Duly discharged bill of lading
We have seen that a bill of lading fulfills 3 functions :
Evidence of Contract of Carriage – entered into between the “Carrier” and the “Shipper or Cargo Owner” in order to carry out the transportation of the cargo as per the sales contract between the buyer and the seller..
Receipt of goods – as proof that the carrier has received the goods from the shipper or their agent in apparent good order and condition..
Document of title to the goods – which means that the goods may be transferred to the holder of the B/L which then gives the holder of the B/L (not in the physical sense) the rights to claim the goods or further transfer it to someone else..
The issuance of the bill of lading by the shipping line is just the beginning in the process of transfer of goods from seller to buyer.. This transfer CANNOT be legally completed if the bill of lading has not been duly discharged.
Duly discharged does not refer to the discharging of the cargo covered in the bill of lading, but rather the completion of the endorsement process of the bill of lading..
Ok what is this endorsement process and why is it required..??
A bill of lading is a versatile document which can be controlled as required by the sales contract, or by the Incoterms used, or by the seller and buyer depending on their relationship..
In one of my articles I elaborated on which is the most important function of a bill of lading and why..
When a bill of lading is issued as a Negotiable Bill of Lading, the process of negotiation and transfer of goods is just beginning and naturally it needs to be closed.. duly discharged bill of ladingThis can be done only through the process of endorsement..
It is important for the shipping line to remember that they are only carrying the cargo entrusted to them by the cargo owner and that they must follow the instructions that the shipper on the bill of lading gives them as far as the release of the cargo is concerned..
Remember there is a difference between an exporter and a shipper..
In a negotiable bill of lading, these instructions maybe in the form of endorsements and the shipping line and/or their agents at the destination must take cognisance of the type of bill of lading issued and the endorsements required on the bill of lading before releasing the cargo..
Below are the permutation and combination of consignee and the endorsements required on the negotiable bill of lading for that consignee..
Bill of Lading consigned to Endorsements Required on a Negotiable bill of lading
To Order or To Order of ZYX
Shipper’s endorsement stating DELIVER TO THE ORDER OF “ZYX Client” (who could be the actual receiver) and
ZYX’s company stamp and sign in case he is taking the final delivery or
ZYX’s endorsement stating, DELIVER TO THE ORDER OF “ABC Client” (if the cargo has been further sold)..
To Order of XYZ Bank
Shipper’s endorsement stating DELIVER TO THE ORDER OF “XYZ BANK” and
XYZ bank’s endorsement stating, DELIVER TO THE ORDER OF “ZYX Client” (who could be the actual receiver) and
ZYX’s company stamp and sign in case he is taking the final delivery or
ZYX’s further endorsement stating, DELIVER TO THE ORDER OF “ABC Client” (if the cargo has been further sold)..
If anyone else has seen any other permutations or combinations, would be interested to know.
Once the release is granted to the nominated/endorsed consignee, a bill of lading may be considered to be duly discharged meaning the cargo has been released to the legal party in accordance with the endorsements required on the bill of lading following the instructions of the cargo owner..
Prior to issuing release, the shipping line should also request the cargo owner to give the shipping line an original letter of authorisation allowing the clearing agent or forwarder (yes there is a difference between clearing agent and freight forwarder) to handle the shipment on their behalf and accept the release..
This is in the interest of making this cargo release watertight and to avoid any chance of incorrect release to someone other than the authorised receiver as there is one or more original bills of lading involved..
In the case of Straight Bill of Lading which is neither negotiable nor transferable, release should be given only on surrender of 1 of the issued originals or upon receipt of a telex release confirmation from the Port of Load or where the bill of lading is surrendered..
It is also worthwhile to remember that there is a difference between a telex release and express release and also that generally a telex release is not done on a negotiable bill of lading..
In some companies they put an “ACCOMPLISHED” stamp across the bill of lading usually across the signature at the bottom right to indicate that the cargo release has been done and completed, mainly for audit purposes..
But I have been told that not everyone follows these endorsements to the T.. Some are strictly following same while others are content with releasing cargo to whoever is in possession of the bill of lading and are not seeking any endorsement or authorisation letter (in the case of release to an agent)..
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