A bill of lading (B/L) or (BOL) is an essential document when transporting cargo or freight from one place to another. It is meant to act as a transport document and evidence of a contract for the movement of goods. There are various types of bill lading which can be classified based on different criteria which can be, how the bill is executed, the method of operation, or the place where carriers take responsibility of the cargo.
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What is a Bill of Lading
The word ‘bill’ means a written statement for the cost of goods or services and the term ‘lading’ or ‘lade’ means to put cargo onto a ship or any other kind of carrier. Hence, a bill of lading is a document with records of the goods which have been received on board. In simple terms, it is a legal binding document required to move freight shipment issued by a carrier (the transporting company) to a shipper. A bill of lading describes the type, quantity and destination of the goods to be transported. It functions as a title of ownership of the goods, as a receipt for the receiver of the shipped products and as a contract document between the carrier and shipper, stating the terms and conditions for the movement of the products. The various types of bills are described below.
Negotiable bill of lading
This type of bill of lading has a clear instruction that the goods can be delivered to anyone who has the original copy of the bill, indicating the title and control of the goods. Meaning, the bill can be transferred to a third party through a consignment. A consignment occurs when the receiver of the goods signs off the document and delivers it to a third party. In this type of bill of lading, the receiver or his/her agent has to obtain and present the original copy of the bill. The freight will not be released in the absence of the original copy. In addition, a negotiable bill acts as a receipt so the receiver can acknowledge that the goods have been delivered by signing the bill.
Open bill of lading
An open bill of lading is a type of bill of lading that is negotiable. It can be transferred multiple times by changing the name of the receiver. For example, a switch bill of lading is a type of an open bill of lading.
To order bill of lading
This is a type of bill of lading that is issued without a named consignee instead, ‘To order’ is written on the consignee section. It can be transferred, and it serves as a proof of contract, a receipt and a document of ownership. A to order bill can be used as a negotiable instrument for payment between a buyer and seller using a letter of credit. Cargo can only be released after at least one of the original bills issued is surrendered.
Non-negotiable bill of lading
These types of bills have specific details of a receiver to whom the goods will be shipped. The receiver can simply claim the cargo by confirming his/her identity. The main difference between a negotiable and a non-negotiable type of bill of lading is in the ownership of the bill. One can be transferred to a third party whilst the other only has one receiver.
Straight bill of lading
Also called a consignment bill of lading, it is a non-negotiable type of bill of lading. It is a bill that is specified to a particular person who can sign for and accept the shipment. Therefore, the products cannot be transferred to a third party through transferring the bill. A straight bill also serves as a receipt upon arrival at the destination. This type of bill of lading is used when the goods have been paid for or when they do not require payment. With this bill, a seller agrees to use specific transportation to move cargo to a certain location.
Seaway Bill of lading
This type of bill of lading is non-negotiable. It serves as proof of contract and a cargo receipt but not as a document of title. This bill can be issued as a hardcopy bill or as a soft copy bill. A seaway bill is normally used when a transaction is happening between related companies. For example, when car manufacturer sends parts to a sister company in another country. It can be issued when transactions occur between different companies, but no negotiations will be required.
Types of Bill of lading based on Carriers responsibility
- Port to Port Bill of Lading,
A port to port bill is issued when the responsibility of the carrier begins at the place of origin and ends at the port of delivery. With this type of bill of lading the place of receipt and the place of delivery is not mentioned.
- Combined Transport bill of lading,
This type of bill of lading is issued when the cargo has multiple modes of transport. it can also be referred to as a multimodal bill. The carrier or another party contracted by him/her can carry out all the movements. The carrier will be held liable for any damage that may occur during all modes of transportation.
- Through bill of lading,
A through bill of lading is different from the combined bill of lading in that there is only one mode of transport but with different legs like sea and inland legs. The carrier is responsible only for the sea leg and acts as an agent for the inland movement. Thus, s/he is not held liable for any loss or damage that may occur inland. A through bill of lading is necessary for the export of goods. Unlike other bills that only cover one element, this type of bill of lading covers the whole process and contains other bills such as an inland bill of lading (which covers the domestic transport leg) and/or an ocean bill of lading (which is required for maritime shipping).