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Bill of Lading functions - bulk carrier guide

The Bill of Lading (B/L) is a unique type of document which has three distinct but overlapping functions. These are usually expressed as :-
From this, three important consequences arise for the Owners and the Masters as their employee :-
  1. When he signs the B/L, the Master does so, not on behalf of the Charterers or Shippers, but on behalf of the Owners. The B/L is an Owner’s document, and it is the Master’s responsibility to ensure to the best of his ability that it is properly prepared and signed. This applies whether the ship is employed on a Voyage or Time Charter.

  2. If the B/L contains inaccurate or misleading statements about the quality or quantity of the cargo it covers, then Owners will be liable for the consequences, at least in the first instance. The Master’s main concern must be, to see that this cannot happen. Therefore it is essential that the Master clauses directly on the bills the correct condition of the quality and quantity of cargo if these two items have not be properly described in the document presented to him for signing. If he wants assistance with the wording to be used in the clausing, he should call the commercial office who may engage the local P & I representative for advice.

  3. If an incorrect B/L is issued, for whatever reason, the situation is not necessarily wholly beyond repair, but speed of action is essential, since once a third party takes up the B/L relying on what is says, it is too late to make any correction. The Master must therefore notify the Owners and Charterers immediately of any apparent irregularity in any B/L which he has issued (or which he knows or believes has been issued by the ship’s agents).

As the B/L is an Owners’ document, third parties such as Charterers and Shippers have limited powers to interfere with the Master signing it. However it is not unusual for a charterparty to provide for the Charterers or their agents the authority to sign B/L’s for and on behalf of the Master. In such cases the Master must issue the agent with the authority to sign B/L’s on his behalf in writing, such authority is to include any additional remarks the Master expressly requires included in the B/L’s.

Under normal circumstances, the B/L is the principal evidence of the receipt of the cargo which it describes. However, it is not the only evidence, and it remains open to the Owners to avoid a claim by showing that what the B/L states is in fact incorrect.

For example, apart from paying great attention to the contents of the B/L itself, the Master must also take all practical steps which may subsequently assist Owners to resist any short delivery claim by proving that no cargo has been physically lost (e.g. by draught survey, by written protest as to any doubt or discrepancy in determining of weights or volumes. Charterers’ surveyors or inspectors must justify any statement which they may make as to the condition of the cargo or ‘pumpability’ of oil residues, and also by keeping properly consistent records of bilge pumping with wet cargoes such as ore concentrates).

In some circumstances, shippers/agents may offer to give the Master a letter of indemnity in return for the Master signing clean Bills of Lading. The Master must not accept such a letter without first checking/obtaining authorisation from the Company. A Letter of Indemnity is strictly not enforceable in law. Only the Company can decide if such a letter is acceptable on commercial grounds

Delivery of cargo- How to avoid claims

Should there be reasonable grounds for anticipating damage to cargo before opening the hatches, protest should be noted as soon as possible and not later than 24 hours after arrival; the protest can be extended and can be made without waiting to sight the damaged cargo, continuing the extension of protest as the extent of any damage is revealed.

A surveyor's attendance on behalf of ship, whilst discharging is in progress, it is always beneficial. Every reasonable facility should be extended to a surveyor attending on behalf of consignees, but this does not mean that consignees or their representative have a right to full access to the ship or to examination of documents such as log books.

If a surveyor is not in constant attendance, a survey should be called at once if damaged cargo is found. In the case of damage by moisture or water, or leakage from casks etc., dunnage and matting should not be disturbed until they have been sighted and examined by the surveyor.

Most ships now carry video and/or digital cameras to record heavy weather, structural damage, and cargo damage/problems. As well as damage, digital images can also, of course, record the condition of cargo on loading and the securing put in place prior to the start of a voyage. Such images may be extremely useful to an owner in briefing the P&I Club in defending a claim.

The following points may be useful in defending the ship against claims:
  1. When damaged cargo is sighted in the stow, it should be photographed to provide evidence of its position in relation to other cargo in the compartment.
  2. Packages found damaged during discharge should be separated from sound packages, preferably in a secure location for further investigation and/or repacking.
  3. Packages bearing marks and numbers that may have become displaced from a unitised load should be replaced if possible to ensure that correct identification is still available. If this is not possible every effort should be made to place the correct marks and numbers on other packages to avoid confusion.
  4. Torn, slack and empty bags or packages should be gathered up and including with other discharged cargo. When Bills of Lading state a specific number of bags or packages, it is preferable to show delivery of that number so far as the instigation of a claim may be concerned.
  5. Cargo should never be delivered except on production of the original Bill of Lading properly stamped and endorsed. When the cargo is consigned to order, the Bill of Lading should bear the shipper's endorsement and also that of the merchant to whom it has been transferred. Cargo should never be delivered against invoices, letters of guarantee or indemnity. If in doubt, advice of Owners and/or the P&I Club should be sought.

Related information

  1. Required cargo documents for seagoing bulk carriers

  2. Signing a bill of lading & relevant guideline

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Operation of sea going bulk carriers involved numerous hazards . Careful planning and exercising due caution for all critical shipboard matters are important . This site is a quick reference to international shipping community with guidance and information on the loading and discharging of modern bulk carriers so as to remain within the limitations as specified by the classification society.
It is vital to reduce the likelihood of over-stressing the ship's structure and also complying with all essential safety measures for a safe passage at sea. Our detail pages contain various bulk carrier related topics that might be useful for people working on board and those who working ashore in the terminal. For any remarks please Contact us

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