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Bill of Lading (BL)

Before we start the discussion, let me take you back to the origins of the bill of lading. When shipping began to flourish in the Mediterranean in the early 13th century, the merchants would travel along with their goods from one destination to the other. Therefore there was no need for any written record of the goods being shipped. The trading practices soon began to change. Now the merchants collectively appointed a person who would be responsible to deliver goods to their proper destinations. This was a practice in the late 1350s. Merchants would communicate with the receivers on other ports with letters of advice of the goods being shipped which they would send along with the goods. After decades and centuries together, this letter of advice was mandatory and today we call it the Bill of Lading.

What is the bill of lading?

If we search the meaning of the bill; it is defined as a printed or a written statement of the cost for goods or services delivered or to be @delivered. The meaning of the word “lade” is to put the cargo onto a ship or other forms of the carrier. Thus the bill of lading is the record of the traded goods that have been received on board. It is the agreement between the shipper (seller/exporter)  and the carrier for the transportation of goods. The bill of lading also indicates a particular carrier through which the goods have been carried and the conditions of transporting the goods to their final destination.

Current trade practice and use of lading

For understanding the procedure in a simpler way, lets us consider an example wherein we want to import some goods from china. The seller from China will be the exporter and we in India will be the importer. We will first make the sales contract and fix the payment terms with the seller/exporter (Sales contract, letter of credit). Then the seller/exporter will select a shipping agent with the help of whom he will transport the goods to India. This process also involves some documentation and the Bill of lading is one of the most important documents required for this process.

  • The seller/exporter issues the bill of lading to the shipping agent
  • The shipping agent gives the bill of lading to the master of the ship
  • Master signs the bill of lading when the goods reach onboard and give it back to the shipping agent.
  • The shipping agent now forwards the bill of lading back to the seller/exporter with masters sign.
  • The seller/exporter from China then forwards the bill of lading to us the receivers in India
  • We now need to send this bill of lading to our shipping agent. The goods will only be given to our shipping agent when he shows the bill of lading to the port. He shows the document and delivers us our goods.

Functions of the bill of lading

  1. It serves as a receipt that the goods are loaded on board the ship.
  2. It is evidence of the contract of carriage between the shipper and the carrier i.e a the deal has been initiated by the exporter to the carrier company to deliver goods at the exact destination.
  3. It is a document of title to the goods. Buyer can show this and receive goods at the port.

Elements of Bill of Lading

Bill of Lading

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