Question from a reader
What is a short form/blank back bill of lading..??
Why does my client insist that short form/blank back/forwarder’s bill of lading are not permitted..??
In my previous article about What is a Bill of Lading and why is it important, I briefly touched upon the Terms and Conditions of the Carrier on the 1st page of the B/L..
A Short Form Bill of Lading (also known as Blank Back Bill of Lading) is one where the Terms and Conditions of carriage is NOT printed on the reverse..
The bill of lading however, could make reference to a separate document (either printed or on a website) that contains these Terms and Conditions of the Carrier and this document may or may not be presented together with the Short Form Bill of Lading..
Such Bills of Lading are not seen very commonly and there seems to be a level of comfort in people looking to receive the more common Long Form version (the one with the Terms and Conditions) for their transactions..
Where a documentary credit (Letter of Credit) is involved, UCP600 states that for shipments made under a Multimodal or Intermodal Transport Document, Bill of Lading, or Non-Negotiable Sea Waybill, such documents should :
contain terms and conditions of carriage or make reference to another source containing the terms and conditions of carriage (short form or blank back transport document). Contents of terms and conditions of carriage will not be examined.
This above statement reflects the fact that a Short Form or Blank Back bill of lading is allowed for negotiations (if issued as a negotiable document), even if the terms and conditions do not require to be examined by the bank..
To answer the second question as to “why the client is insisting that a Short Form or Blank Back bill of lading is not permitted“, one would have to look at the Letter of Credit (LC) that has been agreed upon to see if there are any over-riding clauses that prohibits usage of these documents..
Even if a Forwarders Bill of Lading (House Bill of Lading) is issued, goods are ultimately under the control of the actual carrier (who issues the Master Bill of Lading) until they release it and the party that issues the House Bill of Lading (Forwarder or NVOCC) cannot have possession of the goods in order to release to the consignee..
There have been cases where the actual carrier is owed monies and they have held back the release of the cargo till the monies have been paid..
There have been also cases whereby the NVOCC Operator or agent have been known to charge exorbitant amounts as release fee at destination..
Read a live example of one of the case studies that was published on this blog about an importer being held to ransom by the agent of the NVOCC operator at destination for more money..
Legally, the House Bill of lading is not regarded as a carriers document as one cannot secure release of the cargo from the actual carrier, therefore it may not be suitable for a negotiable transaction and hence a lot of the LC’s have this restriction.. But this could vary based on LC’s and there are also cases where the House Bill of Lading is accepted on the LC..
This is the reason why the client might be insisting that a Forwarders Bill of Lading should not be used..
What has been your experience with Short Form bill of lading..??
under Charter party bill of lading as terms and conditions are referred to charter party agreement, therefore normally the charter party bill of ladings are blank back.
Very well explained, being a banker, I am responsible for scrutiny of documents (bill of lading and its supporting documents) before giving approvals to shipping lines and freight forwarders for remittance on account of surplus freight & freight charges to their parent companies and counter parts.
I have seen that “Terms & Conditions” are mentioned on back of the Master / Carrier’s B/Ls, it can be seen on some of the Freight Forwarder’s House B/Ls as well because they are registered Internationally. I have rarely seen the “Terms & Conditions” mentioned on House B/Ls of the locally established Freight Forwarders. May be it is due to trust based relationship with shippers? But how shipper’s mitigate associated risk? (if any)…..
Syed Aamir Ali