When a person, who is the holder of a bill of lading, does not want to negotiate it further, but wants to receive the goods himself, he will present himself to the master or the agent who will check the holder’s identity and check if the freight and all charges have been paid.
If the bill of lading has been endorsed, the endorsement should be checked.
If everything seems to be in order the master or the agent will sign and date it or, in some countries, the agent will exchange the bill of lading against a delivery order which will allow him to receive the goods.
Legally, the master is obliged to deliver the goods to the first person who presents him an original bill of lading, providing of course that the freight has been paid.
As long as the freight has been paid and nobody presents him an original bill of lading, he may retain the goods on board but he should avoid that the ship be retained longer than necessary or that the ship enters unnecessarily into demurrage.
If the freight has not been paid, the master does not have the right to sequestrate the goods on board as no one should ever take the law into one’s own hands. He has to go to a court of law and ask for the goods to be seized and eventually sold so that he can be compensated.
Note :
Checking the bill of lading by the master or the agent for its contents re identity of the receiver, endorser, payment of freight and other charges, cargo and quantities to be discharged or that have been discharged is called “sighting the bill of lading”.
Once the receiver takes delivery of the goods, the carrier looses his lien for the freight.
Several Holders Present Themselves
At Different Moments
If two holders of the bill of lading present themselves at different moments, the master or the carrier will be covered, thanks to the words at the end of the bill of lading: “.. any one of which being accomplished the other(s) to stand void”.
At the Same Moment
If several holders of the bill of lading present themselves at the same moment, check the local or national legislation on that subject.
Usually, the following steps are followed:
• Inform or consult the ship owner’s P&I Club (the correspondent or preferably the head office who will inform the correspondent).
• Leave the bills of lading with an official body such as a court of law, the consul, or the local authority to settle the dispute.
• Discharge the goods into a warehouse/silo/tank, etc. in care of a custodian who will hold the goods until the dispute has been settled and the freight and charges have been paid.
Nobody presents himself
In case the consignee does not present himself, the master can do the following:
• If the freight has been paid, go within reasonable time, to a court of law to ask for the goods to be discharged and warehoused. The goods should only be released on payment of all outstanding charges such as demurrage, discharging costs, warehousing costs (usually for the receiver of the goods).
• If the freight hasn’t been paid and the goods remain unclaimed, go to a court of law or any other local authority and ask for the goods to be seized and to be sold (eventually by auction) so as to recuperate the freight and all other outstanding charges. If the proceeds of the sale are insufficient, the master still has a right of recourse against the shipper, the only known person in the contract of carriage.
“If the Merchant or his Agent fails to take delivery of the cargo, the Carrier’s discharging of the cargo shall be deemed fulfilment of the contract of carriage. Should the cargo not applied for within reasonable time, the Carrier may sell the same privately or by auction”.
In this case there will also be costs for discharging, warehousing, for watching the goods, etc.
Loss of the Bill of Lading
If the bill of lading has been lost or stolen, the receiver of the goods should object to the master or the owner and go to a court of law to obtain an “order to deliver”. The receiver must be able to prove that he was the rightful holder of the original bill of lading. He will also have to pay a caution for eventual juridical consequences.
It is of good practice if anybody fails to present an original bill of lading to inform the P&I Club.
The Bill of lading has not yet Arrived
It often happens that the ship arrives into port before the bill of lading. If the Bill of lading is simply delayed, the master should do the following:
• Inform the P&I Club;
• Ask the receiver for a letter of indemnity backed with a bank guarantee
• Deliver the goods with the Owner’s and P&I Club’s agreement.
Notes
If the master delivers the goods to the wrong party without production of an original and signed bill of lading, the carrier (owner or disponent owner) will be held responsible and have no recourse from the P&I Club or from the court. The ship may even be seized and sold to indemnify the rightful owner of the goods.
Photocopy or faxed bills of lading
Sometimes the master is asked to deliver against a copy or faxed bill of lading, the original being unavailable. Unless special arrangements have been made in writing by the ship-owner to accept such a bill of lading, delivery should be refused. The usual rule is that delivery shall be given against presentation of at least one original bill of lading.
Multiple originals
Bills of lading are often issued in sets of three or four originals. The bill of lading will usually provide on its face that production of any one of those originals, will be acceptable. At the same time the other originals are considered to be void and cancelled.
Retention of the original bill of lading
The master should retain the original bill of lading against which cargo has been delivered. The receiver should have no need to retain it as a contract of carriage it is merely evidence and a copy will suffice, as a document of control its function is now complete as a receipt for the good it makes sense that it should be returned to the master when the goods are delivered.
However originals are sometimes required by local officials or customs and in those circumstances the master should ensure that he (or his agent) is allowed to see the original bill of lading and that he is allowed to retain a photocopy of the receiver or his agent as follows: ‘This is certified to be a true copy of this original bill of lading which is now accomplished.”
More than one person demanding delivery of the cargo
This situation may arise where
(a) no bills of lading are available at the discharge port
(b) more than one set of bills of lading has been placed in circulation, all or some of which are unauthorized
(c) The originals from a single set have found their way in to the hands of a number of holders
(d) The original shipper (seller) has parted with the bills of lading and is asserting that the holder has not complied with its obligations under the sale contract “(e.g. it has somehow acquired the bills of lading without making payment).
Each of the situations places the master (and the ship-owner) in a very difficult position. The master is now on notice that one or more of the bills of lading may not be valid, and that one or more of the holders may have acquired possession of the bills of lading in circumstances where the transfer of the bills of lading into their possession was not intended to transfer the right to demand delivery.
The situations can give rise to complex legal issues and may involve complex commercial solutions and legal solutions.
