A bill of lading is a document that details a shipment of goods, which is picked up by a carrier from a shipper. Included on the bill of lading is the type and quantity of goods being shipped, and information as to destination of the shipment. The bill of lading also doubles as a receipt for the receiver of the product, once the product has been delivered. To explore this concept, consider the following bill of lading definition.
Definition of Bill of Lading
- A receipt detailing the goods that are picked up by a carrier from a shipper, and delivered to a particular destination.
1590-1600 Old English
What is a Bill of Lading
A bill of lading is two things: first, it is a detailed list showing exactly what goods are being picked up from a shipper, to be delivered to their final destination; second, it is a receipt for the person, company, or other entity, that ultimately receives the shipment, providing a record of just what goods were delivered, and where they came from.
An example of a bill of lading is the form that is provided by a moving company to a third-party carrier, which will be delivering store fixtures for them to a retail location. The third-party then checks the bill of lading to ensure that it has everything it is supposed to be delivering. The third-party then hands the bill of lading over to the store as a receipt for the goods, once the delivery has been made.
It is crucial that a bill of lading be properly filled out, that it remain with the goods throughout transportation, and that it be delivered with the goods at their final destination. The bill of lading must be signed by authorized individuals at the shipping location and the destination, as well as by the carrier itself. The bill of lading is evidence that a contract exists and, as such, it needs to be appropriately filled out at each step, from the moment the shipment is received, until the moment that it is delivered.
Purposes of a Bill of Lading
Although a Bill of Lading, commonly abbreviated as a “B/L,” or a “BOL,” is only one document, it has several very important functions. The purposes of a bill of lading include:
- To serve as evidence of a contract of carriage (transport)
- To act as a receipt for the goods received, and ultimately delivered, by the carrier
- To serve as a bill of lading title for the goods in shipment
Evidence of a Contract of Carriage
Many believe that a bill of lading is evidence of a contract between the shipper and the carrier, but that is actually not entirely true. When the shipper contacts the carrier to arrange transport of the goods, their contract is created. Whether written or verbal, such a contract includes details about what is being shipped, how it was being shipped, when it is being shipped, and to where it is being shipped. That contract is not, however, a BOL.
The BOL essentially serves as evidence of a contract’s existence and gives the carrier a portable record of how the goods are to be handled. Once created by the carrier, and transmitted to the shipper, the carrier has the go-ahead to pick up the goods and deliver them to the final recipient.
Receipt for the Goods
Once a carrier receives the product, the carrier inspects it, then provides the shipper with a BOL detailing every item the carrier received. Once the bill of lading is issued, this is proof that the carrier has received what he was supposed to receive from the shipper. This receipt for the goods is also proof that every item in the shipment was free from damage when the carrier received them. From here, the carrier must be careful not to damage the shipment. Otherwise, it could be held liable for the damaged goods.
Title for the Goods
A BOL also serves as a title for the goods. This means that the goods are transferred from the shipper to the carrier, which gives the carrier temporary rights over the goods. The BOL follows the goods when they are transferred to the receiver, which is the ultimate destination and the final owner of the goods. Once the goods are delivered, the receiver is given title for the goods, and then he can do whatever he wants with them. He can keep them for himself or even transfer them to someone else.
Bill of Lading Examples
There are several example bill of lading types that exist, to be used depending on the situation. Some of them require signatures, while others do not. In some cases, an original copy must be provided with the delivery of a shipment, but no all. There are also different bill of lading types to be used based on whether or not the shipment is being shipped between companies. As an example, bill of lading types are outlined below:
Straight Bill of Lading
In a straight bill of lading, the person to whom the shipment is being delivered, the “consignee,” is the only person who can sign for and accept the shipment. This bill of lading is non-transferrable. This means that only the named consignee can claim ownership of the goods.
Seaway Bill of Lading
A seaway bill of lading is to track shipments between companies. In these situations, the rules are a little more lenient. For instance, the shipper does not need to submit an original bill of lading to anyone in particular in order to get paid for his services, which is normally the case in other types of shipments. Because no originals are necessary, this kind of release of a shipment is called an “express release.”
Negotiable Bill of Lading
A negotiable bill of lading acts somewhat like a check, consigned (or made payable) to a company, the shipper, or some other entity. This type of BOL is used to get paid, making it very important. Not only that, but obtaining a replacement negotiable bill of lading is a difficult process, which is why those handling this particular type of BOL should be incredibly careful not to misplace it.
A negotiable bill of lading differs from a seaway bill of lading in that it has the terms and conditions of the carrier printed right on the first page. Despite being the first page, this page is called the “back of the bill of lading.” Additionally, this BOL is also important to the receipt of the shipment itself. The shipment may only be released to an authorized agent at the destination, if at least one original negotiable BOL accompanies the shipment. The back of this bill of lading must also be checked to ensure that everyone who was supposed to sign it actually did.
Bill of Lading Titles
Bills of lading can be titled differently, depending on what exactly the carrier is responsible for in a particular shipment. Bill of lading titles include port to port bills of lading, combined transport bills of lading, and through bills of lading. These bill of lading titles are more thoroughly described below.
Port to Port Bill of Lading
A port to port bill of lading is also known as an “ocean bill of lading.” In these shipments, the carrier is responsible for the product from the moment it is loaded at the port. The carrier’s responsibility ends once the shipment is dropped off at the destination, or delivery port. The bill of lading therefore should not mention the place of origin, nor the specific destination, because the product is only going from one port to another. The ports are the middle stops between the origin and the destination.
An example of a port to port bill of lading would be a BOL accompanying a shipment that needs to go through a distribution center, before reaching its ultimate destination. In this case, the shipment would be brought from its original warehouse to the local distribution center. It would then ship from that distribution center to a distribution center closer to the shipment’s destination. A port to port bill of lading would be drafted up to account for the shipment from one distribution center to the other. Neither of these centers is the origin nor the final destination of that shipment.
Combined Transport Bill of Lading
A combined transport bill of lading, also known as a multimodal transport bill of lading, covers multiple methods of transportation, from the moment a shipment is received, to the moment it is delivered to its final destination. This one contract covers the shipment at every step of the process. On a combined transport bill of lading, the carrier is responsible for any loss or damage that occurs to the shipment, at any point, until it reaches its final destination.
Through Bill of Lading
A through bill of lading is similar to the combined transport bill of lading, in that it covers multiple methods of transportation. The difference here is that the carrier is not responsible for the shipment during the entirety of the process. On a through bill of lading, the carrier is only responsible for the sea and inland transport of the shipment, before the shipment continues its voyage inland.
Fraudulent Bills of Lading
Because there are so many players involved with a bill of lading from start to finish, fraudulent bills of lading can pop up at any point during the shipping process. The main motivation behind fraudulent bills of lading is to obtain a valuable cargo.
One of the more common fraudulent bills of lading is a forged document. The forgeries themselves can vary, from the signatures on the forms, to the specific items listed; but one of the most common forgeries is the impersonation of the authorized receiver of the shipment. This enables the thief to steal everything in that shipment. If the bill is “to order” – meaning the bill is in someone’s name specifically – and is transferable, the thief may forge the person’s signature in order to steal the shipment.
Depending on the type of bill of lading that accompanies a shipment, there may be several people involved in the process who can be held legally liable for a shipment never reaching its destination. This unfortunately involves otherwise innocent bystanders who had nothing to do with the crime but, as the nature of the bill of lading would suggest, are responsible for the contents of the shipment just the same.
In order to prevent forgeries from being successful, and to prove the authenticity of a BOL, watermarks can be used. The appropriate paper should be used as well, since even the slightest change in the density of the paper or the colors of the ink printed on it can be taken advantage of by thieves. The bill of lading should also be up-to-date, and free of spelling errors, in order to make it easier to identify the more obvious fakes.
Related Legal Terms and Issues
- Carrier – A person or company responsible for the shipment, or “carrying,” of goods.
- Forgery – The act of falsely altering or making a document, thus affecting the legal rights or obligations of another.