One of the most important functions of a bill of lading is that it provides information as to the description of the goods, the condition of the goods, the quantity of the goods, the loading port and date of shipment, the discharge port, the name of the ship, whether freight has been paid and the terms of carriage. As these functions are essential to trade it is important that information given in a bill of lading is accurate. Failure to ensure accuracy can give rise to liability of the shipowner.
The essential rule is that in no circumstances, should the master sign a document which he knows to be untrue, or which he believes may be untrue, or where he has not given careful thought to the facts contained in the documents .
The following matters are important. If the master cannot contact or obtain guidance from the shipowners, the following general principles should be applied.
(a) The master must ensure that the information on the bill of lading agrees with that on the mate’s receipt(s)
(b) The master must check the facts about the cargo. It would be unusual for the master or the ship’s agent to prepare the bill of lading. The bill of lading is usually prepared by the shipper or the shipper’s agent. It is accordingly essential for the master to check the information about the cargo in the bill of lading. The master will not know all of the facts about the cargo that appear on the bill of lading which he is being asked to sign.
(c) The master must check the facts about the voyage. If the place or date of loading is incorrect, or if the discharge port is outside the charterparty range, the master should refuse to sign.
(d) Refusal to sign. It is recognised that refusal is not always safe or practical.
Information in the bill of lading
This section deals with ways of describing the cargo and the voyage. It is intended to give the master guidance where he is unable to obtain guidance from the shipowner. It may also assist the master in identifying what is a usual and what is an unusual situation.
(a) Some of the information in the bill of lading is within the master’s knowledge, for example, the port of shipment, the date of completion of loading of the parcel described in the bill of lading, and the date of issue of the bill of lading. If these facts are not correct the master should refuse to sign the bill of lading.
(b) Some information in the bill of lading may not be within the precise knowledge of the master, for example the quantity or weight or the actual condition of the goods loaded. The following rules may assist.
(i) The master should if possible add the words ‘shipper’s figures’ or ‘shore figures’ to any statement as to quantity or weight on the bill of lading.
(ii) If the master does not know the weight or quantity loaded (because there has been no opportunity for a tally or an accurate draught survey)then the words ‘weight and quantity unknown’ should be written alongside the figure.
(iii) If the ship has its own figures and these differ from those in the bill of lading, then the ship’s figures should be written alongside the shipper’s figures; and/or the words ‘weight and quantity unknown’ added
(iv) If in situation (iii) the master is not permitted to add the ship’s figures and if the difference between the shipper’s figures and the ship’s figures is more than could reasonably be explained by the practical imprecision of draught surveys or tallying then the master should refuse to sign the bill of lading. If the difference is small he should follow (ii) above.
(v) Usually the master only knows the apparent condition of the cargo. Accordingly if he can see no apparent problem with the goods when loaded he should mark the bill of lading ‘received in apparent good order and condition’ .
(vi) If the master can see that the goods are damaged in some way then he should say so. A more difficult question is where the master thinks that the goods may be defective or substandard, for example because they appear dirty, or mixed with foreign particles or debris, or are discoloured or odourous. If such comments are appropriate he should do his best to explain in ordinary language in writing on the face of the bill of lading what he believes is wrong with the condition of the cargo.
If he requires to add an additional sheet of paper then he should state (in writing on the bill of lading) how many sheets of paper are attached to each bill of lading.
He should seek guidance from the P&I club or its local correspondent or agent or from a surveyor as to the precise wording to be used.
(vii) It is always useful to describe the nature of the packaging of goods, for example ‘in paper bags’ or ‘polythene sacks’. If these are torn or damaged the bill of lading should say so, such as ‘about 457 bags torn’. If only a rough estimate can be made of the quantity damaged, however, this should be stated, for example ‘about 10 % torn’ or ‘about 5000 bags damaged’. Whether it is on the basis of a tally or on estimate, the master must have evidence to support his remarks.
(viii) Special clausings are often used for, for example, timber or steel cargoes, and if possible the shipowner or the P&I club correspondent should be consulted.
(ix) If in situation (vi) or (vii), the master is not permitted by the shipper or charterer to add comments which accurately describe apparent defects in the goods or packing he should refuse to sign the bill of lading.
Quantity and condition
(x) The words ‘weight, measure, quantity, condition, contents and value unknown’ are useful and desirable words to add to a bill of lading if they are not already part of the printed form.
(xi) The master need not describe the quality of the cargo .
- For the avoidance of doubt the master should place his signature and/or the ship’s stamp at the foot of the bill of lading only
Other matters at the time of signing
Freight / hire / demurrage / liens
The master may be worried that a bill of lading presented to him does not give the shipowner sufficient protection in terms of freight or hire or demurrage or liens for any of those or he may be worried about other terms of carriage. These are all matters for the shipowner or its P&I club to consider.
The master should always check with the shipowner’s managers as to whether they requires protective terms to be added, but leave the decision to them.
Charterparty bills of lading
Wherever there is a reference to a charterparty in the printed form of a bill of lading (for example in the Gencon charterparty), the master should check with the shipowner as to the date of the charterparty to be inserted in the bill of lading
Except in purpose-built container ships or in special trades where cargo is customarily carried on deck, carriage of cargo on deck should always be checked with the shipowner. Where cargo is carried on deck it is essential to state on the face of the bill of lading that cargo is being carried on deck. It is for the master to check with the shipowner and for the shipowner to ensure that such carriage is permissible.
‘For customs purposes only’
Sometimes, the master is asked to issue bills of lading ‘for customs purposes only’. The issue of additional bills of lading, for any reason, is problematic and should be referred to the shipowner for careful consideration. If the bill of lading to be released is a duplicate of the original bills of lading, then if the shipowner agrees that such a bill can be released, then it should be clearly marked with a warning such as: ‘For customs purposes only. Not a document of title.
Delivery of cargo will not be given against production or surrender of this bill of lading’.
Sometimes, again for customs purposes, the master is asked to issue bills of lading which show the ultimate destination of the cargo and which may be an inland destination beyond the sea discharge port. This is something which should be referred to the shipowner or its P&I correspondent for assistance. If the shipowner considers that it is essential in the trade and for customs purposes that such a destination be shown on the bill, then wording such as the following should be considered: ‘The carrier has undertaken carriage to the discharge port named above. The carrier is informed by the shipper that the intended inland destination of the cargo is [name inland destination]. The carrier makes no representation as to the destination of the cargo after the discharge port and the reference to the inland port is included, at the shipper’s request, for customs purposes only’. The alternative and more formal approach is not to permit such a marking on the face of the bill but to leave those involved in the sale and purchase of the cargo to reach a more satisfactory arrangement with customs.
References to sale contract etc.
Sometimes the master is asked by the shipper to show on the face of the bill of lading a sale contract reference number, or a letter of credit reference number,or an invoice number. This is for documentary purposes related to the sale contract. The risk is that the bill of lading containing this information may be treated as an ‘ad valorem’ bill of lading . The master is not under any obligation to include this information on a bill of lading
Bill of lading carried on board in ‘ship’s bag’
Bills of lading are often issued in sets of three or four originals. On occasions, the ship is asked to carry one of these bills of lading on board the ship during the voyage, sometimes with the additional instruction that delivery of the cargo at the discharge port should be given against that document. This is an inherently unsafe practice . The practical advice to the master is that he should resist any request or instruction to carry one original of the bill of lading on board. He should also bring the request to the attention of the shipowner and seek guidance. Practical advice to the shipowner, if he feels compelled to agree to the request, may be that:
(a) All of the original bills of lading should be marked: ‘One original bill of lading retained on board against which bill delivery of cargo may properly be made on instructions received from shippers/charterers’. In this way, the clausing will give notice to any party purchasing any of the bills of lading that delivery may be made in exchange for one original bill of lading retained on board; or
(b) The shipowner should make it clear to the charterer/shipper that the carriage of the bill of lading on board is simply the transportation of the document itself, and the master can take no responsibility for confirming or ratifying the identity of the person to whom that document is handed at the discharge port.
‘FIOST’ ‘Free out’ ‘Liner terms’
The inclusion of these terms can directly affect the responsibility of the shipowner or charterer for the cargo and for loading and discharging operations. If any such abbreviation is used, then these are matters which the master should report and discuss with the shipowner as soon as possible.
These words, made on the face of the bill of lading, may be taken to denote that freight has been paid. If asked to sign a bill of lading bearing these abbreviations, the master should treat them in the same way as he would the marking ‘freight pre-paid’.
How many bills of lading is a ‘set’?
The master should check with the shipper and with the charterparty. He should also check also the terms of the bills of lading themselves as they may show the number to be issued. There is no general rule as to what number should or must be issued for a parcel of cargo .
Sometimes the shipper or charterer will require bills of lading for individual parcels of cargo. Where the cargoes are clearly different in nature,this is not a problem. Where cargoes are homogeneous it should not be a problem to issue a bill of lading for each parcel. However, caution should be exercised where the homogeneous cargo is damaged and clausing of bills of lading will be required .
Blending/co-mingling of oil cargoes
(a) Oil cargoes are unusual in that charterers and traders may wish to comingle cargoes shipped from different ports on different dates, and often with different specifications.
(b) If cargoes shipped from separate ports and/or on separate dates and/or of separate origins are co-mingled then complications arise as to the accurate description of the port of shipment, date of shipment, and type of cargo in the bills of lading. Further problem may arise at the discharge port if the cargo mixed in the tanks no longer resembles the cargo described in one or more of the original bills of lading.
(c) Wherever there is co-mingling of cargo shipped on different dates from different ports and of different types it is essential that the shipowner’s instructions are obtained before bills of lading are issued. If the shipowner’s instructions cannot be obtained the master should refuse to sign and should explain his reasons for doing so by reference to (b) above.
Letters of indemnity
It is not for a master to agree to sign a bill of lading in return for a letter of indemnity. That is for the shipowner to decide. If the shipowner cannot be contacted then the master should refuse to sign.
Refusal to sign
In circumstances where the master feels that he should refuse to sign a bill of lading he should seek guidance from the shipowner or from the P&I club or their correspondent. If no guidance can be obtained, the following general principles should be applied.
(a) If the refusal of the master to sign a document is met with physical threats or coercion against the ship or her master or crew, then the master should sign the document. When the vessel has sailed and upon reaching a position of safety, the master (or the shipowner, if it is now in contact with the master) may give notice of protest to all parties and authorities concerned to the effect that the document has been signed under duress and the shipowner and the master consider themselves not bound by the master’s signature. (Of course thought must be given as to whether the ship or master, or any sister ship is likely to return to this dangerous regime).
(b) Sometimes legal pressure will be exerted on the master to sign. The most common example will be where the ship is operating under a charterparty. The charterparty may list the master’s obligations with regard to signing bills of lading. For example he may have to sign bills of lading ‘as presented’. This and similar expressions do not mean that the master must sign any bill of lading whatever its terms. For example, the master can refuse to sign a bill of lading ‘as presented’ if it
(i) contains facts about the cargo which are incorrect and which cannot be satisfactorily dealt with by following the steps in the section entitled ‘Information in the bill of lading’
(ii) contains facts about the voyage which are incorrect or names discharge ports outside the charterparty range
(iii) says that deck cargo is being carried under deck
(iv) contains terms which the charterparty expressly prohibits in the bill of lading
However, if the master is required by the charterparty to sign bills of lading ‘as presented’ he should not refuse to sign a bill of lading simply because it is marked, for example, ‘liner out’ or because it contains some foreign jurisdiction clause. These are not facts but terms of the shipper’s or charterers’ trade. They are matters for the shipowners to argue about with charterers if necessary.
Sometimes commercial pressure will be exerted on the master to sign in circumstances where he should, as advised above, refuse to sign. It is for the shipowner to make commercial decisions in response to such pressure.The shipowner may wish to negotiate, or take the commercial risk, or accept a letter of indemnity. The master, however, does not have these options. He should maintain his refusal to sign. Delay to the vessel or other consequences of threats made by the shipper or charterer may then perhaps be avoided by the following steps.
(i) The master should sign the document in the form that he is prepared to give. For example in the case of a bill of lading where the quantity or description of the cargo is in dispute, the master should sign a bill of lading showing the quantity or description which he considers to be accurate. The bill of lading should be left with the ship’s agent (and a protecting agent appointed for this purpose if possible). Notice can then be given that a bill of lading for the cargo has been signed and issued and is available for collection.
(ii) Alternatively, the master should give notice that he has given authority to the ship’s protecting agent to sign bills of lading on his behalf subject to instructions and approval from the shipowner when available
The master should not sign bills of lading in blank.
Where any person coming on board insists that the master takes delivery of a document from them he should mark it ‘for receipt only’.