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CONTENT OF THE BILL OF LADING

Introduction

It is remarkable that the law doesn’t give a clear definition of the bill of lading or lays
down the form in which it has to be drawn up.

A clear definition of the bill of lading is only to be found in Article 1, par. 7 of the
Hamburg Rules, which were adopted on the 30th of March 1978 by the UN but which
have been ratified by only 26 countries, most developing countries.

Steps have been taken by a number of international organisations (UN/ECE,

International Chamber of Shipping – ICS and the International Chamber of
Commerce – ICC) to standardize the international trade documents with regard to the
size or format and the lining. For this purpose, the UN/ECE has drafted a model
document called the “UN Layout Key” that can be used as a basic document or as a
“master” to print other documents by means of self copying paper (Idem or NCE-
paper), photocopier (xerox machine), printer and the like.
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A closer look at the master document, the shipping permit, the mate’s receipt, the
quay service document, several bills of lading, shows us that the layout of each
document is in many ways identical (at least for the top 2/3).

The law (Hague-Visby Rules, Article III, par. 3a, b and c) only gives the enumeration
of the entries which have to appear on the bill of lading, so that it can be considered
as a full and negotiable document that entitles the holder to receive the goods.

In general, the bill of lading must state the nature and the quantity of the goods that
must carried, together with:

– the name and place of residence of the shipper;

– the name and place of residence of the consignee;
– the name and place of residence of the master;
– the name, nationality and tonnage of the ship;
– the place of loading and discharge;
– the stipulations relating to the freight;
– the marks and numbers of the goods;
– the number of copies delivered.

Article 3, par. 3a, b and c of the HVR requires that, among other things, the bill of
lading shows:

– the leading marks necessary for identification of the goods;

– either the number of packages or pieces, or the quantity, or weight, as the case
may be, as furnished in writing by the shipper;
– the apparent order and condition of the goods.

The words “to order” are usually entered in the box “Consignee” (See further, Issue
of the bill of lading.)

In the box “Notify party/address” we find the person to whom the master (or the
agent) has to address himself on the arrival of the ship to know who the receiver of
the goods is. This box is only filled in, in case the bill of lading has been issued “to
order”. It remains empty if, in the box “Consignee”, the name and place of residence
of the receiver has been filled in.

The bills of lading which are used nowadays, don’t mention the name and place of
residence of the master anymore. The master is only obliged to sign the bill of lading.
On the other hand, the bill of lading mentions in the left top corner the registered
office of the carrier (owner, agency, forwarder). Further, the bill of lading mentions in
the right top corner the bill of number (B/L No) and the Reference number i.e. the
Customs Registered Number (CRN) from the shipper or from the forwarder.

Bills of lading for through transport or for combined transport also have boxes or
spaces for: “Place of receipt” and “Place of delivery”. These are inland places in
which the carrier (the sea carrier as MTO or the forwarder as MTO) receives the
goods or respectively delivers the goods to the addressee. For combined transport,
the bill of lading must also mention if it is non-negotiable like for instance with the
“non-negotiable waybill”. Further, the bill of lading show if it is a “Original” or a “Copy,
not negotiable”.
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For container transport a few additional mentions ca be found such as:

– Total number of containers/packages

– Type of service (LCL/LCL, LCL/FCL, etc.)
– Freight and charges (origin zone, Ocean sector)
– Shipped on board vessel ...... plus date and signature or initials
– (See further, Types of bill of lading.)

Shipped in Apparent Good Order and Condition

Most bills of lading have (usually on the bottom right) the clause “Shipped on board in
apparent good order and condition …..”. With this clause, the master acknowledges
to have received the goods on board of his ship in apparent good order and
condition. This is in agreement with the Hague-Visby Rules which states in Article III,
par. 3c that only the apparent order and condition of the goods has to checked. The
master shall consequently not open the boxes or open the packages to examine the
content of the goods. He only has to check what he can perceive with his senses
(e.g. what he can see or what he can smell).

For the carrier, this clause is very advantageous because he only has to deliver the
same quantity of goods, in the same apparent condition, as determined during
loading. The consignee will, of course, have to accept the goods as stated in the bill
of lading and on producing it. In this way, the bill of lading is perfectly negotiable and
it will allow the buyer to obtain a documentary credit.

Shipped and Received

There is a difference between a “Shipped bill of lading” and a “Received bill of

lading”. See “Documents in Connection with Sea Carriage – Received for Shipment”
and “Bill of Lading – Definitions”.

To obtain a Documentary Credit, a bank will only accept a “Shipped bill of lading” and
not a “Received bill of lading”. Bills of lading, which contain the mention “intended”
with regard to the ship, the port of loading or of discharge will be refused, unless they
show a “shipped” annotation together with the real port of loading en of discharge,
unless the bill of lading gives a final destination place that is different to the port of
discharge.

Since all bills of lading for combined transport bear the mention “Received by the
carrier from the shipper in apparent good order and condition ……”, the date of
embarkation and the name of the shipper will have to be mentioned after the goods
have been loaded: “Shipped on board on ……. by ……..” followed by the signature of
the carrier or of his representative. See following document: Bill of lading for
combined transport shipment or Port to port shipment.

Number of Copies

All bills of lading bear the following mention:

"In witness whereof the Master or agent of the said vessel has signed the
number of Bills of Lading indicated below all of this tenor and date, any one of
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which being accomplished the others shall be void." (CONGENBILL - figuur

13.33.)

"In witness of the Contract herein contained the number of original stated
opposite have been issued, one of which being accomplished the other (s) to be
void." (Bill of Lading for combined transport shipment or port to port shipment -
figuur 13.43.)

According to this texts, the bill of lading is issued in a number of originals of which
one is sufficient to collect the goods and from the moment this has been done the
others are of no value anymore.

In practice, the master or the agent from the carrier will only sign “one original” that
will be issued to the shipper, who delivered the goods to the master, in exchange for
the bill of lading that he will mail to the receiver which will allow him to collect the
goods. The master, the agent or the carrier will sign several copies of that original
(usually two or three) which in fact boils down to the same original and which are
destined for the shipper. Only these two or three originals bear the mention
ORIGINAL and all other copies that may be issued such as a copy for the master,
one for the consignee, one for the owner and other copies for other purposes bear
the mention COPY NOT NEGOTIABLE. Sometimes, hundreds of these “copies not
negotiable” are made but not one gives the right to collect or receive the goods.

To whom exactly the original bill of lading has to be handed over, depends on the
terms of the contract of sale: FCA, CIP, FOB, CIF, et al, with or without documentary
credit. For more details, see Documents Used by Outgoing Goods.

Full Set of Bills of Lading

The two or three (sometimes also four) original bills of lading which were handed
over to the shipper is called the full set of bills of lading. If one person has the full set
of bills of lading in his possession (on condition that more than one original was
issued), it is impossible for another person to collect the goods.

In two situations, the full set of bills of lading can be demanded: viz. by the bank in
case a documentary credit is granted and by the insurer in case of abandonment or
by surrendering of rights.

The number of originals delivered is always mentioned on the bill of lading. In order
to protect oneself against deceit, e.g. if a person who is not entitled to hold a original
bill of lading wants to collect or receive the goods, every bill of lading shows the
following clause:

“…….. one of which being accomplished, the others shall be void”.

Signing of the Bill of Lading

In practice, only the master signs the bill of lading. However, his signature is mostly
replaced by the one of the agent whose signature will be followed by the words “as
agent only”.
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To be allowed to sign the bills of lading in the master’s name, the agent needs to
have a power of attorney from the master. The master must, however, ensure himself
that this power of attorney only is valid for the goods and the voyage in question. For
want of clear instructions from the master, the agent could misuse this power of
attorney and use it for several voyages or for all shipments done by the same vessel.

Power of Attorney

I, Captain ............, master of the m/v ........... hereby give

authority to Mr. .........., Agent at .................... to sign .....
Bills of Lading relating to the following goods: ...............
loaded on my vessel on the ........... in the harbour of
........... and bound for ...............

Master.

The shipper doesn’t sign the bill of lading. The bill of lading is consequently a
contract that is signed by only one contracting party and that is so accepted by the
other party.

"......In accepting this Bill of Lading the Merchant expressly accepts and agrees to all
its stipulations on both pages, whether written, printed, stamped or otherwise
incorporated, as fully as if they were all signed by the Merchant." (CONLINEBILL
Figuur 13.30; zie ook figuren 13.32 en volgende.)

Date of the bill of lading

The law doesn’t mention explicitly that the bill of lading has to be dated. Some
national legislations prescribe that the bill of lading has to be signed within twenty
four hours after completion of the loading.

The place and date of issue of the bill of lading can be very important because the
allowance of a documentary credit often expires on a certain date. The date can also
be important in case of import or export licences.

The master or the agent bears all responsibility for an anti or post dated bill of lading
with all possible consequences .

Quick Reference

Check “UN Layout Key” to standardize the international trade documents such as the
shipping permit, the mate’s receipt, the quay service document, several bills of
lading, etc.

The HVR enumerates the entries which have to appear on the B/L.

To order is entered in the box Consignee.

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Notify party/address shows who the receiver is.

The master is only obliged to sign the B/L.

For containers the B/L shows a few additional entries.

The master only has to check the apparent condition of the goods (with his senses).

There is a difference between a shipped Bill of Lading and a Received Bill of Lading.

The bill of lading is issued in a number of originals; only one has to be accomplished.

The full set of bills of lading represent all the originals given to the shipper.

Only the master or the agent signs the bill of lading. Be careful for the Power of
Attorney.

Place and date of the bill of lading can be important in case of a documentary credit.

PRINCIPLE OF THE LAW

Introduction

The Hague-Visby Rules as adapted by the Protocol of 79, mainly aims at protecting
the third holder of the bill of lading and consequently regulates in a very clear
manner, via compulsory provisions, the relation between the carrier and the shipper
(in fact the third holder of the bill of lading after transfer by endorsement). To this
end, the Hague-Visby Rules are composed of the three following parts:

1. a minimum of liabilities from which the carrier cannot back out;

2. a maximum of exemption or exonerations that cannot be extended;
3. the limitation of liability of the carrier to a certain sum (see further Limitation of
Liability).

A minimum of Liabilities

According to Article III, par. 1 of the Hague-Visby Rules, the carrier (and thus also the
master) shall be bound before and at the beginning of the voyage to exercise due
diligence to:

a. Make the ship seaworthy.

b. Properly man, equip and supply the ship.
c. Make the holds, refrigerating and cool chambers, and all other parts of the ship in
which goods are carried, fit and safe for their reception, carriage and preservation.

In principle, the previous voyage is terminated and the new voyage begins from the
moment the ship is discharged and that it is ready to receive a new shipment.

The new voyage receives a new number, which has to be properly entered in the log
book. The log book must also state that, for instance, all the holds were clean and
free of smells, that the bilges have been tested and found in good order, in short, that
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the ship was ready in every respect to receive the goods on board. It often happens
that the loading has already started in one or several holds before the other holds are
empty. In this case, the readiness of each hold separately has to be entered in the
log book.

With regard to the seaworthiness of the ship, see Time Charterparty, Seaworthiness
of Vessel.

In accordance with Article III, par. 2, the carrier (and thus also the master), shall
properly and carefully load, handle, stow, carry, keep, care for, and discharge the
goods carried.

This paragraph is very important and prescribes in fact that the master is always
responsible for the goods he takes on board even if they have been loaded and
stowed by the charterer. (See also Voyage Charterparty, Clause 2, Owner’s
Responsibility Clause.)

A Maximum of Exemptions

According to Article IV, par. 1 of the Hague-Visby Rules, neither the carrier nor the
ship shall be liable for loss or damage to the goods, arising or resulting from
unseaworthiness of the ship providing that a due diligence has been exercised to
make the ship seaworthy, before and at the beginning of the voyage.

It further says that whenever loss or damage to the goods has resulted from
unseaworthiness the burden of proving the exercise of due diligence shall be on the
carrier or other person claiming exemption under the said Article.

According to par. 2 of Article IV of the Hague-Visby Rules, neither the carrier nor the
ship shall be responsible for loss or damage arising or resulting from:

a) Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier
in the navigation or in the management of the ship.
b) Fire, unless caused by the actual fault or privity of the carrier.
c) Perils, dangers and accidents of the sea or other navigable waters.
d) Act of God.
e) Act of war.
f) Act of public enemies.
g) Arrest or restraint of princes, rulers or people, or seizure under legal process.
h) Quarantine restrictions.
i) Act or omission of the shipper or owner of the goods, his agent or representative.
j) Strikes or lockouts or stoppage or restraint of labour from whatever cause,
whether partial or general.
k) Riots and civil commotions.
l) Saving or attempting to save life or property at sea.
m) Wastage in bulk or weight or any other loss or damage arising from inherent
defect, quality or vice of the goods.
n) Insufficiency of packing.
o) Insufficiency or inadequacy of marks.
p) Latent defects not discoverable by due diligence.
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q) Any other cause arising without the actual fault or privity of the carrier, or without
the fault or neglect of the agents or servants of the carrier, but the burden of
proof shall be on the person claiming the benefit of this exception to show that
neither the actual fault or privity of the carrier nor the fault or neglect of the
agents or servants of the carrier contributed to the loss or damage.

Note that the exemptions as stated in Article IV, par. 1 and 2 are not agreements
between the parties but lawful prescriptions. Beside this enumeration, even in case of
due diligence, the carrier cannot release himself of his liability, in other words, an
extension of these exemptions of liability to other cases, not foreseen by the law is
null and void, since the Hague-Visby Rules are of public order.

Burden of Proof

The first paragraph of Article IV is in fact a repetition of paragraph 1 of Article III.

This paragraph is nonetheless of the utmost importance for the master, because in
case of an eventual loss or damage of the goods, as a consequence of the
unseaworthiness of the ship, the burden of proof will be on the carrier, thus on
himself. Consequently, the master must, at any time, be able to prove that, before
and at the beginning of the voyage, he has exercised a due diligence to make his
ship seaworthy.

The means that the master can use to show that he exercised a due diligence to
make his ship seaworthy are:

– produce all valid safety certificates (national and international ones);

– produce a valid classification certificate;
– the log book in which all measures to make the ship seaworthy MUST be entered,
before as well as when the ship is ready to leave;

– inspection of the holds, refrigeration and cools chambers, tanks, bilges, etc.;
– make the ship ready for sea (especially the watertight sealing of the holds);
– check if the crew is complete plus allocation of tasks;
– fire muster and boat muster;
– check provisions;
– quantity of fuel and water before leaving;
– test all bridge instruments and equipment, steering gear, whistle, navigation
lights, etc.;
– test engines;
– stability condition with possible reference to the “captain’s booklet” or “loading
manual”;
– if necessary remarks relating to the goods during loading and/or discharging
such as: damages to the goods, shortages, stevedore’s damage, etc.;
– to put it briefly, everything that the receiver of the goods could bring forward to
make the carrier liable in case the goods arrive damaged or in an other
condition than described in the bill of lading.

Example

Due to a breakdown of the steering gear, the ship sheers out of line and runs
aground. The goods suffer hereby water damage. If the carrier can prove that the
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breakdown of the steering gear is due to an Act of God (e.g. cargo ship safety
equipment certificate, classification certificate, certificate of inspection of the steering
gear and testing of steering gear before the ship’s departure with proper entry thereof
in the logbook, and the like), he will not be held responsible for the water damage to
the goods. If the carrier cannot prove that the damage to the steering gear is due to
an Act of God and resulted in not making the ship reasonably seaworthy, than he will
have to compensate for the damage to the goods.

In case of damage to the goods resulting from an exemption as foreseen by the

Hague-Visby Rules, the receiver of the goods will always hold the carrier liable and
the carrier will have to prove that he is not liable, in other words the burden of proof
will always be with the carrier (cf. Hague-Visby Rules, Article 4, par. 2, (q)).

For goods to which the Hague-Visby Rules do not apply such as deck cargo “shipped
on deck at shipper’s risk” the carrier (in this instance the master) is also obliged to
take good care of these goods but if, for instance, they arrive damaged, the receiver
will now have to prove that the master committed a fault or that he is liable which
means that the burden of proof now lies with the receiver and not with the carrier.

In a nut shell we can say that regarding the exemptions as laid down in the Hague-
Visby Rules (and which are of public order), the burden of proof lays with the person
who by virtue of these exemptions claims to be released of liability. With a negotiable
bill of lading it will always be the carrier.

Exemptions in contracts to which the Hague-Visby Rules do not apply and which can
be freely negotiated between parties, the carrier can include in that contract any
exemption clause which will be fully legal. The burden of proof shall now however be
with the party who wants to reject the exemption clause, in other words, the burden
of proof will now be with the receiver of the goods.

IMPORTANT REMARK

It is not because the Hague-Visby Rules do not apply to certain goods or that in
certain cases they are not applicable at all, that the carrier is not obliged to take good
care of the goods. The master is always responsible for the merchandise he takes in
his care.

On the other hand, it is not because the master can exempt himself of his liability as
provided by Article IV, par. 1 and 2 of the HVR that he not obliged to take good care
of the goods.

I once saw an officer watching a sling hanging in the crane and which was about to
break. When I asked him why he didn’t do anything about it he answered “it doesn’t
matter as in any case we are insured against this”. This was to me a criminal act.

Management of the Ship/Management of the Cargo

From what precedes, we can state that the carrier or the master shall be liable for
damage resulting from the handling of the goods, in other words for commercial
faults or the management of the cargo such as: taking poorly care of the cargo during
loading or discharging, bad equipment of the holds, bad state of the loading gear,
bad stowage of the goods, bad or insufficient care of the goods at sea (except in
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case of Act of God), inadequate or insufficient functioning of the refrigerating and

cool chambers, etc.

On the other hand, the carrier or the master shall not be liable for the navigation of
his ship, in other words for nautical faults or the management of the ship such as: a
faulty manoeuvre, a wrong course or position, a collision, a faulty action with the
bilges or ballast tanks, etc.

It is clearly understood that this non-liability for nautical faults only relates to the
goods, thus towards the receiver of the goods. The master will always have to justify
himself with regard to damages to the ship e.g. in case of stranding or collision or any
other professional faults.

Deviation

According to Article IV, par. 4 of the HVR the carrier shall not be liable for any
deviation in saving or attempting to save life or property at sea or any reasonable
deviation shall not be deemed to be an infringement or breach of the Hague-Visby
Rules or of the contract of carriage, and the carrier shall not be liable for any loss or
damage resulting from that.

Quick Reminder

The HVR aim at protecting the third holder of the bill of lading.

The HVR impose a minimum of liabilities:

– make the ship seaworthy;
– properly man, equip and supply the ship;
– make the holds, refrigerating and cool chambers, and all other parts of the ship in
which goods are carried, fit and safe for their reception, carriage and preservation.

Each voyage must be numbered. Write in the logbook all steps taken to make the
ship seaworthy before the beginning of the voyage.

A new voyage starts when the voyage receives a new number, i.e.when discharging
is completed and loading commences.

The master is always responsible for the goods he takes in his care.

The HVR allows a maximum of exemptions;

– The master must exercise due diligence at all time to make his ship seaworthy;
– The HVR gives a list of the cases in which the master or the carrier are not
responsible in case of loss or damage to the goods. This list cannot be extended.

The master must be able to prove that before the beginning of the voyage he has
exercised a due diligence to make his ship seaworthy. The burden of poof lays with
him.
For goods to which the HVR do not apply, the burden of proof lays with the receiver.

The master is always liable for the management of the cargo.

The master is not liable for the management of the ship (regarding the goods).