<\/p>\n
A bill of lading is one of the main documents used in the international transport to carry the goods by sea. It fulfills different kinds of roles such as being an evidence of a contract of carriage, receipt for goods or document of title. In my assessment I am going to focus on its last function. This subject involves a great number of issues which have arisen during the last centuries. One of those issues is describing a bill of lading as a \u201cnegotiable” document which is not correct in full legal meaning of this word or \u201cquasi-negotiable” document which is more accurate but still can cause misunderstandings. A reason why a bill of lading is sometimes called \u201cnegotiable” document is that it consists some of the features that a negotiable instrument normally consist. At the end I will try to explain that negotiability is not necessary for a bill of lading to meet its purpose.<\/p>\n
\u201cNegotiability” of a bill of lading<\/p>\n
As I wrote at the beginning, one of the functions which a bill of lading fulfills is being a document of title and according to this role a bill of lading is often described as a negotiable document. This statement is ambiguous and for some authorities\u00a0[1<\/a>]<\/span>\u00a0it might be used in colloquial language. This way of thinking is based on the fact that a bill of lading is often compared with a bill of exchange, a typical negotiable instrument. In article written by Sarel F. du Toit from University of Johannesburg we can find information about the traditional test to distinguish a negotiable instrument. According to this test an instrument is negotiable when \u201cthe instrument, by the custom of trade, is transferable like cash by delivery and capable of being sued upon by the person holding it pro tempore.”\u00a0[2<\/a>]<\/span>\u00a0A longer and more exact definition of this phrase was stated in the book International Trade Law\u00a0[3<\/a>]<\/span>\u00a0where we can read that the negotiable instrument has two main characteristics: \u201cFirst, it is transferable by delivery and, with the transfer, rights embodies in it are transferred, such that the transferee can enforce them in his own name. (\u2026) Secondly, where the transferee takes it in a good faith and for value, he takes it free of any defects of title of the transferor.”\u00a0[4<\/a>]<\/span>\u00a0A bill of lading does not acquire all of those criteria. The main reason for using the description \u201cnegotiable” in relation to this document is that a bill of lading is transferable by indorsement and delivery. In this meaning we can talk about the bill of lading as a negotiable document. Moreover this attitude was presented in case Lickbarrow v Mason: \u201cBills of lading are transferable and negotiable by the custom of merchants. And though a consignor may in general stop goods in transitu before they reach the consignee, yet he cannot if the consignee have previously indorsed over the bill of lading to a third person, for a valuable consideration and without fraud.”\u00a0[5<\/a>]<\/span>\u00a0Another similarity between a bill of lading and a bill of exchange is that both those documents can be made out to a particular person or his order or to bearer.\u00a0[6<\/a>]<\/span><\/p>\n It is argued if a bill of lading made out to a named consignee, known as a straight or non-negotiable bill of lading, can be uses as a document of title\u00a0[7<\/a>]<\/span>\u00a0. For example Indira Carr\u00a0[8<\/a>]<\/span>\u00a0plainly claims that straight bill of lading cannot be a document of a title. On the contrary in case Rafaela S\u00a0[9<\/a>]<\/span>\u00a0Lord Justice Rix stated completely opposite. This is another ambiguous point worth considering, especially if we look at a straight bill of lading from a perspective of its transferability. As Paul Todd noticed in his article \u201cthis document can be transferred once only.”\u00a0[10<\/a>]<\/span><\/p>\n However, the biggest difference between those two documents, which has significant importance on entire marine law, was explained by Lord Devlin: \u201cIt cannot, as can be done by the negotiation of a bill of exchange, give to the transferee a better title than the transferor has got”.\u00a0[11<\/a>]<\/span>\u00a0It simply means that in case of a bill of lading negotiability can be only seen as transferability. Similar point of view is presented in a book Shipping Law\u00a0[12<\/a>]<\/span>\u00a0. It is important what rights had the previous holder and of course if he was a lawful holder of a document. In case Gurney v Behrend\u00a0[13<\/a>]<\/span>\u00a0Lord Campbell C.J. noticed that bona fide holder of the indorsed bill of lading is not sufficient to possess the rights and that kind of situation we can observe in relation to a bill of exchange which may pass to a bona fide second party by simple delivery for valuable consideration. Another point was made by Mr. Thomas who acted on behalf of the defendant in case The \u201cFuture Express”\u00a0[14<\/a>]<\/span>\u00a0and who said that the property would pass by transferring the bill of lading only if that was the intention of the transferor. This statement was firmly accepted by Lord Justice Lloyd, one of the judges in this case.<\/p>\n The next difference between a bill of lading and a bill of exchange is related to production of a bill of lading. A bill of exchange is negotiable by its nature in contradiction to a bill of lading which is only negotiable when a seller made it negotiable\u00a0[15<\/a>]<\/span>\u00a0.The notice about its transferability must be mentioned on its face. Without this information a buyer who requested that a bill of lading was issued as a \u201cnegotiable” bill of lading has right to reject the bill, as it was shown in case Soprama S.p.A. v Marine & Animal By-Products Corporation\u00a0[16<\/a>]<\/span>\u00a0where a bill of lading was made as a straight bill which was in opposition to the terms of letter of credit.<\/p>\n A quasi-negotiable bill of lading<\/p>\n In the article written by Malcolm Clarke\u00a0[17<\/a>]<\/span>\u00a0a bill of lading is described as a \u201cquasi-negotiable” document. Above I pointed out some arguments according to which a bill of lading should not be called \u201cnegotiable”. That a bill of lading can not give better title or that it has to be written on its face that it is negotiable. For that reasons we might use the expression \u201cquasi-negotiable” to bills of lading. The phrase \u201cquasi” simply means \u201calmost”, \u201cas it were” or \u201cpartly”. So a bill of lading consists of some of the features of a negotiable instrument. This description is still confusing but in my opinion much more accurate and it helps to avoid ambiguity. Furthermore if we consider the option that a straight bill of lading can be also transferable, which was pointed by G. H. Treitel\u00a0[18<\/a>]<\/span>\u00a0in his article, we could name it \u201cquasi-negotiable” as well. This theory assumes that even a single transmission could be seen as a transfer in the same way as it is in case of a bill of lading. The difference is that a bill of lading might \u201cbe transferred repeatedly, for a theoretically infinite numbers of times (\u2026), a \u201cstraight” bill (\u2026) cannot be transferred more than once.”\u00a0[19<\/a>]<\/span>\u00a0In other words if a bill made out by named consignee acquires a feature of transferable document it partially possess a quality of negotiable document.<\/p>\n Function of a bill of lading.<\/p>\n To be accepted as a document of title a bill of lading \u201cmust not only transfer rights of possession but facilitate the transfer of ownership, and enable the transferee to protect and enforce those rights, notably against the carrier of the goods, with effective weapons of contract law”.\u00a0[20<\/a>]<\/span>\u00a0A bill of lading has been used for centuries by merchants in international trade and it fulfills its role effectively, especially in accordance to its transferability. It is true that it has to comply with conditions such as being made out to \u201corder”, which means that the carrier is supposed to deliver the cargo to a named consignee or to his order or assigns.\u00a0[21<\/a>]<\/span>\u00a0Nevertheless it is a big convenience for everyone who wants to carry the goods by sea and would like to have a possibility to transfer the rights to goods to another lawful holder before they arrive to the port of destination. It was clearly explained by Bowen, L.J. in case Sanders Brothers v Maclean & Co.\u00a0[22<\/a>]<\/span>\u00a0that a bill of lading during a voyage is commonly accepted as a symbol of a cargo and by passing it to another parties by indorsment and delivery this party obtains the property of the cargo. In case Charles Barber and Others v William Meyerstein\u00a0[23<\/a>]<\/span>\u00a0one of the judges named bill of lading \u201ca living instrument, and the transfer of it for value passes the absolute property in the goods”.\u00a0[24<\/a>]<\/span>\u00a0For the proper usage of a bill of lading its negotiability is not necessary. If it would be so it could create an increasing number of difficulties and misunderstandings like uncertainty to whom the goods belong to. In some situations it is confusing enough without bill of lading being negotiable. Problems with recognizing the owner in situation when the voyage itself takes a long time could incur risk of depravation of goods. However the main point is that all international trade is about trust. So the title to goods obtained by fraud or other crime should not be acceptable and only a lawful holder of a bill of lading, as is written in Carriage of Goods by Sea Act 1992, \u201cshall (\u2026) have transferred to and vested in him all rights of suit under the contract of carriage as if he had been a party to that contract”.\u00a0[25<\/a>]<\/span>\u00a0Despite all prerequisites for a bill of lading to regard it as a \u201cnegotiable” or \u201cquasi-negotiable” instrument negotiability is not essential for its existence\u00a0[26<\/a>]<\/span>\u00a0and fulfilling its function.<\/p>\n To summarize I believe that usage of phrase \u201cnegotiable” in relation to a bill of lading is not fully appropriate mainly because this document does not have all of the features which are necessary for a negotiable instrument. A bill of lading possess them only partially so the phrase \u201cquasi-negotiable” is more accurate. Nevertheless after analyzing this issue I came to a conclusion that for function which a bill of lading should perform it does not have to possess all of the qualities required for a negotiable instrument. To fulfill its role as a document of title it only has to be transferable.<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" A bill of lading is one of the main documents used in the international transport to carry the goods by sea. It fulfills different kinds of roles …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[85],"class_list":["post-2243","post","type-post","status-publish","format-standard","hentry","category-free-law-essaysinternational-law","tag-uk-law"],"yoast_head":"\nBibliography:<\/h2>\n