CONTRACT OF AFFREIGHTMENT 2
CONTENT
1.0 Introduction
2.0 Objective
- Main Body
- Bill of Lading
- Functions of Bill of Lading
- Negotiability of Bill of Lading
4.0 Conclusion
5.0 Summary
6.0 Tutor Marked Assignment (TMA)
7.0 References/Further Reading
INTRODUCTION
Bill of lading is also a part and parcel of the contract of affreightment like the charter-party. But it is a contract that serves a dual purpose either as a contract between the shipowner and the third party or as merely an evidence of goods between the shipowner and the charter- party.
The bill of lading arguably falls into the category of contract referred to as contract of adhesion. A contract of affreightment is normally evidenced by a bill of lading when the goods to be shipped form only part of the cargo which the ship is to carry.
OBJECTIVE
The main objective of this unit is to distinguish between a bill of lading and a charter-party.
MAIN BODY
Bill of Lading
It is necessary to note the primary functions of the bill of lading in a contract of carriage of goods by sea and learner should be able to note that it is an important aspect of the carriage of goods by sea. A bill of lading is a document signed by the shipowner, or by the master or other agent of the shipowner, which states that certain goods have been shipped on a particular ship and sets out the terms on which these goods have been delivered to and received by the shipowner.
It is usually in standard form, which in some cases governs the contract of carriage of goods by sea. It is divided into two parts: one is blank, on which the names of the party’s freight and the particulars voyage will be reproduced, and one printed containing clauses inserted unilaterally in advance by the carrier.
It has been argued that the bill of lading falls into the category of contract referred to as contracts of adhesion, that is contracts on take it or leave it basis. This view is particularly prominent in the United States of America.
The bill of lading is issued to the shipper in sets of three. One is retained by the master or broker, while two copies are dispatched; one by express mail to the buyer or the consignee. It is a document of title, possession of which, in legal sense, is possession of the goods which it represents.
Functions of the Bill of Lading
A bill of lading in its classical legal terms has three main functions:
- It is the contract of carriage of goods or at least evidences the contract of carriage.
- It acts as a receipt for goods put on board the vessel
- It acts as a document of title.
The Bill of Lading as a Contract
The bill of lading is merely evidence of the contract between the shipowner and the shipper and a contract between the shipowner and third parties. An assignee who acquires rights in a bill of lading by way of negotiation of the bill of lading is bound by the terms of the contract as contained in the bill of lading or other documents in which the terms of the contract may be contained.
In Crooks v. Allan (1879) 5 Q.B.D, 38, it was held that a bill of lading is not the contract but only an evidence of the contract. But in The Ardennes, it was settled that a bill of lading is not, in itself, the contract between the shipowner and the shipper of goods, though it has been said to be excellent evidence of its terms.
The Bill of Lading as a Receipt
This was originally the traditional or original role of the bill of lading. It served as receipt for the goods to which it related that the goods have been taken on board. In its original role, it itemized the goods shipped and gave further particulars of the goods such as the description, quality and shipping mark.
In Cox v. Bruce (1886) 18 QBD 147, it was held that it was no part of the master’s duty to insert these quality marks. A document which is not signed by or on behalf of the carrier is not a bill of lading in the legal sense.
Under the Hague Rules, Art III Rule 3, the shipper is entitled to demand the issue of a bill of lading incorporating a statement as to the apparent order and condition of the goods when received by the carrier. Such bill is prima facie evidence of receipt by the carrier of the goods and therein described, but conclusive evidence when the bill is transferred to a third party in good faith.
The Bill of Lading as a Document of Title
The third function of a bill of lading is that it serves as a document of title to the goods it represents, and its transfer is equal to the physical transfer of the goods.
The holder of a bill of lading in respect of goods that had been shipped may effect a transfer of ownership in respect of the goods by transferring the bill of lading to anybody who has given him value for the goods.
Types of Indorsement
Special Indorsement
Indorsement in blank
Restrictive indorsement
Conditional indorsement
Bills of Lading as a Negotiable Instrument
A bill of lading is an assignable document of title to the goods. If a bill is transferred or assigned by one person to another, either by a mere delivery (as in the case of a bearer of bill of lading) or by an indorsement of the bill of lading followed by its delivery (as in an order bill of lading), the bill of lading is said to have been negotiated, and the party to whom the bill is transferred is referred to as the transferee of the bill of lading.
A bill of lading is not a negotiable instrument under the Bill of Exchange Act, because unlike a bill of exchange, the bona fide holder of a bill of lading and for value cannot acquire a better title than the transferor possesses. A negotiable instrument is therefore an exception to the general rule of law that nemo dat quod non habeat. International commercial contracts, the bill of lading is the pivot upon which other contractual relationships are dependent.
The important point, however, in the context of negotiability of the bill of lading is that the fact that a party is an indorsee of the documents does not by itself permit right of suit under the terms of the documents per se.
The extent of the negotiability of the bill of lading as it pertains to right enforcement in contract is contigent upon the particular enforcement regime in the particular country.
CONCLUSION
The bill of lading as part and parcel of contract of carriage of goods by sea, as has been discussed is a contract between the shipowner and third party or an evidence of contract between the charterer and the shipowner. It could also serve as receipt evidencing that the goods are on board the ship or it could serve as a title of document that can be transferred. It could also serve as a negotiable instrument in some regard.
SUMMARY
In summary, the bill of lading is a major document of carriage of goods by sea. It is a document that evidences a contract between a charterer and a ship owner and also serves as a contract of carriage of goods between the ship owner and the third party who is placing goods on board the ship.
TUTOR MARKED ASSIGNMENT
- What are the functions of a bill of lading?
- Bill of lading is a negotiable instrument.
REFERENCES/FURTHER READING
- A handbook on Carriage of Goods by Sea: Wale Olawoyin, Lecturer University of
- Sale of Goods Act,
- Rawlings, Commercial Law, University of London Press,
- Okany Nigeria Commercial Law, Africana-Fep Publisher, Limited,
- Sofowora, General Principles of Business and Coop Law, Soft Associates,