The Challenges of Preparing Bill of Lading and its Mitigation

The report highlights the challenges faced by importers in preparing bills of lading, which is a time-consuming process that can lead to problems if not available. However, it suggests using seaway bills and Mate's receipts as effective alternatives to mitigate these issues.

International Business Law

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK ..............................................................................................................................................1
Stating the problems which are highly associated with the use of Bill of lading along with the
remedies to overcome such problems.........................................................................................1
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
International business law consists of the rules and regulations which govern all the
transaction which take place at international level. In the world of globalization, companies
prefer to expand their business operations and activities from national to international market. In
this, international business law protects all the parties from any malpractices which take place in
international transactions (Hamilton and Webster, 2015). Bill of lading is the document which is
issued by carrier to the exporter when they undertake transportation for the international trade
and transactions. It contains information regarding the good which are shipped by exporter to
importer via carrier. This report will develop understanding in relation to the several aspects of
International Sale of Goods act. The present report will discuss the problems which are closely
related to the use of Bill of Lading. Besides this, this project report will also shed light on the
ways through which one can overcome the problems of use of bill of lading.
TASK
Stating the problems which are highly associated with the use of Bill of lading along with the
remedies to overcome such problems
In international transactions bill of lading is the most essential document which provides
security to exporter in relation to the payment. In addition to this, it provide guarantee to
importer that they will receive goods on due date. Specifically three parties are involved in bill of
lading namely exporter, carrier and importer. Carrier refers to the person who takes the
responsibility in relation to delivery of the shipped goods on the predetermined date and
destination. On other hand exporter consists of the entity that export the goods and there by
receive the payment of shipped goods. In contrary to this, importer is one who takes delivery of
the specified goods and title in return of making payment for such goods. Bill of lading may be
defined as document which is issued by carrier or agent to the shipper of goods (Ryngaert, 2015).
It contains information regarding the consignor and consignee, name of vessel, weight or volume
of cargo, freight rate as well as type and quantity of the goods. Besides this, bill of lading
document also provide information about the destination for which it is being consigned.
It may also be served as a receipt of shipment which provides information that the good is
delivered by the carrier for the predetermined destination. Further, bill of lading also provides
information about the route from which the goods are delivered to the importer. It is most
1

important document of global transaction which protects both importer and exporter form any
kind of discrepancies. Bill of lading is usually used by the business parties when payment of
shipped has been made in advance. In this, carrier has the obligation to deliver the appropriate
goods to the importer (Fenwick and Wrbka, 2016). Along with it, time at which bill is endorsed
by an exporter then title of the goods is transferred to importer. For instance: a logistics company
has transported the goods through ship. In this situation, carrier or agent issue bill of lading to the
company which contains information regarding the name of the consignor and consignee, name
of the port of arrival and departure along with dates. In addition to this, it also contains name of
vessel, no of packages and the type of packaging which are used by them.
Besides this, such receipt also includes the weight of the cargo. At the time when goods
are cosigned by the consignor on ship then bill of lading is signed by both the parties namely
consignor and carrier. Thereafter, carrier has the obligation to deliver the specified type and
amount of good to the right party or importer (Findley, Nielson and Sharman, 2015). Once the
goods are delivered by the carrier then such bill also required to sign by the importer. Thus, such
receipt or bill of lading helps in making guarantee to exporter and importer in relation to getting
the payment of shipped goods and delivery of the goods.
Problems which are associated with the use of bill of lading:
There are several problems which are associated with the use of bill of lading which
place adverse impact upon the parties to bill of lading. Due to rapid growth of shipping
environment several problems are faced by an importer, exporter and carrier. On the basis of the
above mentioned aspects bill of lading includes high amount of details. Carrier as well as
exporter needs to include each and every aspect in the bill of lading in relation to the shipped
goods. Carrier and exporter mentioned various details in the bill of lading about the name of
consignee as well as the number of packages which are being consigned to them (Reed, 2015). In
addition to this, it also includes the details about the name of the port from which good is
consigned by an exporter.
Besides this, such receipt also entails the name of the port from which an importer will
take delivery of the goods. Along with it, bill of lading also contains the type of packaging,
weight of cargo as well as freight charges. Thus, carrier and exporter require including large
amount of information in bill of lading. It is the most important document in international
transaction which offers protection to innocent party if defendant party fails to perform as per the
2

terms and conditions of the contract. Therefore, carrier and agent need to involve high amount of
details in bill of lading which take long time. Thus, preparation of bill is very time consuming
process which impose problem in making use of bill of lading. Moreover, due to the longer time
of preparation sometimes lading document may arrive later than the shipped goods. One of the
main causes behind such delay is the slow speed of bank and other postal services. This aspect
also creates problem in front of buyer in relation to taking the delivery of consignment or
shipped goods (Aikens, Lord and Bools, 2015). Due to the absence of lading document buyer is
unable to check the delivered good that it is in accordance with the shipped good or not. Bill of
lading document includes all type of information in relation to the type and quantity of goods,
weight, freight charges etc. Thus, if buyer does not have the same document then he is not able
to check all the goods at the time of delivery. Usually, written communication system is very
sound as compared to oral communication.
Moreover, oral communication in relation to the shipped goods creates confusion in the
mind of an importer. In the absence of such receipt or document there is the high level of
uncertainty about the goods which are received by an importer. Along with it, after taking
delivery of goods importer is unable to return the goods. According to international sale of goods
transaction buyer can return the goods at the time of delivery if they are not in accordance with
the specified sample. After taking delivery of goods buyer is not in condition to return the goods.
Thus, bill of lading imposes problem in front of both buyer and seller (Reardon, 2015). Exporter
have to spend huge amount of time in the preparation of bill of lading document whereas
importer is also face problem in relation to the making assessment of delivered goods in the
absence of such receipt. For instance: Exporter makes export of oil and gas in the overseas
market via water transportation such as sea. In this, carrier will take less time to deliver oil and
gas through short seas routes rather than the receiving of lading documents or receipts. In this
situation, carrier has limited choices in the context of delivering cargo.
On the basis of this aspect, if buyer insists to represent the bill of lading before receiving
the goods then carrier is obliged to uphold the goods until and unless he receive the receipt or
document of shipped goods. In this, carrier has fear to loosing another deal. In addition to this, if
any damages occur within this time duration then carrier also may claim about damages to the
exporter. Along with it, preservation of the goods by the carrier is also the subject of high level
of risk. Moreover, there are several goods which accounts for the high risk due to price
3

fluctuations such as oil and gas etc. Besides this, if carrier have some idea about the identity of
receiver or buyer and on the basis of this aspect if he make delivery of such goods without
getting the bill of lading then it impose high level of obligation in front of carrier. Moreover,
carrier has duty to make delivery of delivery of goods on the basis of or after getting the
document of shipped goods (Esplin and Esplin, 2016). In this situation, if carrier makes delivery
of good to the wrong person then he is obliged to pay the full value of the cargo to the rightful
owner. In this condition, carrier does not have any point or aspect which defends itself from such
situation. This aspect creates high level of problem in front of carrier while they involve bill of
lading the international transactions.
Along with it, bill of lading document also creates problem in front of buyer while they
check the goods that it is in accordance with the specification or not. In the modern shipping
environment another problem is arises in relation to the gas tankers. Usually, it is highly difficult
for the buyer to check the gas that it is in accordance with the terms and condition. In this case,
buyer or importer also faces difficulty in relation to the signing of bill of lading document
because he is unable to give assurance that he has received goods as per the predetermined terms
and conditions (Bill of lading in the modern shipping environment, 2016). Furthermore, there are
also some types of goods which are sold in bulk rather than in smaller units. In this, buyer faces
problem in evaluating the quality of the goods (Thürer and et.al, 2016). For instance: oil and gas
are delivered in bulk rather in smaller units. In this case buyer can only check the weight of the
cargo rather than its quantity in terms of number of units. Thus, this aspect also imposes problem
in front of the buyer or an importer.
Along with it, when master of the ship opts to add up the clause of weight or quantity
unknown then it also impose problem in front of an importer. On the basis of this clause carrier
has no liability in relation to the shortage of quantity which will occur in the weight of cargo.
Thorough this, carrier or agent is free from giving the assurance in relation to the quality of
shipped goods (Friedman and et.al, 2016). In this case, importer is unable to claim upon the
carrier for the short quantities on the basis of bill of lading document. On the basis of all the
above mentioned aspect it can be stated that there are numerous problems which are interlinked
with the use of bill of lading.
Ways to overcome the above identified problems: Bill of lading is the vital part of international
shipping transactions which encourages import and export of goods or service. Nevertheless,
4

there are several problems which have adverse impact upon the use of bill of lading. Thus, there
are several effective measures are available to parties of bill of lading which help them reducing
the above identified problems and there facilitates international business transaction with the
increasing rate. In order to reduce the longer time duration and complexities importer and
exporter needs to make use of seaway bill of lading. In seaway bill of lading, receipt or
document is issued by shipping line to their customers after they have made payment of all
charges (Dounighi and et.al, 2016). Seaway bill is not a negotiable instrument and document of
the title of goods. It can be serve as a proof of contract and receipt of goods. In seaway bill, the
obligation in relation to the identifying of consignee is unconditional. Moreover, the sea way bill
is used only when then importer and exporter is well known to each other.
Importer and exporter can make use of seaway bill in lieu of bill of lading in the
transactions where letter of credit and other banking arrangements are absent. In addition to this,
buyer and seller can also make use of seaway bills in the place of bill of lading when payment of
received good is made under an open account. Besides this, it also proves to be more fruitful for
parties to lading when importer and exporter belong to the similar part of business (Mikkilä,
Panapanaan and Linnanen, 2016). Further, it is highly suitable when there are no needs of
negotiation between importer and exporter either through directly or by the bank.
Along with it, seaway bill of lading helps in overcome the problem of receiving of bill of
lading later than the goods. In this, there is no requirement in relation to the printing the original
bill and courier the same bill to consignee. Through this, carrier is able to deliver the goods
whether he received bill of lading or not. It provides assistance to carrier by mitigating the risk of
losing another overseas deal or transaction. In addition to this, seaway bill also offers protection
to both importer and exporter from the price fluctuation in the dynamic business arena. In
addition to this, to overcome the problem of longer time in relation to the preparation and
delivering of bill export needs to make use of electronic bills rather than written bills.
In the written bills of lading carrier have to wait until and unless bills is not prepared by
exporter. Thus, by making use of electronic means such as e-mail etc exporter can send the
goods from the carrier. On the basis of this aspect carrier does not have to wait for the
preparation of bill of lading. Through this, exporter can send the bill of lading or receipt to the
carrier when shipped goods are on the way. Electronic bill is more effective substitute of written
document of lading which also contains information about the goods, carriage and delivery
5

system (Hamilton and Webster, 2015). It facilitates faster delivery of goods without any delay
and thereby makes contribution in the growth and development of overseas business
transactions.
Along with it, shipper and carrier also make use of Mate's receipt which helps them in
saving the time and there by helps in getting success in the overseas market. Mate receipts may
be defined as a document which is issued by carrier to the shipper and contains information
regarding the shipped goods which are not loaded on board. Such receipt is exchanged from the
bill of lading on later. Mate receipts require less documentation so it helps exporter in shipping
the goods by saving the time. Besides this, master of the ship cannot add the clause in relation to
the weight or quantity unknown in the contract. On the basis of UK laws and legislation carrier
or agent cannot rely on such exemption of liability. Such clause is applied only in the common
law countries. Thus, on the basis of the legal laws and legislation it is the prime responsibility of
carrier to supply the goods to an importer in accordance with the bill of lading document. If
agent fails to deliver the specified goods in terms of quantity to buyer then he is obliged to give
compensation to buyer for the missed quantity or loss suffered by him (Ryngaert, 2015). Thus,
by undertaking all these effective measures importer, exporter and agent can mitigate the
problems which are linked with the use of bill of lading and thereby able to make global
transaction more effectively and efficiently.
CONCLUSION
From this project report it has concluded that bill of lading document plays a significant
role in the international transactions. Further, it can be concluded that such receipt provides
guarantee to exporter about receiving the payment of shipped goods. In addition this, it also
offers protection to buyer that they will take delivery of appropriate goods. It can be seen in the
report that preparing of bill of lading is more time consuming process. Besides this,
unavailability of shipping document also creates problem in front of an importer. Further, it can
be inferred that parties of bill of lading needs to make use of seaway bills which helps them in
reducing the problem faced by them. Along with it, it can be articulated that Mate's receipt is
also the most effective way which helps in mitigate the problem faced by importer and exporter.
6

REFERENCES
Books and Journals
Aikens, R., Lord, R. and Bools, M., 2015. Bills of lading. CRC Press.
Dounighi, N.M. and et.al., 2016. Preparation, characterization and stability investigation of
chitosan nanoparticles loaded with the Echis carinatus snake venom as a novel delivery
system. Archives of Razi Institute. 70(4). pp.269-277.
Esplin, D.B. and Esplin, J.A., Apple Inc., 2016. System and method for managing wireless point-
of-sale transactions. U.S. Patent. 9. pp.235,861.
Fenwick, M. and Wrbka, S., 2016. The Flexibility of Law and Its Limits in Contemporary
Business Regulation. In Flexibility in Modern Business Law. Springer Japan.
Findley, M.G., Nielson, D.L. and Sharman, J.C., 2015. Causes of Noncompliance with
International Law: A Field Experiment on Anonymous Incorporation. American Journal of
Political Science. 59(1). pp.146-161.
Friedman, A.M. and et.al., 2016. 672: Neonatal outcomes after high-order cesarean delivery.
American Journal of Obstetrics & Gynecology. 214(1). pp.S355-S356.
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
Press.
Mikkilä, M., Panapanaan, V. and Linnanen, L., 2016. The Pursuit of Responsible Business:
Corporate Responsibility of Finnish Companies in Their Global Operations. In Key
Initiatives in Corporate Social Responsibility. Springer International Publishing.
Reardon, K.A., 2015. Computerized Writing Assessment Technology: Business Law Students
Weigh in on its Use in the College Classroom for Developing Workplace-ready Writing.
Computers and Composition. 38. pp.32-44.
Reed, D., 2015. On exclusivity: English jurisdiction clause in bill of lading-Compania Sud
Americana de Vapores SA v Hin-Pro International Logistics Ltd [2015] EWCA Civ 401.
Shipping and Trade Law. 15(6). pp.8-12.
Ryngaert, C., 2015. Jurisdiction in international law. Oxford University Press.
Thürer, M. and et.al., 2016. Card-based delivery date promising in high-variety manufacturing
with order release control. International Journal of Production Economics. 172. pp.19-30.
Online
Bill of lading in the modern shipping environment. 2016. Online. Available through:
<http://www.tamimi.com/en/magazine/law-update/section-6/may-4/bills-of-lading-in-the-
modern-shipping-environment-problems-and-solutions.html>. [Accessed on 27th January
2016].
7

8

9