Bill of lading is a negotiable transport document, only when it is issued in a negotiable form.
Negotiable bill of lading plays a key role in international export-import transactions, where the exporter or exporter's bank does not want to release the goods to the importer without surrendering at least one original bill of lading to the carrier's agent at the port of discharge.
Today on this article I will try to answer below questions:
Negotiable bill of lading is the only transport document, which lets consignor of the shipment transfer document of title to a 3rd party. Additionally, with the help of the negotiable bill of lading new consignor could also transfer the title of goods to another party.
- What is a negotiable transport document?
- What are the differences between negotiable bill of lading and non-negotiable bill of lading?
- How does a bill of lading could be issued in a negotiable form?
- What is a consignee field on the bill of lading?
- What is a notify field on the bill of lading?
- How to complete consignee and notify fields of a bill of lading? (explanations with examples)
Negotiable bill of lading is the only transport document, which lets consignor of the shipment transfer document of title to a 3rd party. Additionally, with the help of the negotiable bill of lading new consignor could also transfer the title of goods to another party.
All transfers related to the title of goods under negotiable bills of lading should be made with endorsements and completed by transferring the original bills of lading to new buyer.
The main difference between a negotiable bill of lading and non-negotiable bill of lading is the document of title.
It is possible to take following actions under negotiable bills of lading, which are not possible to perform under non-negotiable bills of lading:
A bill of lading could be issued in negotiable form, if it is made out;
A document of title in this context is a document, which provides its holder with the exclusive right to demand delivery from the carrier. As the goods will only be released at the port of discharge against surrender of the original bill of lading, possession of the negotiable bill of lading means possession of the goods. (source: The use of transport documents in international trade, report by the UNCTAD)
What are the differences between negotiable bill of lading and non-negotiable bill of lading?
The main difference between a negotiable bill of lading and non-negotiable bill of lading is the document of title.
- Only lawful holder of the original bill of lading can demand delivery from the carrier against surrender of the original bill of lading at the port of discharge.
- Carrier is only entitled to release the goods to lawful holder of the original bill of lading against surrender of the original transport document at the port of discharge.
- Consignor or shipper can transfer title of goods to a 3rd party by endorsement and transfer of the original bill of lading.
- Goods may be sold in transit and endorsement/transfer of document has the same effect.
How does a bill of lading could be issued in a negotiable form?
- "to order" or
- "to the order of a named party"
- "to bearer".
- or indicates, by wording such as "negotiable" or other appropriate wording recognized as having the same effect by the law applicable to the document.
What is a consignee field on the bill of lading?
Rotterdam Rules defines the consignee as a person entitled to delivery of the goods under a contract of carriage or a transport document or electronic transport record.
Consignee field generally stated on the upper left side of the bill of lading. Negotiability of the bill of lading is shaped by how the consignee field is completed.
If a bill of lading made out "to order", "to the order of a named party" or "to bearer", then it is negotiable.
If a bill of lading made out "to a named party", then it is may or may not be a negotiable transport document depending on the rules of applicable law.
Rotterdam Rules defines the consignee as a person entitled to delivery of the goods under a contract of carriage or a transport document or electronic transport record.
Consignee field generally stated on the upper left side of the bill of lading. Negotiability of the bill of lading is shaped by how the consignee field is completed.
If a bill of lading made out "to order", "to the order of a named party" or "to bearer", then it is negotiable.
If a bill of lading made out "to a named party", then it is may or may not be a negotiable transport document depending on the rules of applicable law.
Especially under cash against documents and letters of credit transactions, it is vital importance to complete the consignee field in a negotiable form.
Notify is the person, who is to be notified of the arrival of the goods. Notify party stated on the bill of lading has no effect on the consignee of the bill of lading.
Notify field generally stated just under the consignee field of the bill of lading.
How to complete consignee and notify fields of a bill of lading?
Selected payment method could have a huge impact on the completion of the consignee and notify fields on the bill of lading. For this reason I would like to show how to complete consignee and notify fields of the bill of lading separately for each payment method.
How to complete consignee field of a bill of lading under cash in advance or open account payments?
Under cash in advance and open account payments, exporters and importers complete the transaction without interfered by a 3rd party such as a bank.
Shipping documents are sent directly to the importer by the exporter via express courier or registered postal services.
As there is no 3rd party exists in the transaction, bill of lading may be made out to the name of the importer company under cash in advance and open account payments.
How to complete consignee field of a bill of lading under cash against document payment method?
Although it is not possible to consign a transport document to a bank without having the bank's advance acknowledgement as per documentary collection rules (URC 522), it is a customary act to made out the bill of lading to order of the presenting bank, who is making presentation to the importer.
Consignee field of a bill of lading should be completed according to letter of credit instructions.
In most cases issuing banks demand that bills of lading must be made out to the order of issuing banks.
Notify field of a bill of lading should be completed according to letter of credit instructions. In all other payment methods notify field can be completed either;
What is a notify field on the bill of lading?
Notify field generally stated just under the consignee field of the bill of lading.
How to complete consignee and notify fields of a bill of lading?
How to complete consignee field of a bill of lading under cash in advance or open account payments?
Shipping documents are sent directly to the importer by the exporter via express courier or registered postal services.
As there is no 3rd party exists in the transaction, bill of lading may be made out to the name of the importer company under cash in advance and open account payments.
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| Bill of lading consigned to the importer company . |
How to complete consignee field of a bill of lading under letter of credit payment method?
In most cases issuing banks demand that bills of lading must be made out to the order of issuing banks.
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| Bill of lading made out to the order of the issuing bank under letter of credit. |
How to complete notify field of a bill of lading under various payment methods?
Notify field of a bill of lading should be completed according to letter of credit instructions. In all other payment methods notify field can be completed either;
- by writing the importer company's name and adress
- by writing "the same as consignee"
- by writing another company's name and address, such as importer's logistics supplier, importer's custom clearence office etc., as requested by the importer.
