Ocean bill of lading in international trade recomendation in use,khoá luận tốt nghiệp

THE STATE BANK OF VIETNAM

MINISTRY OF EDUCATION AND
TRAINING

BANKING ACADEMY
INTERNATIONAL BUSSINESS FACULTY

Vu Thi Thanh Van
Student ID: 18A4050258

OCEAN BILL OF LADING IN INTERNATIONAL TRADE -

RECOMENDATION IN USE

BACHELOR THESIS

Ha Noi, 18th May 2019
0


THE STATE BANK OF VIETNAM

MINISTRY OF EDUCATION AND
TRAINING

BANKING ACADEMY
INTERNATIONAL BUSSINESS FACULTY

Vu Thi Thanh Van

Student ID: 18A4050258
OCEAN BILL OF LADING IN INTERNATIONAL TRADE -

RECOMENDATION IN USE
Major: International Business
Code: 734.01.20

BACHELOR’S THESIS
Supervisor: Ph.D. Tran Nguyen Hop Chau

Ha Noi, 18th May 2019
1


DECLARATION
I hereby declare that no portion of the work referred to in the thesis has been submitted in
support of an application for another degree or qualification of this or any other university
or academy.

2


ACKNOWNLEAGDEMENT
This thesis would hardly be complete without the helpful instructions from Ph.D. Nguyen
Thi Hong Hai and Ph.D. Tran Nguyen Hop Chau. I would like to thank them for being so
enthusiastic and supportive with me since the very beginning of this research
Moreover, my heartfelt thanks spend for my family and friends that always stand by my
side. Words fail to express how grateful I am to my father, my mother, my brother and my
friends for their unconditional love and mental supports.

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OCEAN BILL OF LADING IN INTERNATIONAL TRADE RECOMMENDATION IN USES

CHATER 1: INTRODUCTION......................................................................................1
1.1. Research motivation..........................................................................................1
1.2. Research scope and objective........................................................................... 2
1.3. Research questions andpurpose....................................................................... 2
1.4. Research methodology...................................................................................... 3

CHAPTER 2: LITERATURE AND THEORETICAL REVIEW.................................4
2.1. Literature review................................................................................................. 4
2.1.1.

Development of Bill of Lading....................................................................... 4

2.1.2.

Governing laws and practices......................................................................... 5

2.1.3.

Bill of Lading problems in international trade............................................... 6

2.2. Theoretical review...............................................................................................6
2.2.1.

Definition.......................................................................................................6

2.2.2.

Roles of Bill of Lading in the international trade.......................................... 7

2.2.2.1.

In the contractual term.............................................................................7

2.2.2.2.

In payment term.......................................................................................8

2.2.3.

Bill of Lading standard terms and conditions................................................. 9

CHAPTER 3: ANALYSIS..............................................................................................13
3.1..................................Usage of Bill of Lading types in the international trade
......................................................................................................................... 13
3.1.1...............................................Types based on characteristic of transference
.................................................................................................................... 13
3.1.1.1.........................................................................Straight Bill of Lading
.............................................................................................................. 13
3.1.1.2.........................................................................To order Bill of Lading
..............................................................................................................134


3.1.2.2.

Received for shipment Bill..................................of Lading

15

3.1.3.................................................................................................................Ty
pes based on method of shipping................................................................ 16
3.1.3.1..............................................................................Liner Bill of Lading
..............................................................................................................16
3.1.3.2................................................................Charter party Bill of Lading
.............................................................................................................. 17
3.1.4.................................................................................................................Ty
pes based on shipping voyage..................................................................... 18
3.1.4.1.............................................................................Direct bill of Lading
..............................................................................................................18
3.1.4.2.........................................................................Through Bill of Lading
..............................................................................................................18
3.1.4.3....................................................................Multimodal Bill of Lading
..............................................................................................................19
3.2................................................................................Special Bill of Lading types
......................................................................................................................... 19
3.2.1...........................................................................Surrendered Bill of Lading
.................................................................................................................... 19
3.2.2...................................................................................Switch Bill of Lading
.................................................................................................................... 21
3.2.3..........................................House Bill of Lading and Master Bill of Lading
.................................................................................................................... 23
3.2.4...................................................................................................Sea waybill
.................................................................................................................... 24
3.3.............Application of Bill of Lading under the Letter of Credit transaction
......................................................................................................................... 26
3.3.1....................................Bill of Lading flow in a Letter of Credit transaction
.................................................................................................................... 26

3.3.2.
Advantages of Negotiable Bill of Lading over Non-Negotiable Bill of
Lading
in a Letter of Credit transaction................................................................................. 27
3.3.3.
Types of Bill of Lading that banks do not prefer in the Letter of
Credit
transactions................................................................................................................ 27
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4.2.2.

Clean Bill of Lading..................................................................................... 43

4.2.3.
Shipper, consignee and notify party names................................................... 44
Abbreviations List
4.2.4.
Signature...................................................................................................... 45
4.2.5.

Port of discharge and Port of loading........................................................... 46

4.2.6.

The requirement for Date of shipment.......................................................... 47

4.2.6.1.

Importance of the Date of shipment in Letterof credit payment..............47

4.2.6.2.

Determination of the Date of shipment...................................................47

4.2.7.

The requirement for On board Notation....................................................... 48

4.2.7.1.

Appearance of On Board Notation on the Bill of Lading.......................48

4.2.7.2.

Data components of the On Board Notation...........................................49

4.2.8.

Partial Shipment Allowance......................................................................... 50

4.2.9.

Amendments on the Bill of Lading............................................................... 50

4.3. Conclusion........................................................................................................ 51

REFERENCES..............................................................................................................52
B/L

Bill of Lading

COGSA

Carriage of Goods By Sea Act

CPBL

^CY

Charter party Bill of Lading
Container Yard

D/O

Delivery Order

HBL

House Bill of Lading

ICC
ISBP

International chamber of Commerce
International Standard Banking Practice for
the Examination of Documents

L/C

Letter of Credit

MBL

Master Bill of Lading

MTO

Multi model Transport Operator

NVOCC

Non - Vessel Operating Company

OBN
UCP

On Board Notation
Uniform

Customs

Documentary Credits

and

Practice

for

6


UNCTAD

United Nations Conference on Trade and
Development


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CHATER 1: INTRODUCTION
1.1.

Research motivation

In the global trade, the ocean shipping industry plays a crucial role since this
method of transport offers not only the great storage capacity for a wide range and
volume of goods but also the competitive freight charges. It is to explain why up to
about 90 percent of goods in foreign trade nowadays carried by waterways constituting
the main means of transportation by far (figures by ISC - International Chamber of
Shipping), which illuminates the fact that shipping is such the lifeblood of the global
economy. This fact leads to the regular presentation of the ocean transport documents
in the international business. As an individual or a company involving the field of
import and export, it is indispensable to obtain throughout knowledge about the
transport document issues as well as its procedure.
The main characteristic of overseas trade is that the goods flow in and out of the
nation’s borders, consequently, the shipment goes through the long geographical

distance under the control of the carrier other than the shipper. As the results,
international shipping requires a pack of documents which orchestrates a continuously
long chain of actions: from offering the buyers/sellers that are responsible for the
goods and fulfilling the obligations, the freight forwarders that are handling shipping
and transportation; to providing the banks with the legal right to ensure the payment is
collected. The document here is divided into different types: commercial document,
transport document, insurance document, and financial document. In the scope of this
thesis, we only discuss the document of transport, particularly the Bill of Lading.
Bill of lading (B/L) is among the most essential documents used during the
transit of goods. Without this document, it is impossible to either move goods or
receive payment. Bill of Lading acts as a key instrument in both international
shipment and payment. However, since this bill varies as diverse types for different
purposes, traders may easily face with confusion. In fact, many commercial disputes in
the implication of the Bill of lading have occurred in the foreign trade owing to the
lack of knowledge or the misunderstanding about this kind of document. Especially, in
the case of Letter of Credit payment, discrepancies of transport documents are
abundant. As a result, it is important to give notice when issuing and inspecting the
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Bill of lading to avoid unwanted risks in business. The main aim of this thesis is to
offer helpful recommendation in use of Bill of lading by analyzing its classifications,
features and governing rules.
1.2.

Research scope and objective
Issuance of transportation document in the global trade caters not only for the

delivery of cargo but also for the international payment process. It, therefore, is under
the adjustment of numerous sources including sale contracts, international conventions

as well as international banking practice i.e. However, the scope of this debate remains
primarily focused on the bill of lading’s application in the field of overseas payment,
particularly by the documentary credit method. The underlying reason is that
documentary credit now serves as the most popular choice of traders for international
transactions due to its advantages. That explains why when it comes to the reviewed
jurisdictions for the later recommendation, the research mostly discuss UCP 600 and
ISBP 745 which are updated editions, widely used and have the great impact on the
banks, import/export companies, logistic experts or whoever involving in the
international business in general.
1.3.

Research questions and purpose

The thesis is conducted in order to provide necessary recommendation in using
Bill of Lading in the Letter of credit transaction. As the result, it may asset to minimize
risks and frauds as well as reduce discrepancies in the presentation of this transport
document. To reach those aims, this research will be required the review of the B/L
general background in term of classifications, functions and governing rules to realize
its application in the oversea trading business.
Below is a list of questions which offers readers a general viewpoint on what
aspects this research shedding the light on:

>

What are different types of Ocean Bill of Lading and in which cases that to use
them?

>

What are the popular disputes concerning to Bill of Lading in the international

trade?

>

Which types of Bill of lading should be applied under the Letter of credit to
secure the payment?
2


>

What to notice when issuing and inspecting the Bill of Lading in term of letter
of credit transaction?

Hopefully, at the end of this thesis all of these above questions can be solved probably.
1.4.

Research methodology

In order to obtain a comprehensive understanding, it is imperative to investigate
all available databases covering the topic of the traditional bill of lading.
The analysis comprises of literature reviews and comparative researches of traditional
sent documentation in the field of maritime transport. The existing body of literature
will be explored to identify the gaps and then to establish the needed recommendation
in use of Bill of lading. Additionally, the thesis will also be based on a legal dogmatic
method, which means that laws and practices applicable to the subject in question will
be described. Conclusions drawn from this research work are based on the
interpretations and inferences gleaned from this literature reviews.
In short, it may be said that qualitative and comparative methodology in nature
is constituted the main way to conduct this research .

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CHAPTER 2: LITERATURE AND THEORETICAL REVIEW
2.1.

Literature review

Although the literature about Bill of lading covers a wide variety of such theories,
this review will focus on three major themes as below, which found repeatedly
throughout the literature reviewed.
2.1.1.

Development of Bill of Lading

The bill of lading has appeared in the trade and carriage of goods by sea
hundreds of years ago. The numerous researches about the history and origin of the
traditional bill of lading have been done, which is important because the origins of a
document will contribute to understanding its nature.
Mitcheihill (1990) and McLaughlin (1925) have pointed out the same root of
the early bill of lading in the past. They assumed that there was a paper form used
similar to the bill of lading far back from the eleventh century of Medieval Italy. As no
formal “sea code” existed at that time when goods were shipped, disputes apparently
arose between shippers and the ship's masters. Therefore, various cities requiring every
master to take with them a clerk who was obliged to enter in a ship’s book or register a
record of the goods received from the shipper. That is considered as the earliest
reference to keeping a record of goods shipped on board.
In this period, it was the “book” but not the “bill” of lading as the evidence of delivery.
Later, when merchants ceased to sail with any their goods they required a receipt from

the ship-owner, a copy of the relevant entry in the Book of Lading was a natural
candidate, and it is that copy that became the Bill of Lading.
Daniel E. Murray (1983) and Mitcheihill claimed that not until the sixteenth
century did the bill of lading become “legal significance” and widespread in common
uses. This bill was found in a form lasted nearly to the present time. Of the eleven
Sixteenth - Century - bills found in the Seldon Society Publications, eight are
recognizably 'modern' bills of lading, in that their final sentence begins "In witness of
the truth", "In witness whereof' or "And for the testimony of the truth", which phrase
is repeated today on all traditional bills of lading. By this period, statements on the bill
of the condition of shipped goods become more specific: it had to contain information
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about the quantity of merchandise, the marks of the merchandise, its condition, the
name of the consignee and the amount of freight.
Peel. Samantha (2002) performed the thesis titled “Development of the bill of
lading: its future in the maritime industry” to discuss not only the historical evolution
of B/L from the early days but also infer to its growth related to the changes in the
business environment. The author stated the development in the use of nontransferable bills and other special types of bills shows that the industry now requires
different documents for different purposes. Consequently, there is no doubt that it will
change again in the future as and when required because that is the nature of this
document.
2.1.2.

Governing laws and practices

It is observed that, from the past, the use of bills of lading in international
carriage of goods by sea has been subject to a variety of international regimes, such as
the Hague Rules (1924), the Hague-Visby Rules (1968) or the Hamburg Rules (1978).
Presently efforts are being made to arrive at a universal agreement under the umbrella

of The Rotterdam Rules, but such an agreement is yet to arrive among the comity of
nations.
In the report (1971) by the secretariat of UNCTAD (United Nations Conference
on Trade and Development), the need for the revision of The Hague Rules was
mentioned when using the Bill of lading in the foreign trade. Mitcheihill also referred
to this rule in his book “Bills of Lading - Law and Practice (1925). The Hague rules
were adopted at Brussels in 1924, officially called the “International Convention for
the Unification of Certain Rules Relating to Bills of Lading” governing many aspects
of the carrier’s liability. These rules are followed by some 90 percent of nations and
(after some changes) the US adopted them in 1936 as Carriage of Goods by Sea Act
(COGSA).
The Hague Rules were slightly amended (beginning in 1931, and further in 1977 and
1982) to become the Hague-Visby Rules. In addition, the U.N. established a fairer and
more modern set of rules, the Hamburg Rules (effective 1992). Also, a more radical
and extensive set of rules is the Rotterdam Rules, but as of November 2015, only 3
states have ratified these rules, so they are not yet in force.
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Besides those above mention rules, Stephen Mills also mentioned to UCP and
Incoterms as current practices and good guidance, particularly the version of UCP 500
and Incoterms 1990.
2.1.3.

Bill of Lading problems in international trade

Numerous scholars have explored complex issues that arise in the course of the
bill of lading performing its basic functions.
Yiannopoulos (1958) found conflict problems concerning to Bill of lading in
the international business. The author realized that due to varying domestic standards

and conflicts rules, the same clause inserted into an international bill of lading could
be valid in one country and invalid in another, and the liability of the carrier could
vary with the fortuitous or selected forum.
Many authors, writing about Bill of lading, realized the same thing: “The more
important a document, the more perhaps it is vulnerable for fraud”. John Bassindale
(1996) confirmed other problems by stating that because of their nature, bills of
lading present numerous opportunities for fraudsters to manipulate the commodity
trades. These opportunities arise because of the unique range of function that such
bills perform. This research, although published in 1996, is still very relevant today.
Andreas Sioulas (2013) also found interested in investigating different kinds of
bills of lading frauds in his research. The analysis mainly focused on possible
documentation frauds which may include false bills of lading, frauds caused by sellers
as well as buyers or incorrect cargo statement.
Also being aware of frauds in bill of lading, Mohammad El Hawawy (2013)
explored complicated process involved in shipping cargo and the number of entities
involved can be taken advantage of by fraudsters. Frauds cover from theft of cargo
through forged documents, theft of cargo through other fraudulent means, to the
improper use of documents. The author in his research then pointed out some
suggestions to avoid specific kind of frauds
2.2.

Theoretical review

2.2.1.

Definition
6


The term of Bill of lading, in most cases, may be realized by different names as:

Ocean Bill of lading, Marine Bill of lading, Liner Bill, Port to Port Shipment Bill of
Lading, e.t.
“Bill of lading is document that establishes the terms of contract between a shipper and
a transportation company. It serves as a document of title, a contract of carriage, and a
receipt for goods”. The bill is issued by/ or on behalf of the carrier/ or the ship’s
master after goods are shipped on board or received for shipment, then handed to the
shipper as a confirmation of the carrier. It is a legal document between the shipper and
the carrier detailing the type, quantity and destination of the good being carried.
2.2.2.

Roles of Bill of Lading in the international trade

2.2.2.1. In the contractual term

• Receipt of goods for carriage:
Being a receipt for goods is a primary function of a bill of lading since it
contains a description of the applicable goods in the margin. The B/L records the date
on which the full quantity of goods were received by the carrier, evidence of the
apparent condition and quantity of the goods on receipt including marks, number,
quantity or weight (the “figures”), place of issue and the load and discharge port(s).
It’s the proof that the carrier has received the goods from the shipper or their agent in
apparent good order and condition. This description is perhaps the most important part
of a bill of lading, as the consignee or endorsee of the bill, which wishes to buy the
goods by having the bill endorsed to it, normally has no opportunity to verify the
quantity and quality of the buyer’s representations by examining the goods
It is therefore important for the owner or charterer member that the bills of
lading are issued to describe accurately the goods received on board. This means that
the carrier is obliged to deliver cargo to the consignee and remain its recorded
condition in the B/L. When there is a dispute as regards the quantity, quality of goods
or condition of goods, the bill of lading, becomes a prima facie evidence that the goods

where shipped in the conditions stated on the bill of lading

• Evidence of the contract of carriage:

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This function of the bill of lading is described in the Hague rules in the following
words: “bill of lading means 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” Hague Rules,
1924, art 1.The B/L serves as evidence of the contract of carriage, a legally-binding
agreement which helps the carrier process the cargo according to the original contract
terms set up by the carrier and shipper or freight owner.

• Document of title:
Title, in the context, is a term that means the right to possession of goods from
the carrier. That right to possession is determined by the possession of a document,
particularly a bill of lading. Only the person presenting an original bill of lading is
entitled to oblige the carrier to deliver the consignment to him when the goods arrive
at place of destination.
The transfer of the goods in an international trade can also be affected by the
transfer of a document of title with the changes of possession. The bill of lading, as the
document of title, represents the consignment of goods and transfers practical
ownership of it only if the bill is “negotiable”.
“Negotiable” is a concept needed to make clear here. A bill of lading may or
may not be negotiable, depending upon the nature of the document. A non-negotiable
bill of lading provides for the delivery to the named consignee only, even without the
production of the bill of lading upon identification of the consignee at the port of
destination. A negotiable bill of lading, on the other hand, requires the carrier to

deliver the goods to the consignee or to his order. Therefore, “negotiable” means the
bill of lading can be transferred from a person with title to a person without title
several times during the voyage. Not merely can it be transferred for the first sale, it
further allows the purchaser to resell the consignment still at sea. Moreover the bill of
lading can be pledged to a bank as security for an advance. This function will be
described more deeply in the following part
2.2.2.2.

In payment term

Since the Bill of Lading holds the function as “a document of tittle” as above
mentioned, it is an important in financing international sales. The fact that the bill is
8


the symbol of the goods enables goods to be pledged. A pledge can only be created if
actual or constructive possession of the goods is delivered to the bank. Obviously, a
cargo at sea cannot be delivered to a bank any more than it can be delivered to a buyer.
It is the ability of the bill of lading to transfer constructive possession of the goods,
which allows constructive possession of the goods to be delivered to the bank and so
create the pledge.
That is to say that B/L enhances international trade finance as banks and other
financial institutions accept the bill as security or collateral for letters of credit
advances to the importer or exporter because of the banks’ confidence in the
“document of title” feature of the bill of lading.
2.2.3.

Bill of Lading standard terms and conditions

Each shipping line or airline has their own B/L format, but the parts that need to be

filled up are almost the same. A standard B/L normally secures following below heads
of information:

• Shipper
Shipper is the name and address of whom is shipping the cargo.
This may or may not be the actual owner or manufacturer of the cargo, but could also
be a trader, an exporter or a freight forwarder. Someone who book space from the
shipping line and pay the freight charges has the right to edit the shipper information.

• Consignee
Consignee is the name and address of whom is receiving the cargo.
This may or may not be the actual owner or recipient of the cargo as it could be a
trader, an importer or a freight forwarder. Depending upon the nature of the bill of
lading, typical entries in the consignee box may be the “bearer” or “holder”; it may
name the consignee; it may show the words “to order” with or without the name of the
consignee or the box may simply left blank. Each of these affects the transferability of
B/L controlling over the delivery of goods.
9


• Notify Party
Notify Party is the name and address of the party who generally should be notified by
the ship-owner of the arrival of the cargo. Depending on the B/L, it can be the same as
or different from the consignee

• Pre-Carriage by
Assume that there is an inland point which is connected to the mainland port by means
of a vessel, the name of that vessel is shown here. Most times, it’s blank.

• Place of Receipt

This is the place where the cargo is handed over by the shipper or the shipper’s freight
forwarder to the carrier/shipping line. If this box of information is filled, it is assumed
that the carrier has done the movement from here to the Port of Loading and if there
any incidents or damages to the container or cargo between the Place of Receipt and
Port of Loading, the liability will be that of the carrier.

• Port of Loading
This is the place from which the container or cargo is loaded onto the nominated
vessel or voyage by the carrier

• Place of delivery
This is the final destination of the container or cargo. If this box of information is
filled, it means that the carrier has undertaken to move the container or cargo from the
Port of Discharge to the Place of Delivery. And accordingly, the carrier is responsible
for the cargo condition.
Please note if there is a Place of Delivery shown in the B/L, the carrier will not allow
the consignee to take delivery of the container or cargo at the Port of Discharge and
move it to the Place of Delivery

• Port of Discharge

10


This is the place at which the container or cargo is discharged by the carrier from the
nominated ocean vessel.

• Ocean Vessel/Voyage
This is the name of the vessel and the voyage number that carries the container or
cargo from Port of Loading

• Marks & Numbers
The shipper marks his packages with some information identifying the shipment so
that the consignee can know what the shipment is.
Besides, the container / seal No. also shown here by the carrier.

• Number and Kind of Packages
Here the number of packages that are packed in FCL or LCL. Example: 20 pallets, or
10 cartons.

• Description of Packages & Goods
This area is used to describe exactly what cargo is being loaded in the container or
LCL.
Generally other information like number of packages, freight conditions, HS code etc.
are also mentioned.

• Gross Weight
This is the weight of the cargo that is loaded in the container or loaded on board. It
does not include the tare weight of the container, just the cargo with packaging.

• Measurement
This is the volumetric calculation of the cargo that is loaded in the container. The total
volume of the cargo in the container is shown here

• Booking No. and Bill of Lading No.
11


It’s usually shown on the upper right corner. With the information, you can easily
track and trace your shipments from the official website of the carrier.

These numbers have the format XXXX123456789...Generally, the first 4 letters are
the carrier’s SCAC Code (such as COSU - COSCO, MSCU - MSC), then followed by
several numbers, which could be 8 digital or 10 digital.

• Others
The shipping carrier also lists some other information, including but not limited
to:Total Number of Containers and/or Packages, Freight & Charges ,Date on Board,
Date of Issue, Place of Issue, Number of Originals
SUMMARY
Plentiful researches have been done to illustrate the diverse understanding of
the Bill of Lading in international trade. Soon, the authors have realized the
importance as well as numerous existing issues relating to this transport document.
The B/L not only performs its significant functions for the carriage of goods but also
for the payment transaction in the overseas business. Bearing the role as the “Receipt
of goods for shipment, evidence of the carriage contract and document of title”, the bill
proves the legal relationship between the shipper, the carrier and the consignee and
lays the basic foundation for the services of trade finance from the banks. Those facts
all explained why B/L is the type of document that really needs to pay attention to.
Many researchers have already studied probably about governing laws as well as
offered helpful guidance. However, those hardly based on the new updated legal
documentation. This thesis has provided a valuable contribution to the literature by
summarizing and supplementing the needed notices and recommendations for those
above-mentioned literature reviews in terms of international payment when the B/L is
surrendered for the documentary credit transaction. The research thus focuses on the
document under the governing of UCP 600 and ISBP 745.

12


CHAPTER 3: ANALYSIS

3.1.Usage of Bill of Lading types in the international trade
3.1.1.

Types based on characteristic of transference

As described above, a bill of lading may or may not be transferable, that fact classifies
this document into three different types based on negotiability:
3.1.1.1.

Straight Bill of Lading

Straight B/L is a form of B/L consigned directly to the buyer, with the “Notify Party”
as the buyer or buyer’s customs broker.
Features: Since consignee is appointed as a specific customer, this type of B/L is nonnegotiable and non - transferable. The cargo covered under a straight bill of lading
can only be released to the named consignee and cannot be transferred to anyone by
endorsements on the bill of lading. Once the customer (buyer) presents legitimate
proof of identity, which is normally settled upon prior agreements, the shipping
company will release the cargo.
Usage: Typically, the “Straight Bill of Lading” is utilized for delivery of items that
have already been fulfilled payment obligations, as well as gifts or donations or any
items that do not require payment such as exchanges or returns. In such cases a straight
B/L is the simpler sort to apply.
3.1.1.2.

To order Bill of Lading

“Order Bill of Lading” is described as those "in which it is stated that the goods are
consigned or destined to the order of any person named in such bill”. (Federal Bill of
lading act, 1916)
Features: Order Bill is the most common negotiable B/L authorizing named consignee

to pass the bill of lading by endorsing. Legally, the endorsement on the document
acknowledges the transfer of the ownership of the goods on B / L for the beneficiary.
Usage: This order can be of three main kinds which bear different viewpoints of
affording security for the advancement value
13


• “TO ORDER OF CONSIGNEE” This order mainly is cater for intentional resale
transactions in which the consignee does not act as the end-buyer. If the
consignee
wants to re-sale the cargo, he will require the transport document to be made out
of

his

order, later endorse to the end-buyer on the back of the document so that the
end-buyer
will be able to receive D/O and take the delivery.

• “TO ORDER OF ISSUING BANK” commonly applied when the purchase of
goods is covered by a letter of credit where it may be traded, used as security for
borrowing money from banks or if the goods are expected to be traded on a
mercantile
exchange while the shipment is still in transit.

• “TO ORDER OF SHIPPER” is utilized with T/T (Telegraphic Transfer) or Clean
Collection payment method. Under these circumstances, commercial documents
including the bill of lading will be sent directly to the importers without the
inspection
of the banks and the importers only accept to pay once know for sure that good

has
been shipped. This application may benefit the importers, however, lead he
exporters
to face with enormous payment and financial risks. To tackle those problems,
issued
B/L should be destined “to order of shipper” in which the buyer cannot take the
delivery without the shipper’s endorsement indicating the buyer is the legal
consignee
in this case. This fact, thus, allows the shippers to control over the release of
goods

by

not endorsing the B/L until the payment obligation of the buyers is fulfilled. Or
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Features: Bearer B/L is also presence the word of “negotiability”, however “delivery
will be made to whosoever holds the bill. Such bill may be created explicitly or it is an
order bill that fails to nominate the consignee whether in its original form or through
an endorsement in blank”. Unlike order bills of lading, they can be transferred without
endorsement. The bearer B/L can simply be transferred by hand from one person to
another. An order B/L may also become a bearer B/L if it is endorsed in blank by the
person named in the order bill of lading.
Usage: Since the bearer B/L is freely negotiable, it is used when it is intended for resale without endorsement and authentication.
3.1.2.

Types based on time of issuing and time of loading

3.1.2.1.

Shipped on board Bill of Lading

Shipped on board B/L acknowledges 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”
Feature: Its function is to confirms that the carrier has received and loaded the
containers physically on board the specified voyage on the stated date
Usage: The definition tells everything about usage of this bill. It is only issued when
the consignment of goods is in expected condition and has already been loaded on the
ship as a confirmation of the carrier
3.1.2.2.

Receivedfor shipment Bill of Lading

This bill is issued prior to the loading time stating that the cargo has arrived at the port
and has been taken into the charge of the carrier.
Pre-printed statements appeared on the surface such as: “Received for shipment” or
“Received for carriage” or “Taken in charge” are typically considered as the
denotation of this type.
Features: This type only confirms that the goods are delivered to the carrier, yet
hardly means “shipped on board”. The consignment might be stored in CY or ICD
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