Bill of Lading as Evidence of Contract

This article discusses the concept of the Bill of Lading as evidence of a contract of carriage. It explores the functions of the Bill of Lading and provides examples to support the argument.

Running head: BILL OF LADING AS EVIDENCE OF CONTRACT
BILL OF LADING AS EVIDENCE OF CONTRACT
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BILL OF LADING AS EVIDENCE OF CONTRACT
Introduction
The Bill of Lading refers to the legal document between a carrier and a shipper that
contains the quantity, destination and type of the goods to be carried (Veenstra, Zuidwijk and
Van Asperen 2012). Debates surround regarding the question whether the Bill of Lading is
actually a contract or evidence of the contract. While some legal experts argue that the Bill of
Lading is a contract, others are of the view that it is actually the evidence of a contract. Those in
favor of the Bill of Lading being a contract put forward the argument that it details the terms of
the document for both parties – the shipper and carrier. Further, the bill also has the name of the
consignor and the contract provisions for the shipment. The experts, who state that the bill is an
evidence of the contract, put forward the argument that the agent provides the bill to the shipper
as evidence that the contract was signed between the two parties.
The present paper aims to provide argument in favor of the contention that the Bill of
Lading is an evidence of the contract of carriage. The paper will first provide a brief explanation
of the bill covering its main functions and then provide examples that prove that it is an evidence
of the contract.
Discussion
Carriage refers to the entire or specific part of the services and operations carried out by
the carrier in terms of the goods.
Carrier is the entity, which issues the Bill of Lading after arranging for the carriage of
the goods.

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Merchant means the individual who owns the goods that the carrier carries. The
exporter, shipper, consignee, receiver, anyone entitled to, or owning the possession of document
of title or the possession of goods.
The contract between a goods carrier and the merchant or consignee or shipper is referred
to as the contract of carriage. Contracts of carriage usually explain the duties, rights and
liabilities of the parties involved in the contract. These duties, rights and liabilities address topics
like acts of God and include clauses like force majeure (Brodie 2013). International conventions
standardize the conventions relating to the carriage of goods in international freight shipment.
The international standards make sure that there is uniformity in the implementation of laws and
rules concerning goods carriage.
Pejovic (2015), states that the contract of carriage must favor both the passenger and the
company but it is not the case in most instances. To provide an instance, the Southwest Airlines
classified the mechanical difficulties difficulties of its airplane as an act of God in its contract of
carriage thus denying many of its passengers the right to board another flight under the same
contract. However, Ritorto and Fisher (2017) view this instance to be fair because according to
him, the airline has all the right to do so because the flight and the seat belong to the company.
The Bill of Lading, as mentioned earlier, is the document that is issued by the carrier to
the passenger. The bill has three basic functions – document of title, evidence of the contract of
carriage and receipt of the goods.
The ‘title’ is the document in the bills of lading context, which is provided to the
consignor authorizing it the possession of the goods. The title is not to be taken to mean as the
right to ownership because the ownership right is provided through the sales contract. In case

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where the carrier gives the right to the possession of goods to the passenger and it is decided by
the possession of the bill of lading, that document is termed as the document of title. Hence, the
consignor providing an original document or the bills of lading is authorized to delivering the
goods at the destination. In the light of the judgment in the Sanders Bros. v Maclean (1883), the
function of the bills of lading as the document of title could be understood. The judgment ruled
in favor of McLean stating that the delivery of the bills of lading “operates as a symbolical
delivery of the cargo” (Tajudin 2014).
The bill of lading also functions as evidence of the contract of carriage (Gaskell 2017).
This is an important function in both negotiable and non-negotiable scenarios. The carrier or
agent might be the charterer, owner or freight forwarder who enters into a contract of carriage
with the consignor. Usually, the Master will be considered in service of the ship owner and the
Master’s signature will comprise a contract with the ship owner. Apart from the original carrier,
the Master must consider that he will be sanctioning or signing the bills of lading to permit
another to sign on his behalf. The Leduc & Co v Wards (1888) case presents a good example of
the Bill of Lading as an evidence of the contract (Ndi and Alawneh 2013). In the case, the bill
contained a clause that permitted the carrier to diverge from agreed route that caused the ship to
be lost and the delivery was delayed. The shipper sued the carrier against which, the carrier
pleaded that the shipper had all the knowledge about the deviation clause stated in the Bill of
Lading. The court however rejected the plea claiming that the lawful holder or shipper had no
knowledge of any such commitment being made otherwise he would have been bound to follow
it. Under section 4 of the Carriage of Goods by Sea Act 1992 in the UK, the Bill of Lading is the
conclusive evidence held by the shipper and the carrier is halted by his conduct and words (Soyer

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and Tettenborn 2013). It is worth mentioning that whatever deal was made orally between the
shipper and the carrier does not bind the shipper legally.
The third function of the bills of lading is functioning as the receipt. Whether negotiable
or not, the function of the receipt is valid to all bills including the bills of lading. The bills of
lading acts as an evidence of receipt when the consignor receives the carriage of goods, checks
the status on receipt, and marks them in terms of quantity, weight, apparent order, number and
condition (Vafidis 2012). The Bill of Lading as receipt is governed by the Hague-Visby Rules.
The carrier must take utmost care while writing all the information including quantity, packaging
and leading marks because it is important in both legal and practical terms. If the carrier provides
any incorrect quantity or other information and later has to claim for the damages of goods, the
carrier would be accountable for it. The section 4 of the Carriage of Goods by Sea Act 1999
states that the Bill of Lading is prima facie evidence when it is in the hands of the shipper and
the carrier and conclusive evidence when in the hands of a third party.
As discussed in the above section, one of the functions of the Bill of Lading is the
evidence of the contract of carriage. However, a closer analysis of the other two functions also
indicates that the bill is actually an evidence of the contract rather than the contract itself. It
becomes a contract when the goods are laden on the ship and will consequently already exist
prior to the issuing the Bill of Lading. If there is any damage in the cargo before the Bill of
Lading is issued, the shipper has the authority to claim it under the contract of carriage providing
it as the bill itself. Under The Hague Visby Rules, the Bill of lading is prima facie evidence of
the shipped cargo and follows the common law. exception of this law is found in Article 3, Rule
4 of the Hague Visby according to which, the bill is a conclusive evidence once it has been
shifted to a third party acting in good belief. In the case of Oricon v Intergraan (1967) Lloyd’s

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Rep 614, it was held that the copra cakes weighing 105,000 kilogram was acknowledge by the
parties where all the bills lading were Hague Rules bills. This acknowledged the bills of lading in
this case as the prima facie evidence. Hence, it proved that the Bill of Lading is an evidence of
the contract.
In the case of Associated Agencies Limited v Roha Premium, (sic) Potato, Appeal
10/2012, the Supreme Court of Cyprus measured the principles of organization and functions of
bills of lading (Howard 1993).The appellant company, that is, Associated Agencies Limited
based its claims of the fees invoice that was issued by it to the respondent. The invoice,
confirmed the appellant company, it had contended thus confirming its standpoint that it had
arranged for the carriage in response to the respondent’s shipment application through the
Hamburg Sud vessel. The appellant company further argued that the fees invoice was issued in
its own authority and not as Hamburg Sud’s agent. However, Hamburg Sud denied the claims
and stated that the appellant company had acted as its agent from the beginning. The court found
that the appellant company’s claims were not true based on sections 186 and 190 of the Contract
Law. Sections 186 and 190 of the Contract Law state that the agent could not personally enforce
any contract, which the appellant company did. The court thus, ruled in favor of the respondent
stating the respective functions of the Bill of Lading including evidence of the contract.
Another instance that provide proof that the Bill of Lading is an evidence of the contract
of carriage is the case of Archangelos Domain Limited v Adriatica Societa Per Azione Di
Navigatione [(1978) 1 CLR 439]. In this case, the court referred to the extract of Lord Goddard,
who had passed the famous judgment in the case of S S Ardennes (Cargo Owners) v S S
Ardennes (Owners)[(1951) 1 KBD 55] (Lista 2016). Lord Goddard had stated that the Bill of
Lading is not a contract between the ship owner and owner itself although it is an excellent

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evidence of the same. The contract comes into existence before the Bill of Lading is signed and
only one party signs the Bill of Lading and the shipper hands it to him after he boards the goods
in the ship. It thus, does not present any doubt that in case the shipper discovers terms and
conditions in the bill that are against his wishes, he is entitled to demand the goods back.
The document produced as Bill of Lading works as evidence of contract of carriage. It is
the responsibility of the ship owner to ensure that the carriage is delivered to the consignee or
shipper with whom the owner has signed a contract. Delivering the goods to any individual who
does not have the permission to receive the goods without the bill of lading is prima facie
conversion of the goods. It is also a breach of the contract. hence, it is clear from this that the bill
of lading acts as an evidence that the contract was signed and that the person, even if he does not
have entitlement to receive the goods. When the person produces the bill of lading, he gives the
evidence to the carrier that he is authorized to accept the delivery.
Conclusion
To conclude, it could be stated that there are enough instances to prove that the Bill of
Lading is an evidence of a contract of carriage and not the contract. The essay first provided brief
definitions of the different terms including carriage, contract, merchant and the bill of lading.
Further, the essay elaborated on the bill of lading and explained its three basic functions. These
included the Bill of Lading as document of title, as evidence of contract of carriage, and as
receipt of the goods. To prove that the Bill of Lading is an evidence of contract of carriage, the
essay provided several cases where the evidence of contract function was contented. In addition,
the essay provided examples of cases to explain the other two functions of the Bill of Lading.

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However, it is suggested that further research o be taken on understanding the evidence of a
contract of carriage more extensively.

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References:
Brodie, P., 2013. Commercial shipping handbook. Informa Law from Routledge.
Gaskell, N., 2017. Bills of Lading 2e: Law and Contracts. Routledge.
Howard, T., 1993. The Carriage of Goods by Sea Act 1992. J. Mar. L. & Com., 24, p.181.
Lista, A., 2016. International Commercial Sales: The Sale of Goods on Shipment Terms. Informa
Law from Routledge.
Ndi, G.K. and Alawneh, T.S., 2013. Is Deviation a Fundamental Breach of the Contract of
Carriage by Sea? A Critical Analysis of Current Law. Paper Proceedings of ICLJ 2013, p.330.
Pejovic, C., 2015. Clean Bill of Lading in Contract of Carriage and Documentary Credit: When
Clean May not be Clean. Penn St. JL & Int'l Aff., 4, p.127.
Ritorto, R. and Fisher, S.A., 2017. Exploring Airline Contracts of Carriage and European Union
Flight Delay Compensation Regulation 261 (EU 261)-A Bumpy but Navigable Ride. J. Air L. &
Com., 82, p.561.
Soyer, B. and Tettenborn, A. eds., 2013. Carriage of Goods by Sea, Land and Air: Uni-modal
and Multi-modal Transport in the 21st Century. CRC Press.
Tajudin, A.A., 2014. Exploring the Idea of Professor MacNeil: Presentation or Flexibility. Persp.
Bus. LJ, 3, p.239.
Talmon, S., 2001. The Cyprus question before the European court of justice. European Journal
of International Law, 12(4), pp.727-750.

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Vafidis, M.P., 2012. No Sanity Clause: Thoughts on the Bill of Lading Package Limitation. USF
Mar. LJ, 25, p.235.
Veenstra, A., Zuidwijk, R. and Van Asperen, E., 2012. The extended gate concept for container
terminals: Expanding the notion of dry ports. Maritime Economics & Logistics, 14(1), pp.14-32.