & Lyle Ltd [1936] 2 All E.R. 597 H.L
Leduc v Ward [1888] 20 Q.B.D. 475
Lickbarrow v Mason 2 T. R. 75
Mata K, The [1998] 2 Lloyd's Rep. 614
Nea Tyhi, The [1982] 1 LLR 607
Pyrene Co. Ltd. v. Scindia Navigation Co. Ltd. QUEEN'S BENCH DIVISION [1954] 2 Q.B.
198.
Rewia, The [1991] 2 Lloyd’s Rep. 325
Starsin, The [2001] 1 Lloyd’s Rep. 437
Stettin, The [1889] 14 PD 142