BILLS OF LADING

Chapter 1: Introduction
The purpose of this assignment is to identify and understand the differences between the two types. Therefore, their legal definition will be presented as well as, where and how each of them should be used appropriately, in order to avoid misunderstanding between the involved parties which, unfortunately could lead them to court. Furthermore, past cases such as, “APL vs. Peer
Voss and the Rafaela S”, will be mentioned in order to distinguish the difference between a seaway and a straight bill of lading.

Chapter 2: Literature Review
2.1 Bills of Lading
The bill of lading (B/L) is used for the transportation of goods by sea. The word “lading” derives from the word loading, referring to the loading of goods onto a ship. (Investopedia, 2015)
This document is signed and act as a legal contract between the shipping company, which has the responsibility for the carriage of goods from the port of origin to the port of destination, and the customer who makes the export (shipper) and the import (consignee).
Its role is very important because in case of error, the commodity, which can be worth hundreds of thousands dollars, may end up into the wrong hands before the fulfillment of all the obligations from the contractual parties who participated in the carriage.
The information presented on the bill of lading have to be properly completed, in order to avoid mistakes during the carriage of the goods. Therefore, it is necessary to indicate the names of the sender and the recipient of the goods, the names of the loading and discharging ports as well as, the name of the ship in which the cargo is loaded and the dates of departure and arrival in the appropriate ports. In addition, extra information have to be mentioned on the bill of lading regarding, the nature of the goods that are going to be transported, the way they are packed into containers/pallets and also the freight that is going to be paid for the transportation. (Day, 2015)
Bill of lading is issued and provided to the shipper as soon as, the goods are on board the vessel.
The shipment cannot be released to the consignee at destination as long as the shipper holds that original bill of lading. The shipper will release their hold on the cargo, usually once the shipper

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has been paid, and the original is sent to the importer by courier, so it can be presented to the shipping company at destination to secure the release of the cargo. (Sampson, 2013)
The negotiable bill of lading has three basic functions:
1. It is evidence of the contract of carriage. However, it’s not the contract itself between the shipper and the consignee because the actual contract was already established at the time the consignee placed the order with the shipper and they had made an agreement, neither is the contract between the shipper and the carrier since the contract was already made when the shipper or his agent made a booking with the carrier to carry the cargo from A to B..
2. It is used as a receipt that the goods have been shipped or received for shipment.
3. It is a document of title to the goods. This means that the holder of the bill of lading at the same time is the owner of the goods and he could sell the goods while they are still in transit to any third party simply by endorsing the bill of lading and delivering it to a third party upon payment of the value of the goods. (Donner, 2015)
There are two basic types of bill of lading in the maritime sector which are been used in different situations. The first one is the negotiable bill of lading, either wise called “traditional bill of lading”, and the second type is the non-negotiable which can be refer to a “seaway or straight bill of lading”. 1. “Negotiable bills of lading” satisfies all of the above functions. They are issued in 3 sets of originals and the cargo at the port of discharging can only be release with the presentation of one of the originals. Usually, they include the phrase “to order” or “to order of shipper” and in case where letter of credit is involved the phrase “to order of ABC bank” will appeared.
Moreover, in the back of a negotiable bill of lading the terms and conditions of the carrier must and should be appropriately introduced. However, the drawback of a negotiable bill of lading is that many times it can delay the transportation of goods usually, because the consignee did not pay to the shipper the value of the goods and as a result the shipper did not send to him the B/L and in some extreme cases because he may lost the B/L therefore, the goods cannot be release to the consignee. For this reason, negotiable bill of lading is more commonly used for the transportation of conventional cargo in tramp service where, the ships do not have a schedule to fulfill or a specific time to be at a port and in this way even if the delivery of the cargo to the consignee delays for whatever reason nothing will be influenced.
2. “Seaway bills of lading” only satisfies two of the main functions of a B/L, it acts as a receipt of goods and as an evidence of existence of a carriage contract but not as a document of title
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since it is a non-negotiable nor transferable document. Only one copy of seaway bill is issued which does not include the terms and conditions of the carrier in the back of it. Furthermore, the seaway bill is used in the transportation of goods within the same company which can have warehouses around the world and/or when the transportation takes place between two different companies but there are no negotiations required between the two either directly or via bank for release of the cargo and/or when the shipper doesn’t need to submit an original bill of lading to anyone to secure his payment. Moreover, the cargo at the destination port can be release without the presentation of the seaway bill and in some cases it can be release in advance, this is the reason why it is also called an express release bill of lading.
3. “Straight bills of lading” similar to the seaway bills of lading, are also a non-negotiable and non-transferable document which, only acts as a receipt of goods and as an evidence of existence of a carriage contract. They are issued in originals and the name of the consignee is specified in the document. Therefore, the shipment can only be delivered to the person or the company whose name is written in the bill of lading by simply present an identification card to the carrier at the port of discharging or as soon as, at least one of the originals documents is handed back to the carrier. Straight bills are usually been used in the liner shipping services where they have a very sensitive schedule and in order to avoid delays of the delivery which can cause delays to the whole schedule they are using this document which does not need to pass due to a lot of bureaucracy like the traditional bill of lading.
(Manaadiar,2013)

2.2 The case of “The Rafaela S”
In 1989 the appellants, Mediterranean Shipping Company, contracted with an American company, J.I. MacWilliam Company Inc., to transport four containers of printing machinery which, was carried on board two different chartered vessels, from Durban (South Africa) to Felixstowe
(England) on board the “Rosemary’, and from Felixstowe (England) to Boston (USA) on the
“Rafaela S.”
On the 18th of December 1989, the carrier issued three documents, described as bills of lading.
However, the consignee box on the documents contained the words, “non-negotiable unless
"Order Of ". Moreover, the box was completed with nothing more than the name and address of the consignee. Except the fact that the bill of lading was transferable only to the named of the
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consignee, it also contained the usual terms and conditions of a traditional bill of lading, regarding the matters relevant to the allocation of risks between the parties. (UK P&I Clubs, 2010)
On the first leg of the voyage, everything went fine and the “Rosemary” arrive to Felixstowe with the four containers as appropriately. On the second leg however, from Felixstowe to Boson under the carriage of “Rafaela S.” the cargo suffered major damage and as a result, the consignee brought a claim against the carrier.
On the one hand, the carrier wanted to apply US COGSA Package Limitation ($2,000 total) to the claim since the port of destination was in USA. On the other hand, the consignee tried to apply the Hague Visby rules which rise the limitation of the carrier to a total of $150,000 and stated that since the carriage of goods started from Felixstowe the English law should be applied. In order to prove that Hague Visby rules should be applied the consignee had to prove that the document under which the containers were carried was a negotiable bill of lading, and this was the main argument before the court. (Sammarco, 2005)
In fact, the transportation of goods from Felixstowe to Boston was under a straight bill of lading and as the carrier stated a straight B/L was not a B/L since it cannot be transferable to a third party. However, the document was filled on the traditional bill of lading form and the boxes of this particular bill were completed in such a way that there was only one possible receiver, the J.I.
MacWilliam Company Inc., without any terms such as "order to" which consequently would not allow the cargo to be sold to a third party and deemed the B/L to be non-negotiable.
The Law Lords appeared to take this facts into consideration and they concluded that it was indeed a B/L since it was filled in the form of the standard bill of lading and that the consignee should present the document in order to receive the goods. (Brown, 2007)

2.3 The case of “APL Co. Pte Ltd vs. Peer Voss”
In 2000 the appellants, Mr. Peer Voss, who had an automobile business in Germany, offered to sell a convertible Mercedes Benz car to Seohwan, a Korean company in Seoul, at a price of
108,600 DM. As soon as, Mr. Voss received a payment of 48,500 DM from Seohwan, he made an agreement with APL Co. to transport the car on board the vessel “Hyundai General” from
Hamburg (Germany) to Busan (South Korea). (Prakash J., 2002)

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Afterwards, the carriers, APL Co., loaded the car onto the vessel (28 August 2000) and they issued a set of three original bills of lading, showing Mr. Voss as the shipper and as a consignee the Seohwan Trading Co. Ltd with only its address and nothing more. In addition, they did not include the word “order to” which means to order of shipper and automatically they made the B/L non-negotiable. As soon as, the vessel arrived at its destination port, Busan, in South Korea, the carriers released the car to a person, who claimed that he is a representative of Seohwan, without the presentation of any of the originals B/L. However, the person who received the car had presented to the carrier a copy of Mr. Voss’ invoice for the balance sum and also a copy of an outgoing cable form between the Korean Exchange Bank and the bank in Frankfurt showing a payment of 207,500 DM for the car and also for some other transaction between the parties. (Koh G., 2002)
Due to this situation, Mr. Voss who, regardless to say he never receive his payment for the car and this was the primary reason why all three B/L were still with him, sued APL Co. for breach of its duty as a carrier, breach of contract, and for failing to exercise due care with the cargo since, they delivered the car without the presentation of the original bill of lading.
On the other side, APL Co. argued that, when a straight B/L is used which, is a non-negotiable and non-transferable instrument, the carrier is able to deliver and release the cargo to the consignee without the presentation of a B/L.
At the end, the judge found in favor of Mr. Voss since, it is a firmly established principle of law that, in a contract for the carriage of goods by sea, delivery of the cargo is to be made at the discharge port by the carrier to the consignee only upon the production by the consignee of the original bill of lading. (McNaughton, 2003)

Chapter 3: Conclusion
This assignment proved that the usage of bills of lading is very complicated and if they are used wrongfully, as we saw in past cases, “the Rafaela S” and “the APL vs. Peer Voss”, it can lead the involved parties to the court and as a result their reputation was influenced. This is happening because there are a lot of different types of bills of lading, with different factions and suitability.
However, none of them stated clearly where and how each of them should be used therefore, the contractual parties choose which one suited them better.
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On the one hand, there are the negotiable bills of lading which are also transferable documents and they satisfied the factions of document of title, evidence of a contract of carriage and a receipt for goods. This particular document due to its nature it should be used in the dry bulk market and in particular in the tramp service because the cargo usually in this market it can be sold and bought many times during the voyage. Moreover, the cargo can only be released by the presentation of a B/L and usually bureaucracy is the reason why the goods are delayed to be handed to the consignee however, in the case of tramp service time is not a big issue because the vessels operating in this sector do not have a schedule program.
On the other hand, there are the non-negotiable bills of lading which satisfied the factions of evidence of a contract of carriage and a receipt for goods however, there non-transferable and this is the reason why they are not also document of title. This document can be found in the shipping market in the form of a seaway bill of lading and also as a straight bill of lading. They may have the same factions however, they are suitability is completely different. The seaway B/L, did not need to be presented by the consignee to the carrier in order to claim the cargo. Therefore, it should be better used for the transportation of goods within the same company which can have warehouses around the world and/or when the transportation takes place between two different companies but there are no negotiations required between the two either directly or via bank for release of the cargo and/or when the shipper doesn’t need to submit an original bill of lading to anyone to secure his payment. The straight B/L are very well suited, for the transportation of goods via a container in the liner shipping market where, the schedule cannot be delay for whatsoever reason and since the cargo can be released by the presentation of an identification card this will avoid delays in the schedule.
The ways of usage, which are presented above is at least logical and more suitable for each of the types and could indeed solve many problems and avoid misunderstandings between the involved parties. However, even if the bills of lading are reform and become more clear as regards their suitability, usage and when and how each of them should be properly used, as long as the human factor exist in the transportation of goods always mistakes will be happening.

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Reference List
Brown, M., 2007. Straight Bills Of Lading - Application of the 'Rafaela S' In Hong Kong. Retrieved from: https://www.mayerbrown.com/pt/publications/detailprint.aspx?publication=94 Accessed:
16/11/15
Day, A., 2015. What are the contents of a Bill of Lading? Export Management. Publish your article.
Retrieved from: http://www.publishyourarticles.net/knowledge-hub/export-management/whatare-the-contents-of-a-bill-of-lading/4343/ Accessed: 13/11/15
Donner, P., 2015. Commercial Law and Marine Insurance. Chapter 1: Bills of Lading, p. 3-5. World
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Koh, G., 2002. APL Co Pte Ltd v Voss Peer. Laws of Singapore. Academy of Law. Singapore.
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from: http://www.singaporelaw.sg/sglaw/laws-of-singapore/case-law/cases-inarticles/shipping/1421-apl-co-pte-ltd-v-voss-peer-2002-4-slr-481-2002-sgca-41 Accessed:
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McNaughton, S., 2003. Straight Bills Of Lading - Delivery Without? Stephenson Harwood & Lo.
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Manaadiar, H., 2013. Bill of Lading. Shipping and freight resource. Retrieved from: http://shippingandfreightresource.com/what-is-a-bill-of-lading/ Accessed: 13/11/15
Prakash, J., 2002. Cargo consigned under non-negotiable (‘straight’) bill of lading: cargo delivered without production of bill of lading: whether delivery of bill of lading to carrier required: straight bills distinguished from waybills. Voss Peer v APL Co PTE Limited. International Firm of Lawyers.
Retrieved from: http://archive.onlinedmc.co.uk/voss_peer_v__apl.htm Accessed: 16/11/15
Sammarco, C., 2005. UK: "Rafaela S" – House of Lords Gives It to Us "Straight". Barlow Lyde &
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Us+Straight Accessed: 16/11/15
Sampson, S., 2013. Three types of Bill of Lading and their key differences. CDS Global Logistics
Incorporation. Retrieved from: http://web.cds-worldwide.com/blog/3-Types-of-Bills-of-Ladingand-Their-Key-Differences Accessed: 13/11/15
UK P&I Club, 2010. Rafaela S - changes to Rule 2, Section 17. Publications. Retrieved from: http://www.ukpandi.com/publications/article/rafaela-s-changes-to-rule-2-section-17-231/ Accessed: 16/11/15
Wilson, J., F., 2012. Carriage of Goods by Sea, 7th edition. Chapter 5: Bills of Lading and their functions, p. 113-165. Institute of Maritime Law. University of Southampton.

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