THE BILL OF LADING

A bill of lading is a legal document issued by a carrier to a shipper that details

the type, quantity, and destination of the goods being carried. A bill of lading
also serves as a shipment receipt when the carrier delivers the goods at a
predetermined destination. This document must accompany the shipped goods,
no matter the form of transportation, and must be signed by an authorized
representative from the carrier, shipper, and receiver. So a bill is a document
issued by or on behalf of the carrier acknowledging that it has received goods
from a shipper. It is also a receipt that the carrier has actually delivered the
shipment to the stipulated destination. A bill is also a direction to deliver
the goods to a named person.

Article 1 (7) of the Hamburg Rules of 1978, which are a set of rules governing
the international shipment of goods define a bill of lading as’ a document
which evidences a contract of carriage by sea and the taking over or loading
of the goods by the carrier, and by which the carrier undertakes to deliver the
goods against surrender of the document. A provision in the document that
the goods are to be delivered to the order of a named person, or to order, or to
bearer, constitutes such an undertaking.’

SOME TYPES OF BILLS OF LADING:

1. SHIPPED BILL OF LADING: Also known as the shipped on board bill

of lading or on board bill of lading. It is the type of bill which certifies
that the specified goods have been received in apparent good order and
condition from the named shipper (consignor), and have been taken
aboard the named ship (vessel) on the stated date. Banks funding a
shipment require this type of bill and not a received for shipment bill of
lading. This is because it presents a certainty that the goods are already in
transit.
2. RECEIVED FOR SHIPMENT BILL OF LADING: This bill of lading
serves only as a receipt for goods accepted for shipment on a named ship
(vessel), and does not certify their placement aboard the vessel. It is used
where the goods arrive at the port of departure before the vessel does. It is
not considered a complete bill of lading and is replaced by a shipped on
board bill of lading when the goods do go onboard.
3. STRAIGHT BILL OF LADING: This is a non-negotiable/ non-
transferable bill of lading used where the goods have been paid for or do
not require payment (such as donations or gifts). Under this bill of lading,
the shipping company will deliver the shipment to its consignee on
presentation of an identification. There is no named party on the bill. It is
also called Consignment Bill of lading.
 4. CLEAN BILL OF LADING: This is a bill of lading that is free from any
adverse remarks or notations (called 'clauses'), made by the shipping
company about the condition, packaging, or quantity of the goods being
shipped.
5. BEARER BILL OF LADING: The bearer bill of lading is the one in
which the bearer of the bill of lading is the owner of the cargo and there is
no consignee named in the bill of lading.
6. TO ORDER BILL OF LADING: Bill of lading that is written (drawn) 'To
Order' of the consignee and is, therefore, a negotiable-instrument of title.
Ownership of goods covered under it can be transferred by one party to
another by signature (endorsement) and delivery of the bill. Generally,
goods which have not been paid-for in advance (goods sent under an
open-account or a letter-of-credit) are shipped under 'To Order' Bill of
lading.' The consignor must stamp and sign (endorse) this bill so that its
title can be transferred.

The principal purpose of the bill of lading is to enable the owner of

the goods, to which it relates, to dispose of them rapidly though the
goods are not in his hands but are in the custody of a carrier. For
instance, where goods are on the high seas in transit from London to
Mombasa and the bill of lading has been sent to the buyer in Uganda; the
buyer on receiving the bill has become the owner of the goods. This bill
then enables the buyer to pledge the goods as collateral to his bank in
Uganda or he can resell them to another buyer, say, in Kenya.

The character of the bill of lading as a document of title, i.e. a document

which can be owned and therefore the ownership of it could be sold or
otherwise transferred to someone else, was first recognized by the courts
in Lickbarrow v. Mason1. The Court of the Kings Bench noted from the
legal point of view that a bill of lading is:
a. A formal receipt by the ship owner acknowledging that goods alleged
to be of the stated species, quality and condition are shipped to a
stated destination in a certain ship, or at least are received in the
custody of the ship owner for the purpose of shipment;
b. A memorandum of the carriage, repeating in detail the terms of the
contract which was in fact concluded prior to the signing of the bill;
and
c. A document of title to the goods enabling the consignee to dispose of
the goods by endorsement and delivery of the bill of lading.

1
(1794) 5 TR 683
THE INTERNATIONAL RULES RELATING TO BILLS OF LADING

On the initiative of the International Law Association, The Hague Rules 1924
relating to bills of lading were formulated and diplomatic conferences held in
Brussels recommended their international adoption. The Hague rules were
revised by the Brussels Protocol of 1968. The revised rules were known as the
Hague-Visby Rules. The Hague-Visby Rules were fundamentally revised by the
United Nations Convention on the Carriage of Goods by Sea 1978 which
accepted the so-called Hamburg Rules. They were prepared by UNCITRAL and
adopted by a UN Conference at Hamburg on March 30, 1978. They have not
been ratified or acceded to by some countries. The major alteration proposed by
the Hamburg Rules are:

1. The Hamburg Rules apply to all contracts for the carriage of goods by sea
between two different states. Article 2(1) provides that :
1. The provisions of this Convention are applicable to all contracts
of carriage by sea between two different States, if:
(a) the port of loading as provided for in the contract of carriage
by sea is located in a Contracting State, or
(b) the port of discharge as provided for in the contract of carriage
by sea is located in a Contracting State, or
(c) one of the optional ports of discharge provided for in the
contract of carriage by sea is the actual port of discharge and such
port is located in a Contracting State, or
(d) the bill of lading or other document evidencing the contract of
carriage by sea is issued in a Contracting State, or
(e) the bill of lading or other document evidencing the contract of
carriage by sea provides that the provisions of this Convention or
the legislation of any State giving effect to them are to govern the
contract.

2. The Hamburg Rules do not apply to charter parties even if the carriage is not
carried out under a bill of lading. Article 2 (3) reads thus:

‘3. The provisions of this Convention are not applicable to charter-

parties. However, where a bill of lading is issued pursuant to a charter-party,
the provisions of the Convention apply to such a bill of lading if it governs the
relation between the carrier and the holder of the bill of lading, not being the
charterer.’
 2. The period of responsibility of the carrier is extended so as to cover the
whole period during which the goods are in his charge. Article 4 of the
Rules provide thus:

‘1. The responsibility of the carrier for the goods under this Convention covers
the period during which the carrier is in charge of the goods at the port of
loading, during the carriage and at the port of discharge.
2. For the purpose of paragraph 1 of this article, the carrier is deemed to be in
charge of the goods
(a) from the time he has taken over the goods from:
(i) the shipper, or a person acting on his behalf; or 
(ii) an authority or other third party to whom, pursuant to law or regulations
applicable at the port of loading, the goods must be handed over for shipment; 
(b) until the time he has delivered the goods:
(i) by handing over the goods to the consignee; or
(ii) in cases where the consignee does not receive the goods from the carrier, by
placing them at the disposal of the consignee in accordance with the contract or
with the law or with the usage of the particular trade, applicable at the port of
discharge; or
(iii) by handing over the goods to an authority or other third party to whom,
pursuant to law or regulations applicable at the port of discharge, the goods
must be handed over.

3. In paragraphs 1 and 2 of this article, reference to the carrier or to the

consignee means, in addition to the carrier or the consignee, the servants
or agents, respectively of the carrier or the consignee.’

4. The exclusion of the carrier’s liability in case of error in navigation is

abolished;

5. A distinction is also drawn between the carrier and the actual carrier under
article 1. Article 1(1) defines a carrier as ‘any person by whom or in whose
name a contract of carriage of goods by sea has been concluded with a
shipper.’

2. "Actual carrier" means any person to whom the performance of the

carriage of the goods, or of part of the carriage, has been entrusted by the
carrier, and includes any other person to whom such performance has been
entrusted. That being the case, article 10 of the Hamburg Rules clarifies the
liability of the carrier and the actual carrier. It provides:

‘1. Where the performance of the carriage or part thereof has been
entrusted to an actual carrier, whether or not in pursuance of a liberty
 under the contract of carriage by sea to do so, the carrier nevertheless
remains responsible for the entire carriage according to the provisions of
this Convention. The carrier is responsible, in relation to the carriage
performed by the actual carrier, for the acts and omissions of the actual
carrier and of his servants and agents acting within the scope of their
employment.

2. All the provisions of this Convention governing the responsibility of

the carrier also apply to the responsibility of the actual carrier for the
carriage performed by him. The provisions of paragraphs 2 and 3 of
article 7 and of paragraph 2 of article 8 apply if an action is brought
against a servant or agent of the actual carrier.

3. Any special agreement under which the carrier assumes obligations

not imposed by this Convention or waives rights conferred by this
Convention affects the actual carrier only if agreed to by him expressly
and in writing. Whether or not the actual carrier has so agreed, the
carrier nevertheless remains bound by the obligations or waivers
resulting from such special agreement.

4. Where and to the extent that both the carrier and the actual carrier are
liable, their liability is joint and several.

5. The aggregate of the amounts recoverable from the carrier, the actual
carrier and their servants and agents shall not exceed the limits of
liability provided for in this Convention.

6. Nothing in this article shall prejudice any right of recourse as between

the carrier and the actual carrier.

HAMBURG RULES VERSUS THE HAGUE VISBY RULES:

The Hague Visby Rules do not lay down a basis of liability for the carrier
but rather rely on the requirement of seaworthiness [at the beginning of the
voyage] and a number of different and overlapping exceptions. The Hague
Visby Rules were not designed to apply to modern methods of transport
and the rules are weighed too much in favour of the carrier.

The Hamburg Rules on the other hand distinguish the ‘Carrier’ and the
‘Actual Carrier’. The carrier is a party who makes a contract of carriage with
the shipper and the actual carrier is any party entrusted with the performance
of any part or the entire contract of carriage.
 The Hague Visby Rules apply only to export voyages from contracting
state’s ports or bills issued in contracting States. However under the
Hamburg rules, the parties can apply both inward and outward voyages. It
can also be described as an improvement on the Hague Visby Rules.

The Hamburg Rules introduced a unified system of liability. This means

liability based on fault. The carrier is responsible for his own fault or his
servant’s or agents fault which causes loss or damage to the goods.2 Once the
goods are damaged while they were in charge of the carrier, the carrier
should be held liable. But if he proves that he took all reasonable measures
to prevent the damage or loss, he would not be liable any more even if the
loss or damage were as a result of the fault of his servants or agents. On the
other hand, the Hague-Visby Rules introduced a list of exceptions of liability
of the carrier.

The carrier under the Hamburg Rules must provide a seaworthy ship the
whole period of the carriage. So he must take all necessary measures to
prevent the damage or loss and its consequences. However under the Hague
Visby Rules, this duty of the carrier is limited. His duty only to exercise due
diligence, but at the same time he is required to look after the goods
carefully through-out the carriage.

The bill of lading, which represents the contract of carriage, is usually issued
after the goods have been loaded onto the vessel. The bill of lading is
important in three aspects namely:

a. It represents or evidences the contract of carriage;

b. It is a receipt for the goods/ or acknowledgment for the goods;
c. It is a document of title to the goods.

VALIDITY OF THE BILL OF LADING:

A bill of lading is as valid as the source it comes from is. While a bill of lading
is a statement of the commodity being shipped, its quantity, volume, and other
particulars which is or should be present during shipment, it is in no way a
guarantee that mistakes cannot be made during loading nor does it absolve
parties for any shortages, or damages that may happen during loading.

Where a ship owner issues a shipped bill, he acknowledges that the goods are
loaded on board the ship. Where he issues a received for shipment bill, he
confirms only that the goods are delivered into his custody, in this case the
2
Hamburg Rules art. IV [1]
goods must be stored in a ship or warehouse under his control. The received bill
is thus less valuable than the shipped bill because it does not confirm that the
shipment has already begun.

In The Marlborough Hill3it was decided that a received bill and a shipped bill
were in principle no different. In Ishaq v Allied Bank International 4 the Privy
Council acknowledged a general trade practice of recognizing received bills as
documents of title. The Court observed that under Letter of Credit specifically
calls for a shipped bill or a received bill is inconsistent with some other
provision of the credit itself. In some areas where the bill of lading remains
paramount, received bill is usually a much less effective document than a
document than a shipped bill. The reasons for this include:

a. A received bill is no guarantee of shipment;

b. It may cause a gap in the continuous documentary cover to which the
CIF buyer is entitled. In Yello v S.M.Machado & Co Ltd.5 It was
held that the tender of ‘received’ bill ( which were not indorsed with
the date of shipment) was insufficient;
c. It does not identify the carrying ship;
d. It may present difficulties to a bank in deciding whether it is proper
document under a commercial credit.

ISSUE AND CONTENTS OF A BILL OF LADING:

Article 14 requires the carrier or the actual carrier who takes the goods in his
charge, to on demand of the shipper, issue to the shipper a bill of lading. The
bill of lading may be signed by the carrier or a person having authority from the
carrier.6 A bill of lading signed by the master of the ship carrying the goods is
deemed to have been signed on behalf of the carrier. The signature on the bill of
lading may be in handwriting, printed in facsimile, perforated, stamped, in
symbols, or made by any other mechanical or electronic means, if not
inconsistent with the law of the country where the bill of lading is issued.7

Contents of bill of lading: Article 15 provides-

1. The bill of lading must include, inter alia, the following particulars:

3
(1921) 1AC 444
4
(1981) 1 LIR 92
5
(1952) 1 LIR 183
6
Article 14 (2)
7
Article 14(3)
(a) the general nature of the goods, the leading marks necessary for
identification of the goods, an express statement, if applicable, as to the
dangerous character of the goods, the number of packages or pieces, and the
weight of the goods or their quantity otherwise expressed, all such particulars
as furnished by the shipper;

(b) the apparent condition of the goods;

(c) the name and principal place of business of the carrier;
(d) the name of the shipper;
(e) the consignee if named by the shipper;
(f) the port of loading under the contract of carriage by sea and the date on
which the goods were taken over by the carrier at the port of loading;
(g) the port of discharge under the contract of carriage by sea;
(h) the number of originals of the bill of lading, if more than one;
(i) the place of issuance of the bill of lading;
(j) the signature of the carrier or a person acting on his behalf;
(k) the freight to the extent payable by the consignee or other indication that
freight is payable by him;
(l) the statement referred to in paragraph 3 of article 23;
(m) the statement, if applicable, that the goods shall or may be carried on deck;
(n) the date or the period of delivery of the goods at the port of discharge if
expressly agreed upon between the parties; and
(o) any increased limit or limits of liability where agreed in accordance with
paragraph 4 of article 6.

2. After the goods have been loaded on board, if the shipper so demands, the
carrier must issue to the shipper a "shipped" bill of lading which, in addition to
the particulars required under paragraph 1 of this article, must state that the
goods are on board a named ship or ships, and the date or dates of loading. If
the carrier has previously issued to the shipper a bill of lading or other
document of title with respect to any of such goods, on request of the carrier,
the shipper must surrender such document in exchange for a "shipped" bill of
lading. The carrier may amend any previously issued document in order to meet
the shipper's demand for a "shipped" bill of lading if, as amended, such
document includes all the information required to be contained in a "shipped"
bill of lading.

3. The absence in the bill of lading of one or more particulars referred to in this
article does not affect the legal character of the document as a bill of lading
provided that it nevertheless meets the requirements set out in paragraph 7 of
article 1.

SPECIAL RULES ON DANGEROUS GOODS:

The rules requires the shipper to mark or label in a suitable manner dangerous
goods as dangerous.

2. Where the shipper hands over dangerous goods to the carrier or an actual
carrier, as the case may be, the shipper must inform him of the dangerous
character of the goods and, if necessary, of the precautions to be taken. If
the shipper fails to do so and such carrier or actual carrier does not otherwise
have knowledge of their dangerous character:

(a) the shipper is liable to the carrier and any actual carrier for the loss resulting
from the shipment of such goods, and

(b) the goods may at any time be unloaded, destroyed or rendered innocuous, as
the circumstances may require, without payment of compensation.

3. The provisions of paragraph 2 of this article may not be invoked by any

person if during the carriage he has taken the goods in his charge with
knowledge of their dangerous character.

4. If, in cases where the provisions of paragraph 2, subparagraph (b), of this

article do not apply or may not be invoked, dangerous goods become an actual
danger to life or property, they may be unloaded, destroyed or rendered
innocuous, as the circumstances may require, without payment of compensation
except where there is an obligation to contribute in general average or where the
carrier is liable in accordance with the provisions of article 5.

In Venturis v The Attorney General of Tanganyika8 the respondent sued the

appellant for the value of government stores which, whilst being carried by the
M.S. VERA, were lost through the negligent navigation of the vessel by the
appellant as master. The trial judge held that the appellant had been negligent
and that although he was part owner of the vessel, he was not entitled to the
immunity conferred by r.2 (a) of Art. IV of the Schedule to the Carriage of
Goods by Sea Ordinance. On appeal, it was conceded that the appellant was
negligent and the only point for decision was whether the appellant was as part
owner, a party to the bill of lading which had been issued by a company in its
own name. HELD:

1. The appellant having signed the bill of lading simply as ‘captain’

had signed as agent;
2. Where there is a charter of which the shipper is ignorant, the
shipper is entitled to regard the owner as the persons contracting to
carry the goods

8
[1959] 1 EA 289 (CAD)
 3. The terms of the bill of lading which distinguished between ‘the
company’ and ‘ the owners were consistent with the company
being managers or agents and, taken in conjunction with the
uncontroverted evidence that there were three owners of whom the
company was one and the appellant another, and the signature on
the bill by the appellant as Captain, without more led to a prima
facie inference that the appellant was signing for the owners.
4. In the circumstances, the appellant as part owner was a party to the
contract of carriage and entitled to the protection of rule 2 (a) of
article IV of the schedule to the carriage of Goods by Sea
Ordinance. The Appeal was allowed.

THE BILL AS A DOCUMENT OF TITLE:

A document is a piece of written, printed, or electronic matter that provides

information or evidence or serves an official record. Title is a right or claim to
the ownership of property or goods. Every document which is a link in the chain
of title is a document of title. The bill of lading represents the goods and is
recognized as such by law. Thus a transfer of the bill of lading to a party will
vest in that party the ownership or possession of the goods to which the
documents relates, provided that this transfer of rights was intended by the
parties. Some documents of title are so by virtue of the common law’s
recognition of merchantile usage while others have been made so by statute.
The ability to transfer property rights in goods by the transfer of a
document is the keystone of international trade practice.

In E Clemens Horst Co. v Biddell Bros9 the buyer under a CIF contract was
offered a bill of lading but refused to pay until the goods themselves were
delivered. It was held that since possession of the bill of lading announced in
law to equate to the possession of the goods, the seller was entitled to perform
his part of the contract by handing over the document.

There is no common law definition of ‘document of title, but its essence would
seem to be that, by merchantile custom, dealing in the documents, for instance,
their sale or pledge are regarded as dealing in the goods which those documents
symbolically represent. In the absence of a provision in the contract, the CIF
buyer is entitled to a bill of lading which enables him to deal freely with the
goods, in other words, one which possesses the common law quality of
transferability. In Soproma v Marine & Animal By-Product Corporation 10 the
rejection of a straight consigned bill (i.e. one specifying delivery to a named
party with no provision for transferability) was held to be justified. The Court

9
(1912) AC 18
10
(1966) 1 LIR 367
further noted that by the shipping documents, the buyer to whom property
passes under the bill of lading is given contractual rights against the ship owner,
which rights he can by endorsement transfer to a subsequent purchaser.

NOTE: In other to make a bill of lading transferable/ negotiable, some words

such as ‘order or assigns’ ought to be written in them. See Henderson & Co v.
The Comptior D’Escompte De Paris.11

Under the straight consigned bill of lading, delivery must be made only to the
party entitled under the bill. In Sze Hai Tong Bank v Rambler Cycle Co Ltd 12
it was held that the ship owner ‘who delivers without the production of the
bill of lading does so at his peril.’ The Privy Council noted that the object is
the delivery of the goods against the bill of lading. The bill of lading holder was
therefore entitled to damages for mis-delivery.

The significance of the bill of lading as a document of title is well described by

Bowen J. in Saunders v Maclean:13

A cargo at sea while in the hands of the carrier is necessarily incapable

of physical delivery. During this period of transit and voyage, the bill of
lading by law merchant is universally recognized as its symbol and the
endorsement and delivery of bill of lading operates as a symbolic
delivery of the bill of lading, whenever it is the intention of the parties
that property should pass… And for the purpose of passing such
property in the goods and completing the title of the indorsee to full
possession thereof, the bill of lading until complete delivery of the
cargo has been made on shore to someone rightfully claiming under it,
remains in force as a symbol and carries with it not only the full
ownership of goods, but also all rights created by the contract between
the shipper and the ship owner.

NEGOTIABLE AND NON-NEGOTIABLE BILLS

A negotiable bill of lading is the bill which instructs the carrier to deliver goods
to anyone in possession of the original endorsed negotiable bill, which itself
represents title to and control of the goods. The carrier will not release the
goods unless at least one original copy of the bill of lading is presented. A non-
negotiable bill of lading sets out a specific consignee to whom the goods are to
be shipped, and does not itself represent ownership of the goods and as such is
not a document of title. In fact a non-negotiable bill is more of a sea way bill

11
(1873) LR 5 PC 253
12
(1959) AC 576
13
(1883) 11 QBD 327
and not a bill of lading in the traditional sense. Goods are usually released upon
presentment or confirmation of identity.

Bills of lading, like bills of exchange may be made out to bearer, or to a

particular person or his order. If made out to a bearer, they are
transferred by delivery. If made out to order, they are transferred by
endorsement and delivery of the bills. Transfer of the bill of lading passes
such rights in the goods as the parties wish it to pass. However, whereas a
bill of exchange is primarily negotiable unless its negotiability is expressly
excluded, a bill of lading is only negotiable if made negotiable [by adding
the word ‘order’ in the left hand corner of the bill].

To make a bill of lading negotiable in a modern bill of lading, there is a box on

the left hand corner of the bill where the shipper fills if he wishes to get a
negotiable bill by inserting the word ‘order’ and adding as notify party, the
name of the consignee. Where a shipper wishes to obtain a non-negotiable bill
of lading, he does not insert the word ‘order’ in this box but rather inserts only
the name of the consignee.

Copies of the bill could be issued to dispose of the cargo away from the buyer
either before or after he had accepted and paid against the original. It is usual
practice however to issue the bill of lading in several copies. In Glynn Mills &
Co. v East & West India Dock Co14 it was held that a carrier who delivered the
goods to someone in possession of a copy of a bill will not be sued by the buyer
who held the original and whose goods they are.

BILL OF LADING AS EVIDENCE OF CONTRACT OF CARRIAGE:

The carrier or his agent will issue the bill of lading after the goods have been
placed on board. It will contain contractual terms but will not necessarily be a
contract of carriage; which in normal circumstances will have been concluded
between shipper and carrier before the bill of lading is issued. The terms printed
on the bill of lading may well have been incorporated into the carriage by use of
some such phrase as “ subject to the exceptions of our bills of lading” or have
been implied into the contract by the parties previous dealing on the bill of
lading. The bill of lading, at least as between the carrier and the original
shipper, amounts only to evidence of the contract of carriage.

In Ardennes SS (Cargo Owners) v Andennes (Owners) 15 Oranges were shipped

in a Spanish Port on the understanding that the ship would sail directly to
London. The Ship called at Antwerp and the consequent delay in arrival at
London caused loss to the cargo owner. The bill of lading contained a term
14
(1882) 7 App Cases 591
15
(1951) 1 KB 55
which would have permitted the ship to call at Antwerp and the carrier relied on
this term. It was held, however, that the bill of lading was only evidence of the
contract of carriage and that the cargo owner was entitled to prove that the
contract the parties had in fact made contained a term that the voyage would be
diverted.

NOTE: Where shipper charters a vessel, the contract of carriage is in the

charter party. When his goods are loaded on the Chartered ship, he is given a
bill of lading but this bill of lading does not represent his contract of carriage
with the carrier. But where this bill of lading is endorsed to a third party, the bill
so endorsed, represents a contract of carriage between the third party and the
carrier.

NOTE ALSO THAT a bill of lading in its usual form is a receipt for goods
shipped, or to be shipped whether or not on a particular vessel, signed on behalf
of the carrier.

In Leduc v Ward16 the court held that when the terms of contract of carriage are
reduced to writing, in the form of the bill of lading, the parole [oral] evidence
rule applies to prevent introduction of extraneous terms.

BILL OF LADING AS A STATEMENT OF QUANTITY:

Article 16 provides:

1. If the bill of lading contains particulars concerning the general nature,

leading marks, number of packages or pieces, weight or quantity of the
goods which the carrier or other person issuing the bill of lading on his
behalf knows or has reasonable grounds to suspect do not accurately
represent the goods actually taken over or, where a "shipped" bill of
lading is issued, loaded, or if he had no reasonable means of checking
such particulars, the carrier or such other person must insert in the bill
of lading a reservation specifying these inaccuracies, grounds of
suspicion or the absence of reasonable means of checking.

2. If the carrier or other person issuing the bill of lading on his behalf
fails to note on the bill of lading the apparent condition of the goods, he
is deemed to have noted on the bill of lading that the goods were in
apparent good condition.

3. Except for particulars in respect of which and to the extent to which a

reservation permitted under paragraph 1 of this article has been entered:

16
(1880) 20 QBD 475
 (a) the bill of lading is prima facie evidence of the taking over or, where
a "shipped" bill of lading is issued, loading, by the carrier of the goods
as described in the bill of lading; and

(b) proof to the contrary by the carrier is not admissible if the bill of
lading has been transferred to a third party, including a consignee, who
in good faith has acted in reliance on the description of the goods
therein.’

At common law, the carrier need not state any quantity. If the bill of
lading to which the common law applies does not state a quantity without
qualification, it will be merely a prima facie evidence in the hands of the
shipper and the endorsee who will have only such protection.

In Babulai Narshi & Co Ltd v Deutshe Ost- Afrika- Linie 17 a shipper

shipped goods to Mombasa in the defendant’ s ship on a bill of lading
showing the goods to have been shipped in apparent good order and
condition and without any endorsement concerning insufficient packing.
The plaintiff bought the goods after shipment and the bill of lading was
endorsed over to it. The goods were short-landed in Mombasa. The bill
was subject to the Hague rules. On the plaintiff’s suit, the defendant
alleged that the goods were insufficiently packed in cartons. The plaintiff
contended that the bill was a clean bill and that the defendant was
estopped from alleging defective packing.

Held: The bill of lading was a clean bill and the defendant was estopped
from alleging any defect in packing. ( Silver v. Ocean Steamship Co;
Dominion Sugar Co. v Canadian National Steamship(West Indies)

4. Improper packing can only be relied upon on proof that the loss or
damage resulted from improper packing.
Judgement for the plaintiff.

STATEMENT OF CONDITION- ARTICLE 16 (2).

The article provides that ‘If the carrier or other person issuing the bill of
lading on his behalf fails to note on the bill of lading the apparent condition
of the goods, he is deemed to have noted on the bill of lading that the goods
were in apparent good condition’. It is therefore incumbent on the carrier or his
agent or anybody issuing the bill on his behalf to clearly indicate the nature and
condition of the goods received. Where he fails to indicate this on the bill, he is
precluded from denying any defect subsequently found in the goods. In

17
[1974] 1 EA 436 (HCK)
Compania Naviera Vascingada v. Churchill and Sim 18 timber was stained with
oil when shipped but a ‘clean bill’ of lading was nonetheless issued to the
shipper who indorsed it to a third party. The endorsee sued the carrier in respect
of the damage. The carrier was estopped, by the statement in the bill of lading
from denying that the timber was in good condition when loaded and was thus
held liable to the endorsee for the damage.

OTHER DOCUMENTS: ARTICLE 18 provides that where a carrier issues a

document other than a bill of lading to evidence the receipt of the goods to be
carried, such a document is prima facie evidence of the conclusion of the
contract of carriage by sea and the taking over by the carrier of the goods as
therein described. It is therefore not a document of title in most cases.

DELIVERY ORDERS:

A delivery order refers to an order given by an owner of goods to a person in

possession of them (the carrier or warehouseman) directing that person to
deliver the goods to a person named in the order. A CIF contract often provides
that the seller may at his option tender a delivery order in place of a bill of
lading. A delivery order may, by the custom of a particular trade be a document
of title.

In Krohn & Co v Thegra NV 19 it was held that the seller may tender either a
shipped bill of lading or a ship’s delivery order in negotiable and transferable
form.

A delivery order is not a document of title unless proved to be so by reason

of merchantile custom as was the case in Merchant Banking Co of London v
Phoenix Bessemer Steel Co.20

LIMITATION OF ACTION:

Article 20 (1) provides the time limit for instituting actions or submitting to
arbitral proceedings under the Convention to two years. Thus an actions
brought after two years under the convention is time barred. The limitation
period starts on the day on which the carrier has delivered the goods or part of
the goods or in cases where no goods have been delivered, on the last day on
which the goods should have been delivered.21

18
(1904) 1KB 237
19
(1975) 1LIR 146
20
(1877) 5 Ch. D 205
21
Article 20(2) Hamburg Rules.
However, article 20(5) allows an action for indemnity by a person held liable to
be instituted even after the expiration of the limitation period, if it is instituted
within the time allowed by the law of the State where the proceedings are
instituted. However the time allowed shall not be less than 90 days commencing
from the day when the person instituting such action for indemnity has settled
the claim or has been served with process in the action against himself.

JURISDICTION:

Article 21(1) allows a plaintiff, at his option to institute an action in a court

which according to the law of the State where the court is situated, is competent
and within the jurisdiction of which is situated in one of the following:

a. The principal place of business or, in the absence thereof, the habitual
residence of the defendant or;
b. The place where the contract was made, provided that the defendant
has there a place of business, branch or agency through which the
contract was made; or
c. The port of loading or the port of discharge; or
d. Any additional place designated for that purpose in the contract of
carriage by sea.

ARBITRATION:

Under article 22 (1), parties are free to provide by agreement evidenced in

writing that any dispute that may arise relating to carriage of goods under this
convention shall be referred to arbitration. The arbitration proceedings shall at
the option of the claimant, be instituted at one of the following places:

a. A place in a State within whose territory is situated:

(i) the principal place of business of the defendant or, in the
absence thereof, the habitual residence of the defendant; or
(ii) (ii) the place where the contract was made, provided that the
defendant has there a place of business, branch or agency
through which the contract was made; or
(iii) (iii) the port of loading or the port of discharge; or

(b) any place designated for that purpose in the arbitration clause or
agreement.22
22
Article 22 (3)
4. The arbitrator or arbitration tribunal shall apply the rules of this Convention.

5. The provisions of paragraphs 3 and 4 of this article are deemed to be part of

every arbitration clause or agreement, and any term of such clause or agreement
which is inconsistent therewith is null and void.

CONTRACTUAL STIPULATIONS: ARTICLE 23

Contractual terms in any contract of carriage by sea, or bill of lading or any

other document evidencing the contract of carriage must conform to the
stipulations/provisions of the Convention. Where there is an inconsistency or a
derogation from the Convention, that term is void to the extent of the
inconsistency. The nullity does not affect the validity of other provisions of the
contract or document which it forms a part of. A clause assigning benefit of
insurance of goods in favor of the carrier or any similar clause is null and
void.23

THE DATE OF THE BILL OF LADING:

The correct dating of the bill of lading is critical and a matter of great
importance. The correct date of a shipped bill is the date when the goods
are taken on board. The correct date for a ‘received for shipment bill is the
date when the goods are taken into the charge of the carrier.

The date of the bill of lading is material in three legal relationships:

1. In the contract of carriage

2. In the contract of sale
3. In relation to the banks if payment is arranged under a letter of
credit.

IMPORTANCE OF CORRECT DATING AS TO CONTRACT OF

CARRIAGE:

The shipper is entitled to demand that the bill of lading be correctly dated.
Where the master or another agent of the carrier negligently misdates the
bill, the carrier as principal is liable in damages, provided that the shipper
can prove that he has suffered a loss as a result of the misdating, because

23
Read the rest of the article.
 there is an implied obligation that due care should be exercised in the dating
of the bill. See The Saudi Crown24

IMPORTANCE OF CORRECT DATING AS TO CONTRACT OF SALE:

The date of the bill of lading may also be relevant in the contract of sale. In
The Almak25 it was agreed that the purchase price of the goods- gas oil-
should be the price ruling at the date of the bill of lading. The goods were
loaded on June 27 but the bill bore the date of June 22, and the Master
signed it without noticing that it was incorrectly dated. The price was
calculated by reference to June 22 instead of June 27. The market fell by £7
between these two dates with the result that the buyer paid the seller more
than he would have done if the bill had been correctly dated. The action of
the buyer against the despondent owner of the ship failed because the
inclusion of the wrong date in the bill was due to want of care on his part as
he- the buyer had tendered the [inadvertently] incorrectly dated bill to the
master for signature.

IMPORTANCE OF CORRECT DATING AS TO LETTERS OF CREDIT:

When payment is arranged under a letter of credit, the credit often states a
date of shipment of the goods, in addition to the expiry date which every
credit contains. An issuer of the bill of lading who deliberately backdates it
in order to bring it within the shipment time in credit, acts fraudulently.

EXEMPTION CLAUSE IN THE BILL OF LADING:

In Halal Shipping Co. Ltd v. Securities Bremer Allegemeine and another 26

The appellant, a stevedoring company in Aden, was sued on the behalf of the
consignee for damages for the loss by admitted negligence of certain goods
unloaded from the ship, and argued that it was entitled to the protection of
clauses in the bill of lading exempting the carrier of the goods and its agents
from liability for negligence and also that it had received the goods as a
bailee on terms similar to those in the bill of lading. It was held:

1. The appellant was not a party to the bill of lading and was not therefore
entitled to take advantage of any exemption from liability contained
therein as against the consignee;

24
(1986) 1 LR 261

25
(1985) 1 LIR 557
26
[1955]1 EA 690 (CAN)
 2. Even if the appellant has possession of the goods as a bailee, such
bailment was not under any implied contract between the appellant and
the consignee and contained no exemption;
3. There was no evidence to support the submission that the terms of the bill
of lading had been incorporated in to the contract of carriage from ship to
shore;
4. Even if the appellant was a party to the contract in the bill, that contract
and any exemption in it by its terms came to an end when the goods were
discharged over the ship’s rails.

The appeal was therefore dismissed.

EFFECT OF ACT OF GOD ON DUTIES OF COMMON CARRIER:

A common carrier is a person or commercial company that transports goods

or people for any person or company for a fee and is responsible for any
possible loss of the goods during transport. A common carrier offers its
services to the general public under a license or authority provided by a
regulatory body.27 Examples of common carriers include trucking
companies, airlines and railroads.

An act of God as is commonly known is a physical phenomenon or natural

disaster that is beyond the control of the parties. Examples include flood,
hurricanes, e.t.c. The physical phenomenon must be of such magnitude and
severity that the party seeking to use it as a defence could not have taken a
protective action. The carrier may however be held liable for freight claims
if they failed to act as a reasonable prudent person would under the
circumstance and failed to take reasonable available means to avoid or
minimize the loss resulting from the effect of the Act of God.28

In Interfreight Forwarders (U) Ltd. V East African Development Bank 29

the appellant agreed to clear the respondent’s motor vehicle from Mombasa
and deliver it at Kampala. However, the vehicle carrier got involved in an
accident on the way and the respondent subsequently sued for negligence.
The appellant however argued that the vehicle was carried at the owner’s
risk and that the respondent had a duty to insure the vehicle.

HELD: An appellant Court had jurisdiction to review evidence to determine

whether the conclusions of the trial Judge should stand. This jurisdiction
however must be exercised with caution. If there is no evidence to support a
particular conclusion, or if it is shown that the trial Judge has failed to
27
www.wikipedia.com
28
Standards Brands Inc. v. Nippon Yusen
29
[1990-1994] 1 EA 117 (SCU)
 appreciate the weight or bearing of circumstances admitted or proved; or has
plainly gone wrong, the appellate Court will not hesitate to so decide.30

NOTE: Inevitable accident can be a defence to a charge of negligence, but it

cannot succeed unless the defendant can prove that something happened over
which he had no control and the effect of which could not have been avoided
by the exercise of care and skill; indeed the defence cannot be relied upon
where risk is reasonably foreseeable.

The burden of proving inevitable accident rests on the defendant. To

succeed, the defendant must show one of two things namely:

i) either what was the cause of the accident and show all the
possible causes, one or the other of which produced the effect
and;
ii) Must further show with regard to every one of these possible
causes that the result could not have been avoided.

In this case, the defendant gave a plausible explanation of the causes and
effect of the accident.

A common carrier has a common law liability arising from the nature of the
business and is said to warrant or insure the safe delivery of the goods
entrusted to him. However his promise is defeasible [annulled] upon the
occurrence of certain expected risks for example ‘Act of God’ and the
King’s enemies and injuries arising from defects inherent in the goods
carried. This qualification is implied in every contract made with a common
carrier and the occurrence of the risks exonerates the common carrier from
liability. It was not the respondent’s case neither was any evidence adduced
to show that the appellant acted as a common carrier when it undertook to
clear and forward the vehicle to the respondent. [it therefore means that for
an entity to be held liable, it must be proved that he acted as a common
carrier. Mere clearing and forwarding may not suffice.]

Where it is not apparent from the terms of the contract that damages for
breach were to be awarded in a currency specified for the satisfaction of the
obligations under the contract, then damages were to be awarded in the
currency which most truly expressed the plaintiff’s loss.

The general principle of law is that in cases of destruction of goods, the

normal measure of damages is taken to be the market value of the goods
destroyed at the time and place of destruction. Where a decree is for the
payment of money, the Court may order interest at such rate as the Court
30
See also Plotti v Acadia Company Ltd. [1959] EA 248 and Peters v Sunday Post Ltd [1958] EA 428
deems reasonable to be paid on the principal sum adjudged to be paid.
Where such a decree is silent with respect to payment of further interest on
the aggregate sum then the Court shall be deemed to have ordered interest at
6% per annum.

The Appeal was allowed.