Question

In: Finance

8. What are bills of lading, and how do they facilitate interna­tional trade transactions?

8. What are bills of lading, and how do they facilitate interna­tional trade transactions?

Solutions

Expert Solution

Bills of lading are receipts of goods for shipment and a summary of freight charges. More importantly they convey title to the goods shipped.

A Bill of Lading is issued by the carrier and usually contains the following details:

*Description of the merchandise

*Identification marks of the merchandise

*Evidence of ports of loading and destination

*Name of the Seller (exporter)

*Name of the buyer (importer)

*Freight charges, and whether they are paid or to be paid

*Date of shipment

When issued to order, it becomes a negotiable instrument and can be endorsed to convey title. This endorseability, enables the exporter to obtain payment for the goods from a banker to whom it would be endorsed. The Banker would hand over the B/L to the importer only on payment of the value of the goods as per the invoice.

Thus bills of lading, in addition to being an evidence of title to the goods, also aid in financing international trade.


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