Implications of issuing a Clean on Board bill of lading

Many a time, shippers have asked shipping lines for “CLEAN ON BOARD” clause on a bill of lading and if the request relates to a container shipment, this might have very well been rejected by the shipping line..

Why do the shipping lines reject this..?? cob

The clause “CLEAN, ON BOARD” was initially used on break bulk vessels..

In break bulk and bulk vessels, there is a document called Mate’s Receipt..

This document has all the information pertaining to the cargo like description, number of bundles, weight, measurement etc and this note is handed over to the ship at the time of loading..


If any discrepancies are found between the actual cargo delivered and the Mate’s Receipt, the Chief Mate (after whom this receipt is named) a.k.a 1st Mate, 1st Officer, Chief Officer will check the cargo and note such discrepancies to confirm that the cargo was received in that condition..

If the cargo was found to be in good and “clean” condition, the bill of lading will be claused “CLEAN, ON BOARD”..

If the cargo was damaged in anyway or rusted etc, the Mates Receipt would be claused to show the condition of the cargo upon receipt and the bill of lading will not be claused Clean, On Board..

This was possible in the era of pre-containerisation because the ship/agents were able to physically check and verify the cargo..

However, in the case of containerised cargoes and especially FCL cargoes, the carrier/agents are not privy to the packing of the containers and the nature of the cargo as the packing is done by the client on their premises and the carrier/agent is not present at the time of packing..

The carrier relies on the information provided by the shipper in terms of the cargo, number of packages, weight and measurement..

Therefore, the container carriers do not allow the clause “Clean On Board” on the bill of lading as they don’t know the condition of the cargo in the container and will not accept liability for the same..

The carrier puts the clauses “SHIPPERS LOAD STOW AND COUNT”  (SLAC) and “SAID TO CONTAIN”  (STC) on the bill of lading to protect themselves from any claims that the shipper might place on them at a later stage, based on the above facts..

The term “Clean On Board” also does not exist as per the late Mr.Bentley Cook commenting on another article relating to this term..

Hi Hariesh , for further clarification, the term “clean on board” does not actually exist and has caused much confusion over the years by being incorrectly typed on letters of credit and misinterpreted. It actually refers to 2 conditions:
1 Clean – as defined in your article
2 On Board – which is actually a contraction of the term “Shipped on Board” – which distinguishes the condition from “received for shipment”.

Where it appears on an LC therefore it should be typed as “clean , on board ” ie there must be a comma between the 2 terms. – semantics yes but can make a big difference legally.

 

Conclusion

Customers, especially buyers, need to ensure that in container shipments, this term “Clean, On Board” is not added as per of the Letter of Credit requirements as it could unnecessarily delay the process of documentation as more often than not, there will be a discussion or argument between the shipper and carrier about showing this clause on the bill of lading..

The process of shipping and trade negotiations are evolving.. Customers and banks should also evolve with this..

Have you had any experiences brought about by the inclusion of this clause on the bill of lading..??


Article republished after critical updates

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11 thoughts on “Implications of issuing a Clean on Board bill of lading”

  1. In reference to the comment about documents being sent on an approval basis by Deutsche Bank because the name of the signatory on the bill of lading was omitted – that is not a discrepancy, unless the letter of credit itself specifically required it.
    The UCP600 rules define in Article 20.a.i. how the bill of lading is to be signed. “. . .
    indicate the name of the carrier or named agent for or on behalf of the carrier, or . . . Any signature by the carrier, master or agent must be identified as that of the carrier, master or agent”
    There is no requirement that the actual name of the signatory appear, just the name of the party in whose NAME they are signing.

    Reply
  2. Letters of Credit/Documatery Credits do not require a Bill of Lading to indicate “clean” on board. The UCP 600, Article a.ii states the bill of lading is to “indicate that the goods have been shipped on board . . . ” and goes on to define how this can be accomplished.
    Furthermore, the ISBP 2007 revision to the UCP 600 states in paragraph 107 “if the word “clean” appears on a bill of lading and has been deleted, the bill of lading will not be caused or unclean unless it specifically bears a clause or notation declaring that goods or packaging are defective”.
    Should a letter of credit make reference to “clean on board bill of lading,” the requirement is not that the word “clean” appear but rather that the bill of lading not be caused – indicate any defect.
    Should any beneficiary of a letter of credit be advised differently, they can quote the above documents, article and paragraph, to their banker.

    Reply
  3. Dear Sir
    There are instances that in case of FCL container the Bill of Lading is issued with a notation ” Shippers load stow and count”.
    The subject notation helps the Shipping company to avoid liability even if the consignment is damaged inside the container due to their mishandling during ocean voyage.
    Whether the local representative of the shipping company may be approached to witness the stuffing into the container at the shipper’s premises and issue bill of lading without the notation ” Shippers load stow and count”
    Your comments are needed in the matter
    Regards

    Reply
  4. Usually when we request a Clean on Board, the shipping company signs the three original where it says “carrier”. The Deutsche Bank is sending the documents for payment on approval (letter of credit to be paid against presentation of copies only). Claiming that where the Carrier signed did not type the name of the person signing. I have never seen a bill of lading signed by the carrier where they type the name of the person signing. My issue is that the documentary credit if for US$435,000.00 and payment is being delayed.

    Reply
    • Hello Rafael, I have seen this practice in the past where there used to be a rubber stamp with the name of the person signing.. I have not seen this for many years though.. In order not to delay the process maybe its best to accede to this request and for the next shipment maybe remove this requirement in the L/C..

    • What is there to explain? Read INCOTERMS 2020, I just add that now there is no CNF (it’s an old version) but CFR.

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