A bill of lading is a document that a carrier issues to acknowledge the receipt of cargo for shipping. It’s a document that forms a transportation agreement between a shipper and a transportation company. The shipper receives these documents from the Transportation Company (carrier).
A BOL specifies the carrier and conditions for conveying the shipment to its final destination. Bill of lading can be sent by land, sea, or air.
Purpose of BOL
Several LTL and FTL carriers now offer a flexible form submission option, but not all of them have caught up. The aim of any BOL is always the same, regardless of whether you type in your information, click boxes, or handwrite it. The goal is to create a paper trail of documents that can be used as crucial evidence in freight disputes. Aside from legal considerations, the BOL performs several other functions. Below mentioned are 2 of the most common ones.
- Evidence of Freight Movement – A seller fills out the BOL and then receives the shipping agent’s documents. This provides the necessary proof that the previously agreed-upon “contract” to transfer the freight (as part of the order and rating process) has been carried out.
- Transfer of Goods or Products is verified – The BOL also proves that goods have been handed to the carrier for transport. The BOL is a legal document that mentions when and where the airline or agent receives the packet. It also records every time the item is transferred to another party (like the recipient or customer).
Types of BOL
- Clean Bill of Lading – The Shipping Company or its agents issue a Clean Bill of Lading without making any declarations about the defective condition of the goods/packages taken on board/stuffed in containers.
- House Bill of Lading – An Ocean Transport Intermediary freight forwarder or non-vessel operating company creates a House BOL. When the cargo is received, the document is provided to the suppliers as an acknowledgement of receipt of items that have been shipped. The Forwarders Bill of Lading is another name for this type.
- Master House Bill of Lading – A Master BOL is a receipt of transfer documents prepared for shipping corporations by their carriers. The paper provides the terms that must be followed when transporting freight and the details of the consignor or shipper, the consignee, and the person in charge of the cargo.
- Stale Bill of Lading – A stale BOL is offered for negotiation after 21 days from the shipping date or any other date/number of days specified in the documentary credit. A non-negotiable BOL is another name for this bill.
- Order Bill of Lading – Order BOL is the document that contains the terms that allow the bill to be negotiated. This clarifies that the delivery will be made to the consignee’s further order, using language like “delivery to A Limited or to order or assigns.”
- Bearer Bill of Lading – A bearer BOL says that delivery will be made to the person who possesses the bill. These bills are either mainly order bills that do not name the consignee in their original form or a blank endorsement. It is possible to negotiate a bearer bill by physically delivering it.
- Surrender Bill of Lading – Surrender BOL operates under the concept of “import documentary credit”. The bank releases documents upon receipt of the negotiating bank’s records. The payment to the bank by the importer does not occur until the corresponding credit draught matures.
Sets of BOL
This is an old practice in which bills are signed in sets of three originals to ensure that items are delivered on time even if the original is lost. They are labelled as the first, second, and third originals on the top of the bill. A duplicate copy with the words “Non-negotiable” stamped on it could even get distributed.
The master will sign the original BOL, and all other copies will be regarded as void after the master or agent signs the 3-BOL. The bill of lading, which comes in sets, plainly states this paragraph.
This is why, when negotiating a letter of credit for cargo, the bank will always request the entire set of B/Ls. This is done to prevent other B/L holders from claiming the shipment lawfully before the bank.
Negotiable and Non-Negotiable BOL
- Negotiable bill of lading: In this sort of bill, unambiguous instructions are given to deliver the goods to anybody in possession of the original copy of the invoice, representing the freight’s title and control. The buyer/receiver or their agent must obtain and show an original copy of the BOL at the discharge port in this form of the bill. The freight will not be released unless the original bill copy is provided.
- Non-Negotiable bill of lading: The consignee/name of the receiver to whom the freights will be sent and delivered is specified in this sort of BOL. It does not, however, contribute to the ownership of the commodities. The allocated receiver/buyers can claim the shipment by validating their identity under this sort of bill.
In conclusion, a BOL is a legal document that functions as a shipping receipt, a title to commodities, and a contract of the carriage during the shipping process. When the carrier takes ownership of the cargo, they serve the bill of lading. If an ocean carrier uses intermodal transportation with a house bill of lading, this may change slightly. There are no uniform regulations that specify who can issue a bill of lading or what requirements must be met. Shipping organisations and countries, on the other hand, set standards.
Once signed, the bill of lading becomes legally binding. To be legally enforceable, it must include the responsible parties, the origin and destination, the number of packages, the contents of the boxes, and package details. The shipper, the consignee, the carrier, and the notify party are the parties liable in a BOL