Everything You Need to Know About Bills of Lading
by Matt Corby, 22 March 2022
Bills of Lading are one of the most important and high-stakes aspects of the entire shipping process: providing important information to all parties involved in the process. Bills of Lading are crucial for determining the responsibilities of everyone involved, and determining liability in the event that something goes wrong.
Today, we’re taking you through everything you need to know about Bills of Lading: what they are, why they’re important, and the information that they need to include.
What Is Bills of Lading?
In 2017, the New South Wales district court defined a bill of lading as the following:
‘A document. Generally it must be signed by, or on behalf of, the carrier by sea. Three common characteristics of a bill of lading are that (a) it constitutes a receipt for the goods shipped or received by the carrier, (b) it constitutes a document of title for such goods and (c) it contains or evidences the contract of carriage by sea relating to the goods. A document which has all these characteristics will almost certainly be a bill of lading, and a document which lacks any of them will rarely be’
To translate the legalese, a bill of Lading is a legal document that is given to a shipper (the party that owns the goods) by a carrier (the party transporting the goods), and details the key information about the shipment, including its contents, weight, and destination - as well as key details about the shipping journey. Many people still think that bills of lading are only used for ships. However, there are several different types of bills depending on the method of transportation being used. However, these generally include the same information.
Why Do We Need Bills of Lading?
You can think of a bill of lading as a kind of hybrid between a contract and a receipt. The bill of lading provides evidence of the agreement between parties and details the exact terms of that agreement for future reference. It can be used to settle disputes that may arise between the parties involved.
The bills of lading is also required to accompany the shipped products and be signed by the carrier, shipper and recipient. Within this role, the bill provides proof of the goods’ ownership as they travel. It's also used to transfer the ownership of those goods to the recipient upon delivery. This happens when the recipient signs the bill, and can therefore also be used as a confirmation of the delivery’s success. For example, a bill of lading signed by all parties may be used to dispute a claim that goods were not received, protecting your business’ reputation and revenue.
All companies that offer transportation services need to generate bills of lading, as they’re a legal requirement for any shipment. This can act as important documentation if anything goes wrong throughout the process. Many times, carriers hold the original bill of lading until they receive payment from the shipper. This protects them from getting the runaround when it comes time for payment. By law, Bills of Lading need to be kept on file for at least 5 years in case of future issues.
What Should Be Included?
What you need to know is that the bill of lading covers all of the most important details about the shipment.
- Details about all parties involved in the shipment
- The destination of the freight
- The terms of the shipment
- The mode of transportation
- The contents of the shipment
Perhaps the most critical point here is that the information included on a Bill of Lading needs to be accurate. It should also be reviewed by those with expertise in the field. Mistakes in the bill can be construed as deceptive conduct, and companies can face catastrophic fines for false information.
What’s more, make sure to take care in identifying the purpose for which the Bill is being issued - companies have also come under fire in the past for unintentionally producing misleading bills. This means that care and specificity is paramount.
The best way to avoid these mistakes is to entrust the Bill of Lading to an experienced forwarder, and seek legal advice when anything is unclear or amiss.
Some Final Thoughts
Although they are relatively simple documents, Bills of Lading are far more than meets the eye. This article has covered how the bills are vital to the transparency of the entire shipping process. They are legally important documents with the capacity to protect you and your business from fraud and misconduct from other parties.