Definition of carriage of goods contract, bill of lading
Carriage is simply defined as the transportation of goods or cargo from one location to another. It is however not as simple as it sounds as it includes other components such as loading, stowage, transportation, unloading and delivery.
A carriage of goods contract is therefore the legal document entered between a carrier and a sender (or consignor) where the carrier undertakes to move goods in return for payment to another person, usually the receiver (or consignee).
The term “bill of lading” refers to a document evidencing the loading of goods on a ship. It is believed that documents similar to the bill of landing had been in use as early as Roman times. The first statutes date back to the 11th century which saw the rise of Mediterranean commercial cities such as Venice and Genoa. Statutes were enacted at that time that required each ship to be accompanied by a clerk. This clerk was in charge of a catalogue which served as proof of the shipper’s receipt of goods. Contracts between shippers and carriers have become more complex, and bills of lading now state the terms of contract hence making them a prevalent instrument in maritime transport.
A bill of lading enables the consignee at the place of destination to prove his rights to the goods. The modern bill of lading can be described as a legal document or shipment receipt by or on behalf of the carrier and issued to the shipper acknowledging that goods, as described in it have been shipped in a particular vessel to a specified destination or have been received in the ship owner’s custody for shipment.
The bill of lading therefore is a legally binding document which provides the carrier and the shipper with all the information necessary for the accurate processing of shipment goods. It has three main functions. Firstly, it is a document of title to the goods described in the bill of lading. Secondly, it is a receipt for the items being delivered. Finally, the bill of lading sets out the terms and conditions agreed for the transport of goods.
When the goods are shipped, the physical ownership of the goods is passed from the exporter to the carrier. At this point, payment may not yet have been received by the exporter. This makes the bill of lading a critical part of the transaction. This allows the exporter to turn over ownership of the products to the carrier, giving the exporter indirect control of the goods during the transport process. In common law, the bill of lading acts as a semi-negotiable instrument. However, under statutes and under international conventions, bills of lading are entirely negotiable instruments in all legal systems, unless they display on their face that they are not negotiable.
There are two main types of bills of lading in foreign trade that may serve as a title document, i.e. a negotiable (open) and a non-negotiable (straight) bill of lading. The negotiable bill of lading instructs the carrier to deliver the goods to someone in possession of the original negotiable bill, which in turn reflects the title and control of the goods. The non-negotiable bill of lading sets forth a particular consignee to whom the goods are to be delivered and does not in itself reflect the ownership of the goods. For this purpose, a negotiable bill of lading must be used for the selling of goods.
