Bill of Lading

The words “bill of lading” come from an old English term that literally means “a list of cargo.” If you search Google for the definition of a bill of lading, you’ll get thousands of results that say the bill of lading is a contract between you, the owner of the goods, and the carrier stating what goods you’re shipping, where the shipment is coming from, and where it’s headed.

When freight changes hands from shipper to carrier, it is the signature on the bill of lading that signifies the goods have been received in "good order." That is, the goods are in the same condition as when they left the shipper's facility, or a "clean" bill of lading has been issued. A bill of lading without any comments regarding damage, overage or underage can play a crucial role in permitting the seller to receive payment for the merchandise.

A bill of lading is always a receipt for goods.

As it has been for thousands of years, the bill of lading’s main purpose is to serve as a receipt for goods

A bill of lading is sometimes a contract for carriage

This is the function of the bill of lading that brings us into the modern era. Exporters should understand that in the absence of an individually negotiated contract between a shipper and a carrier, the bill of lading is the contract for carriage.

In his work, Primus develops contracts between shippers and brokers to move away from the standard terms of carriers. This is where the phrase “subject to terms and conditions” comes into play in bills of lading—shippers must be acutely aware of and understand this language. It’s where all the gotchas will be; for example, limits of liability for cargo, late payment penalties, etc.

Straight Bill of Lading

This bill of lading is typically used to ship goods to a customer who has already paid for them.

This bill of lading is used for shipping goods overseas. It authorizes the holder or another party to take possession of the goods. Ocean bills of lading can be straight bills of lading or consigned "to order" bills of lading.

“To order” Bill of Lading

A “to order” bill of lading is typically a negotiable document. It allows the transfer of ownership of the goods outlined in the bill of lading to another party upon endorsement by the party listed as the ultimate consignee on the document. Often under the terms of a letter of credit, the bill of lading is consigned "to order" or "to order of [named] bank.”