Why are bills of lading issued in sets of three?


17th Century Bill of Lading, West India Company (NYS Library)

Posted on May 14, 2021 2:06 PM by

Philip teoh

Original bills of lading are normally issued in identical sets of three. The master may act by delivering against the first original presented for delivery of the cargo. The practice is described in the sentence “one being accomplished, the others must remain empty”.

The issuance of a set of three original invoices provides or implies, by itself, that delivery will only be made against presentation. The practice dates back to the 16th century and aims to allow the shipper to keep one original, provide the second to the carrier, and send the third to the recipient by different methods.

Willies J ruled in the English case of Glyn Mills Currie & Co v East & West India Dock Co:

I believe the bill of lading remains in effect at least as long as full delivery of possession of the goods has not been made to a person entitled to claim under it.

This is explained in the judgment:

The nature and extent of the obligation assumed by the shipowner to deliver the goods at the end of the voyage must depend on the terms of the bills of lading, which contain his contract with the shipper: and any assignee of a bill of lading the cargo is aware of and must be bound by these stipulations, which have been introduced into the contract, for its own protection, by the shipowner. In this case, the captain, for the convenience of the shipper, signed three bills of lading of the same content and date, by which he undertook to deliver the goods, at the port of London, to Cottam & Co. or to their beneficiaries; and each bill of lading carried the master’s customary assertion that he had signed three in all, “one of which the bills of lading being completed, the others to be canceled.”

This is a stipulation between the shipper and the shipowner, and it is clearly intended to give some protection to the latter, after having delivered the goods on one of the bills of lading, against subsequent requests for delivery by the carriers. the other. invoices of the set.

It is (in my opinion) incompatible with any reasonable interpretation of the stipulation that the shipowner should be held responsible in all cases for delivering the goods to the true owner, as that interpretation would give him no protection. The stipulation can have no meaning or intelligible effect if it does not allow, in certain circumstances, the shipowner to oppose a request for a second delivery by the holder of a bill of lading.

On the other hand, it is obvious that the stipulation aims exclusively at the protection of the owner and is not intended to confer on him the right to choose the person to whom he will deliver or to affect the rights inter se of the owners. bills of lading. However, I think the natural and reasonable interpretation of the language of the contract is that the shipowner should be exempt by surrender on one of the bills of lading, although it does not represent ownership of the goods – with the proviso that, good faith being an implicit clause in any commercial contract, delivery must be made in good faith and without knowledge or notice of any right or claim preferable to that of the person to whom it is thus delivering.

Subsequently, in a later part of the judgment:

Before the end of the argument, the noble and learned Earl (Earl Cairns) suggested, to your Lordships, that the practice of having so many parts of the bill of lading all as originals was introduced in one purpose of convenience. to the sender or the addressee, and that the final passage, “one of which being accomplished the others to remain void”, was probably intended for the protection of the shipowner. He further suggested that, in order to give effect to this purpose, the true interpretation should be that if the master, acting in good faith, handed over the cargo on part of the bill of lading either to the consignee designated as such or to an indorsee of ‘one part, he would have “completed” the bill of lading insofar as it is a contract of carriage and delivery, and would have been protected even if another part of the bill of lading were to prove unpaid in the hands of an indorsee earlier for the value, but of which the captain had no notice.

If the original bills of lading are issued in batches of identical originals, the question is whether buyers can demand the full set, all three copies. In Sanders Bros v Maclean & Co., the English Court of Appeal replied that it could not.

Bowen LJ explained:

It is clear that the purpose and idea of ​​drawing bills of lading in batches – regardless of the current advantage or disadvantage of the plan – is that the whole thing does not always have to stay in the same hands.

The sender may prefer to keep one of the originals to protect against loss of the document or to transfer it to his agents.

Philip Teoh has practiced law in Singapore and Malaysia for 31 years in both litigation and non-contentious areas. He is the partner responsible for the shipping, international trade and insurance practice at Azmi & Associates Malaysia. He is a SCMA arbitrator and works with the main international arbitration centers of LMAA, EMAC, ICC, LCIA, AIAC, KCAB and others.

The opinions expressed here are those of the author and not necessarily those of The Maritime Executive.


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