Bill Of Lading Essay

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Routine business activities often involve contracts known as bills of lading. A bill of lading is a document or receipt issued by a carrier when it receives goods for shipment. Usually, the receipt indicates (1) the particular vessel on which the goods have been placed; (2) destination; (3) cargo weight; and (4) terms of transportation. International sales transactions usually involve sales and transportation contracts; therefore, a seller not only sells goods, but also arranges the transportation of the goods to the purchaser. Under such circumstances, a bill of lading serves as a link between the sales part of the transaction and the transportation portion of it.

Typically, contracts governing carriage of goods by water are evidenced by charter parties or bills of lading. The term charter party is employed to describe three widely differing types of contracts relating to the use of vessels owned or controlled by others. Bills of lading, by contrast, usually fall into one of four categories—inland, ocean, through, and air waybill—and are independent of the vessel used.

An inland bill of lading establishes an agreement between a shipper and a transportation company. It is used to lay out the terms for transportation overland to the exporter’s international transportation company. In short, inland bills of lading are necessary for the domestic transportation of goods.

An ocean bill of lading provides terms between an international carrier and an exporter. It deals with the shipment of goods to a foreign location overseas. Ocean bills of lading are usually in order form—that is, they call for delivery to the order of the shipper. These bills of lading can be negotiated similarly to a draft or check. Essentially, this means that a bona fide purchaser of the bill of lading takes it free and clear of any defects that, otherwise, do not appear on its face.

A thorough bill of lading covers specific terms agreed to by a shipper and carrier. It covers domestic and international transportation of export merchandise; further, it provides the details agreed upon for transportation.

Finally, an air waybill is a bill of lading that establishes terms of flights for the transportation of goods, both domestically and internationally. An air waybill can be thought of as a type of through bill of lading because it may cover both international and domestic transportation of goods. Ocean shipments, by contrast, require both inland and ocean bills of lading.

Some bills of lading are negotiable; others are not. But inland and ocean bills of lading may be negotiable or nonnegotiable. If it is nonnegotiable, the carrier must provide delivery to the consignee—the person receiving the goods—named in the document. If, however, it is negotiable, the owner of the bill of lading has the right to ownership of the goods and, thus, has the right to reroute shipment. Depending on the parties’ intention, the bill of lading may solely represent ownership of the goods. But the parties may agree that a mere security interest is to be transferred only. Upon receiving the goods, a receipt is issued and later turned in for the bill of lading proper. Apart from proving receipt of the goods to be shipped, the bill of lading incorporates the terms of the contract between the carrier and shipper.

As international trade expands, the quantity of goods transported by water will also continue to grow. Bills of lading will become increasingly important and provide the necessary safeguards to facilitate the expansion of the world economy.


  1. Robert Force, A. N. Yiannopoulos, and Martin Davis, Admiralty and Maritime Law (Beard Books, 2008);
  2. William McNair, Alan A. Mocata, and Michael J. Mustill, Scrutton on Charter-Parties and Bills of Lading, 17th ed. (Sweet and Maxwell, 1964).

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