What Is a Bill of Lading?

The bill of lading serves as both a contract for carriage and a document of title for cargo. It identifies the parties on both ends of a shipment and describes the goods and routing instructions. Every Bill of Lading contains Terms & Conditions which in a nutshell define the responsibilities of both the carriers and the shippers as well as their liabilities.

We will review some of the main clauses contained in the terms and conditions of an ocean bill of lading and which we consider to be most relevant for any shipper or consignee of cargo to keep in mind.

NOTICE OF CLAIM: “Written notice of claims for loss of or damage to goods occurring or presumed to have occurred while in the custody of Carrier must be given to Carrier at the port of discharge before or at the time of removal of the goods by one entitled to delivery. If such notice is not provided, the removal shall be prima facie evidence of delivery by Carrier. If such loss or damage is not apparent, Carrier must be given written notice within 3 days of the delivery”.

It is very important for shippers and consignees to keep in mind this time frame.

LIEN: “Carrier shall have a lien on any and all property (and documents relating thereto) of Merchant in its actual or constructive possession, custody or control or in route, which lien shall survive delivery, for all claims for charges, expenses or advances incurred by Carrier in connection with this shipment, or any previous shipment, of Merchant, or both, which lien shall survive delivery, and if such claim remains unsatisfied for 30 days after demand for its payment is made, Carrier may sell at public auction or private sale, upon 10 days written notice, registered mail to Merchant, the goods, wares and/or merchandise or so much as may be necessary to satisfy such lien and the costs of recovery, and apply the net proceeds of such sale to the payment of the amount due Carrier. Any surplus from such sale shall be transmitted to Merchant, and Merchant shall be liable for any deficiency in the sale”.

This clause is very important to keep in mind; the carrier will not release the documents or the cargo to the consignee until payment of the freight (or previous shipments) has been satisfied.
Another pivotal provision is the GENERAL AVERAGE.

GENERAL AVERAGE: 1) General Average shall be adjusted at New York, or any other port at Carrier’s option, according to the York-Antwerp Rules of 1994. The General Average statement shall be prepared by adjusters appointed by Carrier. 2) In the event of accident, damage, danger or disaster after commencement of the voyage resulting from any cause whatsoever, whether due to negligence or not, for the consequence of which Carrier is not responsible by statute, contract or otherwise, Merchant shall contribute with Carrier in General Average to the payment of any sacrifice, loss or expense of a General Average nature that may be made or incurred, and shall pay salvage or special charges incurred in respect of the goods. If a salving vessel is owned or operated by Carrier, salvage shall be paid for as fully as if the salving vessel or vessels belonged to strangers.

An example of General Average sacrifice is the discarding of freight to keep a vessel afloat. In this case, if the sacrifice is successful, all parties contribute to the loss.

FORCE MAJEURE: “Company shall not be liable for losses, damages, delays, wrongful or missed deliveries or nonperformance, in whole or in part, of its responsibilities under the Agreement, resulting from circumstances beyond the control of either Company or its sub -contractors, including but not limited to: (i) acts of God, including flood, earthquake, tornado, storm, hurricane, power failure, epidemic or other severe health crisis, or other natural disaster; (ii) war, hijacking, robbery, theft or terrorist activities; (iii) incidents or deteriorations to means of transportation, (iv) embargoes, (v) civil commotions or riots, (vi) defects, nature or inherent vice of the goods; (vii) acts, breaches of contract or omissions by Customer, Shipper, Consignee or anyone else who may have an interest in the shipment, (viii) acts by any government or any agency or subdivision thereof, including denial or cancellation of any import/export or other necessary license; or (ix) strikes, lockouts or other labor conflicts. In such an event, Company reserves the right to amend any tariff or negotiated freight or logistics rates, on one day’s notice, as necessary to provide the requested service”.

This is a very important provision that is commonly misunderstood by shippers or consignees. A frequent instance is when due to a severe weather-related event (such as flooding), goods in a container are damaged. The shipper often believes the carrier will be responsible for the value of goods. That is not the case, since the FORCE MAJEURE clause is applied. The shipper will have to deal directly with their insurance company to be compensated for his loss.

Find a link to Promptus Bills of Lading Terms and Conditions.

Remember Bill of Lading’s Terms & Conditions can vary between carriers, trade routes and countries. It’s essential to review and understand the ones being applied to your shipments by your provider to avoid misunderstanding and unrecoverable losses.

At Promptus we care for and encourage our customers to fully understand the Terms and Conditions we have in place. At the same time with recommend you insure your cargo. We offer various levels of coverage. Contact us today to get a quote on all your global logistics needs, including cargo insurance. Call us at 1-877-776-6799 or email us at info@promptus.us.