Carriage Of Goods By Sea

• Published date: 18 May 2021
• Subject Matter: Corporate/Commercial Law, Transport, Contracts and Commercial Law, Marine/ Shipping
• Law Firm: Azmi & Associates
• Author: Mr Philip Teoh

There are many ways goods can be shipped by sea. Many exporters who sell abroad regularly will ship their goods in containers. If their volumes are sufficient to fill a container then the container will contain only their goods, this is a Full Container Load [FCL] shipment. If the goods are insufficient or consists of only a small quantity then the goods are consolidated with other parties/shippers goods and shipped in a Less Container Load [LCL] form. Whilst the container themselves are carried by Shipping Lines¹ with fixed schedules and voyages, often the shipments are arranged by freight forwarders². The contracts of carriage are often bills of lading or seawaybills.

The forwarders who issue bills of lading issue House Bills of Lading. When they book with the Shipping lines, the shipping lines will issue Master Bills of Lading.

Bills of Lading

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 specified goods have been shipped in a particular ship, and which purports to set out the terms on which the goods have been delivered to and received by the ship. After signature, it is handed to the shipper, who may either retain it or transfer it to a third person. This person may be named in the bill of lading as the person to whom delivery of the goods is to be made on arrival at their destination, in which case he is known as the consignee; if he is not named in the bill of lading, he is usually known as the holder or indorsee of the bill of lading.

The three functions of the bill of lading are:

1. As a document of title;
2. Receipt of the goods;
3. Evidence of contract of shipment

1. Document of title

The bill of lading is a symbol of the goods specified in it. Its possession is equivalent to the possession of the goods themselves, and its transfer, being a symbolical delivery of the goods, has by commercial usage the same effect as an actual delivery in the same circumstances.

As regards the shipowner, the bill of lading is a document of title, entitling its holder on production to delivery of the goods. Accordingly, a delivery to the holder of the bill of lading, discharges the shipowner, provided that it is made in good faith without notice of any defect in the holder's title. The shipowner is not, however, discharged, however bona fide his act may be, by delivery to the wrong person without the production of the bill of lading³.

By mercantile custom, a bill of lading has become a symbol of the right of property in the goods. Its possession is equivalent to possession of the goods themselves, and its transfer has the same effect as an actual delivery.

Presentation of bill of lading

Arising from this function, it has been held that a carrier and his agent who delivers cargo without presentation of the original bill of lading is liable for the value of the goods to the actual goods owner, even if delivery is made to the named consignee.

Carriers who release goods without the surrender of the original bill of lading will often obtain an indemnity from...