Understanding Negotiable Bill of Lading
Let me explain what a negotiable bill of lading is. Lading refers to loading cargo onto a ship or vessel, and a negotiable bill of lading is a specific type of bill of lading. This document acts as a legal agreement between the shipper and the carrier, specifying the type, quantity, and destination of the goods being transported. What sets the negotiable version apart is that it's a contract of carriage you can transfer to a third party.
How a Negotiable Bill of Lading Works
You should know that the bill of lading functions as a receipt when goods arrive at their destination—the recipient signs it to confirm delivery. There are various types of bills of lading, each with its own rules; for instance, an ocean bill of lading is only for cargo crossing international waters. A negotiable bill of lading, also called an order bill of lading, transfers control or title of the goods to whoever is named on it. To make this transfer, the consignee—who is the buyer responsible for the goods—signs or endorses the document and passes it to the new consignee. The consignor, that's the shipper, must stamp and sign it first, and then the carrier delivers it. Remember, it has to be written to the order of the consignee and must be a clean bill of lading.
Key Takeaways
- Lading means loading cargo onto ships.
- A bill of lading documents the agreement between shipper and carrier, including goods' details and destination.
- The negotiable bill of lading transfers title to the named entity.
- A clean bill of lading confirms goods are in good condition without defects.
- A straight bill of lading limits carrier liability and isn't transferable.
Clean Bills of Lading vs. Straight Bill of Lading
Let's compare these. A clean bill of lading is what the carrier issues after inspecting and confirming the goods are in proper condition, free of defects. If it's 'claused' or 'fouled,' that means it notes any damage or issues with the products. On the other hand, a straight bill of lading, also known as a uniform bill of lading since its adoption in 1909, specifies how a carrier can limit its liability. You can't transfer it—it's only deliverable to the named consignee. Like all bills of lading, it lists the transported goods and outlines the shipment terms as a contract.
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