The majority of the world’s cargo is transported on sea using ships. Therefore, shipping is very central to commerce and any businessperson would be at loss if he/she didn’t know the common shipping douments and terms that are involved during/used in sales contracts.
We have included the common used Shipping documents (Bill of Lading, Mate's Receipt, Letter of Indemnity (LOI), Cargo Manifest, Freight Manifest, Airway Bill) on this page and the most used shipping terms on another page. Some of the shipping terms overlap with INCO Terms.
Bill of lading
It’s a document that serves as an evidence of the contract of carriage of goods and signed by a carrier (the transporter of goods) or the carrier's representative and issued to a consignor (the shipper of goods) that evidences the receipt of goods for shipment to a specified destination and person.
The Bill of Lading is ought to contain the name of the consignor (shipper); the name of the consignee (receiver); the name of the master of the ship; the name of the ship and the voyage number; the place of departure (Port of loading) and destination (Port of discharge); the price of the freight; the date of loading; the marks and numbers of the things shipped.
Bill of Lading is negotiable since it can serve as a document of ownership which allows ownership to the goods to be transferred by endorsement and delivery of the bill of lading. The Ethiopian Shipping Lines issues 3 (three) original set of Bill of Lading and the bearer of all the three Bills is understood to be the owner of the cargo mentioned in the bills.
Presentation of a Bill of Lading to the Bank
In Ethiopia, a letter of credit usually allows for 21 days for document presentation counted from the date of loading. The date of loading is written on the Bill of Lading as “clean on board on such date” assuming a clean bill. Sometimes a letter of credit may mention less number of days for presentation. Mentioning the presentation limit in the credit has reduced the problem of Bills of Lading reaching the consignee much later than the date of unloading of the goods at the port of discharge. This - the lateness of the Bill - causes a problem for the consignee in the form of port storage charges. Such Bill is known as Stale Bill of Lading and the receiver may reject the Bill stating that it’s “stale”.
Clean Bill of Lading
It declares that the goods have been received in an appropriate condition, without the presence of defects and is issued by the product carrier. In Ethiopia, one of the conditions stipulated in the letter of credit is that the Bill of Lading has to be clean to release the payment to the shipper – Clean on Board Bill of Lading.
Unclean Bill of Lading
An acknowledgement that the ship owner has received the goods in the condition stated therein, but usually has no further legal relevance. Possession of the mate's receipt is evidence of title but it is not conclusive, so the ship owner is not bound in all cases to deliver the bill of lading to the person who delivers up the mate's receipt.
Letter of Indemnity (indemnity bond)
It’s a written undertaking by a third party (such as a bank or insurance company), on behalf of one of the parties (the first party) to a transaction or contract, to cover the other party (the second party) against specific loss or damage arising out the action (or a failure to act) of the first party.
Sometimes in shipping a Letter of Indemnity is issued by the shipper to indemnify the carrier of any damage that may arise from the carrier’s issuing Clean Bill of Lading even though the Mate’s Receipt is remarked as ‘unclean’ – if the remarks are not serious. A good example to this is a remark stating atmospheric rust for steel that has been waiting in the port for some time.
Air waybill (air consignment note)
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