The importance of the bill of lading can be understood by considering the following chain of

events of a transaction.
An individual wishing to ship a consignment of goods overseas approaches a shipping line by
reserving space on the vessel. This may be done directly or through an agent. The carrier then
instructs the place and time of delivery of the goods and the individual is then issued with a
receipt indicating the type and quantity of the goods and the condition in which the carrier’s
agent received them. Then, the carrier is responsible for the goods.
The shipper , meanwhile, gets a copy of the carrier’s bill of lading form. He will enter details
regarding the type, quantity of goods shipped together with any relevant marks, the port of
destination and the name of the consignee. The carrier’s agent will check the cargo details
against the tallies at eh time of loading and will acknowledge them. The freight will be
calculated and then the bill will be signed and will be given to the shipper. The shipper may then
directly dispatch the bill to the consignee or through a bank in the case of international sales
contract by documentary credit.
The consignee may decide to sell the goods while in transit then he may indorse the bill in favour
of the purchaser. Eventually the consignee or indorsee will surrender the bill at the port of
discharge in return for delivery of the goods.