Bill of Lading historical background and short overview

‘ … the materials for the early history of Bills of Lading are singularly scanty owing to the customary nature of the rules of the Law of Merchant. What was so well known to all merchants it did not always seem necessary to embody in written rules or decisions.
W.P. Bennett, The History and Present Position of the Bill of Lading as a Document of Title to Goods. Cambridge University Press, 1914, p.2

Introduction

Although history of Bills of lading is rather difficult to trace it can be safely assumed that it has had a recognised existence in commerce and commercial law for more than four hundred years, while some authors assert that it has been known from at least the fourteenth century. In the Medieval Ages shippers (usually the owners of the goods) as a rule accompanied their cargoes on the voyage to destination and bill of lading served only as an invoice of the goods shipped. Record of the goods loaded was kept by ship’s clerk in the "Register", "Book" or "Writing." All these names apparently describe a document which was kept by ship’s clerk with a copy given to the merchant as a receipt. Such rudimentary bills of lading was not transferrable, mainly, because merchant travelled with their goods and while original was in possession of the shipowner the only one copy of bill, held by merchant, was necessary.

1390, the 25th day of June. Know all men that Anthony Ghileta shipped certain wax and certain hides in the name and on behalf of Symon Marabottus which things must be delivered at Pisa to Mr Percival de Guisulfis, and by order of the said Mr Percival who shall deliver all his things to Marcellino de Nigro his agent, and I Bartholomeus de Octono shall deliver all his goods at Portovenere and for the better caution I affix my mark so.
A copy. Bartholomeus de Octono mate of the ship of Anrea Garoll
http://www.bimco.dk

W.P. Bennett also mentioned a practice recorded in "Extraits des Statuts de l’ile de Sardaigne", documented as "Extrait du Statut de Sassari de 1316." Dealing with masters of ships the record says that the masters of ships which intended to leave the port of Torres with the goods of local merchants, shall give a sufficient written security (de dare suffitiente securitate) that the merchandise which they have promised to transport shall be shipped in entirety on their vessels. When this written security shall have been given to the merchant in form of "police de chargement" (sa puliza) it would allow the ship to leave the port. In French translation "police de chargement," means Bill of Lading, so the record clearly mentioned a document which the shipper received from the master endorsing receipt and warranting shipment of the goods.

Later, in the sixteenth and seventeenth centuries, when larger ships has begun to carry varied cargoesbelonging to several shippers this practice gradually came to naught when merchants ceased to travel with their goods and simply dispatched them to a consignee. From this stage bill of lading began to exist as a separate and distinct document to provide a proof that the person demanding delivery of the goods at the port of destination was the person entitled to do so. Naturally, a copy of the register signed by the master or his mate on receipt of goods was such a document to pass a title and bind shipowner and consignee to the conditions of shipment.

This legal status of bill of lading was eventually secured by the end of the eighteenth century in key decision of the House of Lords in Mason v Lickbarrow (1794) 1 H. Bl. 359, where Lord Loughborough at pp.404-405 characterised bill of lading as:

… the written evidence of a contract of the carriage and delivery of goods sent by sea for a certain freight. The contract in legal language is a contract of bailment; 2 Lord Raym. 912. In the usual form of the contract the undertaking is to deliver to the order or assigns of the shipper. By the delivery on board, the ship-master acquires a special property to support that possession which he holds in the right of another, and to enable him to perform his undertaking. The general property remains with the shipper of the goods until he has disposed of it by some act sufficient in law to transfer property. The endorsement of the bill of lading is simply a direction of the delivery of the goods. When this endorsement is in blank, the holder of the bill of lading may receive the goods, and his receipt will discharge the ship-master; but the holder of the bill, if it came into his hands casually, without any just title, can acquire no property in the goods.
Mason v Lickbarrow (1794) 1 H. Bl. 359 per Lord Loughborough at p.404-405

However, later decisions Patten v Thompson (1816) 5 M & S 350 and Sargent v Morris (1820) 3 B & A 277, although affirming the right of consignee as a bill of lading holder to divest the consignor of his right to stop in transitu, distinguished Mason v Lickbarrow and held that by the mere possession of the bill of lading the person did not also obtain sufficient possessory rights in the goods to give him a lien over these goods, because a transfer of the property is … very different from a transfer of the contract.

It was only in the second half of the nineteenth century when decision in Meyerstein v Barber (1866) 2 CP 38 by the Court of Common Pleas defined a bill of lading as a “symbol of possession, and practically the key of the warehouse”, as Keating J. said:

Goods which had been shipped at Madras under a bill of lading making them deliverable in London on payment of freight, arrived at the port of destination, and were landed and deposited at a sufferance-wharf with stop thereon for the bill of lading freight; so that in fact though delivered under such circumstances and to such extent that the shipowner would not have been answerable for an accident happening to them, they were not capable of being received and taken possession of by the consignee or holder of the bill of lading without producing it and discharging the shipowner’s lien for freight. The wharfinger under these circumstances was at the lowest the common agent for the shipowner and for the consignee or holder of the bill of lading - agent for the consignee or holder, upon his producing the bill of lading showing that he was entitled to the goods, and upon his paying the freight, to transfer the goods into his name, and to deliver them to him or give him a warrant for them, and agent for the shipowner, to retain possession of the goods, and to permit no one to exercise any control over them until the claim for freight had been satisfied. During this period, therefore, the bill of lading would not only, according to the usage, and for the satisfaction of the wharfinger that he was delivering to the right person, be a symbol of possession, and practically the key of the warehouse ; but it would, so far at least as the shipowner was concerned, retain its full and complete operation as a bill of lading, there having been no complete delivery of possession of the goods. There can be no complete delivery of goods until they are placed under the dominion and control of the person who is to receive them.

Modern status of contractual relations between the shipper, the charterer, the carrier and bill of lading holder has been summarised by Evans J in Boukadoura Maritime Corp. v Societe Anonyme Marocaine de l′Industrie et du Raffinage (The Boukadoura) [1989] 1 Lloyd’s Rep 393 in the following words:

The first is that contractual relations between the shipowner and charterer remain governed by the charter-party notwithstanding the issue of a bill of lading to a third party shipper. Secondly, although the shipper is an independent third party, for the purposes of the charter-party he should be regarded as the agent through whom the charterer has performed his undertaking to load cargo upon the vessel. Thirdly, when the shipowners through the master or their agents issue a bill of lading they undertake responsibilities and potential liabilities to third parties which are independent of the charter-party contract. If the document contains a false statement knowingly or recklessly made, then there is a potential liability in fraud: Brown Jenkinson & Co Ltd v Percy Dalton (London) Ltd, [1957] 2 Lloyd’s Rep 1; [1957] 2 QB 621. Fourthly, … the commercial reality today is that the shipowner will invariably be required, and will expect to have to issue a bill of lading, which will or may be held by third parties other than the charterer. Fifthly, it is for practical purposes inevitable that the liabilities under the bill of lading contract will differ to a greater or lesser extent from those undertaken by the shipowner under the charterparty. The differences may result from different contractual terms of, in English law at least, from the operation of the doctrine of estoppel.

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