Bills of lading are proof for the contract of affreightment, which plays a crucial role in international trade. Therefore, with growing trade, bills of lading are a compelling tool for ensuring secure transactions.
The President assented to the Indian Bills of Lading Act on April 11, 1856, to amend the provisions of the Bill of Lading Act 1855. The amendments to the Act entrenched a framework for effective issuance, enforcement, and endorsement of bills of lading.
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Indian Bills of Lading Act of 1856
The Indian Bills of Lading Act of 1856 describes the Bill of Lading as a legal document and contract between the shipper, carrier, and consignee. This legal document functions as a receipt that states the destination of goods to be dispatched, the quantity of goods to be shipped, and source of the freight.
According to Section 1 of the Indian Bills of Lading Act, 1856, the rights to this bill of lading are vested in the consignee, that is, the receiver/customer or the endorsee.
What is a Bill of Lading?
A bill of lading is a legal document that serves as an evidence of a contract of carriage and receipt of goods. The bill entails the details of the type, quantity, and destination of goods to be carried. Furthermore, the bill of lading is the shipment receipt when goods are delivered to a predetermined destination.
The Bill of lading is a transferable bill by endorsement. In this case, the consignor passes goods to the consignee adhering to all contract rights mentioned in the bill of lading and shall continue to the original shipper or the owner. This facility is mentioned in the preamble of the Indian Bills of Lading Act of 1856.
The receipt includes the quantity, the shipment place, the name and address of the shipper(s), that is, the consignor and the name and address of the consignee (the receiver or the customer). Furthermore, the bill of lading details the date of the shipment, the quantity, and the exact weight of belongings.
To avoid errors in shipment, the consignor must include complete descriptions of the packed goods, including whether they are fragile or hazardous. Therefore, the consigner pastes a sticker on the packaging of the goods. In the case of any specific requirement or instruction regarding the product, the same is mentioned with any special order tracking number.
Parties Involved in the Bills of Lading
The Bills of Lading involve the following parties:
The shipper may be either the supplier of goods or the owner of the warehouse/ manufacturers. The shipper prepares and packages the goods for shipment.
The carrier is either an individual, a group of individuals or a company entitled to transport the goods by a specific travel method. The carrier opts to ship goods either by land, water, or airways. Therefore, the carrier chooses the best and most feasible method for the safest transportation.
The consignee is the official and legal recipient of the shipped goods. The consignee receives the transported shipment and is either a consumer or a client and considered the ultimate owner of the product.
Types of the Bills of Lading as Per the Indian Bills of Lading Act
Numerous types of bills come under the ambit of the Indian Bills of Lading Act of 1856.
Clean Bill of Lading
A Clean Bill of Lading is centred on the consignee’s role and the shipment’s payment. This legal document confirms that all the goods inside the shipment are safe and not damaged or defective. The carrier issues the clean bill of lading after inspecting the interest.
Straight Bill of Lading / Non-Negotiable Bill
The carrier issues the straight bill of lading or non-negotiation bill when the consignee has paid for the shipment of goods in advance for direct package delivery to the consignee without third-party interference. The consignment is delivered directly to the consignee, and the carrier need not declare the delivery update to any third party.
Negotiable Bill of Lading
A negotiable bill of lading is also known as an order bill of lading and is one of the most common types of bills. The carrier or the consignor has to update the third party, and the third party receives the consignment. In simple terms, the consignment is delivered to the third party and subsequently transferred to the consignor.
Claused Bill of Lading
A claused bill of lading is issued specifically during shipment when the package/goods bear damages or shortfall. When a bill of lading is said to be claused, the shipment did not go through as promised. This claused bill of lading authorises the consignee to either receive the package or refuse it.
Through Bill of Lading
Through bill of lading deals with transportation. This bill is issued when a particular shipment has to cross various destinations either through one mode of transportation or when multiple modes of transport are used.
Inland bill of lading
The inland bill of lading is transportation-based and is issued when a package is to be transported within a country (domestic shipment).
Ocean Bill of Lading
The Ocean Bill of Lading is also transportation-based. This Bill is only issued when the goods are to be shipped through overseas travel.
Uniform Bill of Lading
A uniform bill of lading is a standardised agreement between the exporter and the carrier. This agreement includes all the items, goods, or property to be transported. This bill specifies the name, destination, and origin of the consignor and the name and destination of the recipient. Furthermore, this agreement includes the terms and conditions from the carrier’s side, their liability, the time frame for the transportation process, the procedure to file a claim if the consignee receives it, and also discusses insurance applicability.
Objectives of the Indian Bills of Lading Act
The Indian Bills of Lading Act of 1856 describes the bill of lading as a legal document specifically for transportation. The Act makes the bill of lading suitable for the following purposes:
- The bill is a legal document that permits the shipment of goods through either seaways or air travel.
- The bill acts as evidence for the carriage contract, which contains all the terms and conditions under which the procedure for transporting goods is carried out.
- The bill acts as a receipt issued by the transportation company, which endorses that the carrier has received the goods according to the terms and conditions of the contract and the goods received did not bear damages.
- The bill of lading acts as a receipt of the goods shipped and is a contract between the shipper and the carrier.
- The bill provides all the details of the shipment and the goods and states the quantity, types of goods, and other specifications.
- This bill includes all the details of both the consignor and the consignee. Therefore, it shows ownership and acts as the title of goods.
- The shipper sends a copy of this bill to the receiver, which acts as the proof of shipment and is specified under Section 3 of the Indian Bills of Lading Act, 1856. This bill specifies that a bill of lading given to the consignee is conclusive proof of shipment.
- This Bill provides the carrier and the consignee with all the terms and conditions in the contract.
Who Can Issue the Bill of Lading?
The Indian Bills of Lading Act of 1856 specifies that the carrier shall issue the legal document—a bill of lading. The carrier conveys the commodities from one destination to the required delivery destination.
The issuance of a bill of lading depicts that the carrier or the consignor is incharge of the goods to be shipped. When conveying these goods, the shipping company either opts for freight collection or prepaid charges.
- Freight Collect: The shipping company bears shipping charges for the shipment of goods.
- Prepaid Basis: The shipping company asks the consignor to pay shipping charges. The consignor is required to pay the charges before the delivery of goods.
Requirements for Issuing the Bill of Lading
The following are the requirements for issuing the bill of lading:
- The carrier or the shipping company can file for this bill.
- When applying for this bill, the carrier must ensure that every piece of information filled in is correct and matches with other documents.
- Three sets of this Bill are to be filed—one is for the consignor, the second for the consignee, and the third to the bank.
- When filing, the Bill should be authentic and that all the stamps should be attached.
- The shipment date and quantity are to be mentioned correctly.
Digitalisation of Bills of Lading
The Indian Ministry of Shipping, during the tough times of the COVID-19 pandemic, took the initiative and developed the workings of the bills of lading and adopted the Electronic Bills of Lading (e-bill). The government authority proposed an e-bill under the Bills of Lading Act to enhance the operations of India’s maritime industry. Implementing the e-bill not only benefits the shipping methods in India but also saves trees and paper costs.
The E-bill allows easy modifications required in the Bill, easy checking of all the details, and is cost-effective compared with the physical paper bill of lading.
Essentially, e- if this electronic system is adapted correctly, then it will inhibit fraud and trickery.
Section 1 of the Indian Bills of Lading Act, 1856 recognises the rights of third parties, that is, consignees and endorsees, and they are to be vested with all rights of suit and liabilities. Therefore, using the e-bill reduces the assertion of titles of third parties.
The bill of lading under the Indian Bills of Lading Act of 1856 is the transportation receipt and a contract between the consignor, carrier, and consignee.
Bill of lading plays a pivotal role in international trade. Therefore, the bill is not only limited to the transportation of commodities in a domestic platform but also deals with exports and imports, promoting the efficiency of India’s international trade.
The bill of lading is a legal conveyance document that legally binds the parties involved, that is, the consignor, the carrier, and the consignee. As per Indian Bills of Lading Act, the bill of lading comprises all essential and crucial details related to the shipment of goods, that is, exact weight and type of goods, specifications about the commodities, details and information of both parties.
For efficient lading of bills in India, the adoption of e-bills should be backed by an efficient and necessary legal infrastructure that provides a strong back so that the shipping companies cannot commit fraud or misuse the benefits of this bill.
What is a bill of lading?
The bill of lading is a legal document that acts as a receipt between the shipper, carrier, and the customer. This is a document of title and a contract between the carrier and the consignor.
Who can file a bill of lading?
A carrier can file the bill of lading. The carrier has to issue three bills, namely the shipper, the consignee, and the third party.
What does the bill of lading represent?
As per Section 3 of the Indian Bills of Lading Act, 1856, a bill of lading is in the hands of the consignee acts as conclusive proof or evidence of the shipment. This bill with the consignee represents that the goods have been shipped.
Is it mandatory to file a bill of lading?
Yes, the carrier must issue a bill of lading because it is an important document to move a freight shipment.
What if a bill of lading is not issued?
If a carrier does not file a bill of lading, the shipment is put on hold until a bill of lading has been issued or until the shipping company sends in confirmation to release the cargo without the bill.
When can a bill of lading be issued?
The carrier issues the bill of lading when goods are loaded onto a freighting vessel either owned by the carrier or used by the carrier at that time.