Resources - Bill of Lading

Bill of Lading

(Learn about what is a Bill of Lading one of the most important documents used in import from China)

Bill of Lading

Bill of Lading (abbreviated as B/L or BOL) is one of the most important documents used in foreign trade: it is generated by a shipper, detailing a shipment of merchandise, giving title to the goods and requiring the carrier to release the merchandise in the specified place.

Bill of Lading

In most cases, the Bill of Lading (usually meaning the set of 3 original bills of lading) is signed by the carrier and delivered to the shipper. The draft of the B/L is often prepared before the completion of loading, but the date must always be accurate – cannot be earlier than the date on which the whole or last of the cargo was loaded. Carrier, who is liable for any discrepancies between the quantity and quality of the order and the situation described in the bill of lading, should take extra care – usually the bill of lading is prepared on a basis of information presented by the shipper, but cannot be verified, because the cargo is already packed.

The Bill of Ladingis therefore a conclusive evidence between the carrier and the receiver and between the carrier and the shipper, referring to the number, quality, quantity and the weight of the goods. All the discrepancies noticed by the carrier can be put on the bill of lading (referred as “claused bill of lading”).

The terms on which the received cargo should be transported should also be specified in detail, often on the reverse side of bills of lading. There are several types of Bill of Lading; some of the most popular are described below:

Claused Bill of Lading – if the transported goods have any shortfalls, the shipping company may point it out. This kind of Bill of Lading is colloquially called “dirty” or “foul” – the shipper may have troubles while receiving payment, bank may also refuse to accept claused Bill of Lading. Something opposite to the Claused Bill of Lading is the Clean Bill of Lading, which declares that the goods have been received in an appropriate condition.

Another type is House Bill of Lading, issued by a freight forwarder to a shipper as a receipt for the goods being shipped with other cargo, f.e. in one container.

Sea Waybill is similar to the Bill of Lading, but it is not a document of title.

Through Bill of Lading covers more than one stage of carriage. The whole transportation process may be undertaken by more than one carrier. Along with the development of multimodal transport, House to House Bill got more popular – it covers not only the carriage of cargo by ship, but also all other forms of carriage, including rail and road transport.

The importance of Bill of Lading is undeniable. Therefore we should be very careful and try to avoid any inaccuracies and mistakes. Any mistake in the quantity of the goods may affect shipper (if more goods were declared than actually shipped) or carrier (opposite situation), both parties may face consequences from the custom office. Even if those inaccuracies were not caused by the action brought in bad faith, one of the parties may assume that the Bill of Lading is fraudulent. If there is a need to correct a Bill of Lading, it can be done according to the relevant rules of law. If the original Bill of Lading is to be substituted by a new one, the original should be surrendered or cancelled first. Otherwise, the alteration may rise some suspicions.

The legal basis for Bills of Lading are the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, often known as the Hague-Visby Rules. It defines the obligations of the carriers (“carefully load, handle, stow, carry, keep, care for, and discharge the goods carried" and to "exercise due diligence to ... make the ship seaworthy”) and the shippers (pay freight, pack the goods sufficiently well). In the 70’s, due to the growing international trade, the next convention was ratified: United Nations Convention on the Carriage of Goods by Sea, called Hamburg Rules. The final draft of a new convention, which largely revised the previous ones, was signed in 2008 in Rotterdam, hence we have Rotterdam Rules. Those are international conventions, and the regulations are not legally binding on China, since China is not a signatory or a party to it. On the other hand, several solutions from those conventions were in fact incorporated in the PRC’s Maritime Code.