Bill of Lading

A bill of lading is a legally binding document issued by a carrier or the carrier's agent acknowledging receipt of specified cargo in apparent good order and condition for carriage, stating the terms on which carriage is to be performed, and operating as a document of title to the goods described within it. As a document of title, the B/L can be transferred by endorsement, making it a negotiable instrument used in trade finance and letters of credit. The Hague-Visby Rules govern the rights and duties of parties to most international bills of lading. For a master, the significance of clausing a bill of lading — adding a notation that cargo was received in damaged or questionable condition — cannot be overstated. A clean bill of lading represents that cargo was received in apparent good order; issuing a clean B/L for cargo that was visibly damaged exposes the carrier to a cargo claim for the full loss. Officers must inspect cargo before loading and ensure the mate's receipt and subsequently the B/L accurately describe any shortfall or damage. Electronic bills of lading are increasingly used but must be accepted by all parties and their banks to function as documents of title. The B/L must also correctly identify the shipper, consignee or order, port of loading, port of discharge, and description of goods. Errors in the B/L — whether in the description of cargo, the marks and numbers, or the destination — can cause costly delays and legal disputes at the discharge port.