Question

As the discharge port agent you are approached by a person claiming to be a director of the ‘notify party’ shown on the bill of lading for one of the consignments. According to the manifest the Bill of Lading (B/L) is made out “to order”. He states that he does not have the original B/L and you tell him that the only way he will get that consignment is if he presents a letter of indemnity countersigned by a bank. A letter of indemnity with a bank’s counter-signature is duly presented and the cargo is released. A few days later another person arrives with the original B/L properly endorsed for the same consignment and when you contact the bank, which countersigned the Letter of Indeminity, they claim it is a forgery. What action should you take and what is the most likely outcome? Explain your answer with reference to specific case law(s).

Answer 1

A bill of lading (B/L), is an important issue when shipments are made to move the cargo or freight from one place to another place. On one hand, it is a contract between a shipper and the carrier for the transportation of goods, and on the other hand, it presents as a receipt issued by a carrier to the shipper.

So, the bill of lading is expressed as a legal document that furnishes all the important details to the shipper and the carrier to appropriately process the freight shipment through distinct maritime countries and invoice it accurately.

There are following types of Bill of lading--

1.Straight bill of lading

2.Openbill of lading

3 Bearer bill of lading

4. Order bill of lading

Since this Bill of Lading (B/L) is made out “to order”, it comes under Order bill of lading.

It is a negotiable instrument of title as the bill of lading is made to “to order” of the consignee, This clearly signifies that the ownership of the bill of lading can be passed on from one person to another by authorizing signature and delivery of the bill of lading.

All goods which are shipped under “To order” of the bill of lading  and have not been paid in advance can be categorized into two types:

To Order, Bank: confided to a bank with the considered consignee’s name given under ‘notify party.’ The bank endorses the B/L to the purposive consignee against payment of (or a pledge to pay) the amount of the accompanying bill of exchange. In the letter of credit transactions ‘To Order’ B/Ls are used commonly and may be bought, sold, or traded, or used as security for borrowing money from banks or other lenders.

To Order, Blank Countersigned: not confided to any named party but ‘To Order’ of the consignor, with the intended– consignee’s name mentioned under ‘notify party.’ The consignor must sign (endorse) and stamp this B/L so that its title can be handover.

So far the action is considered, the bank has acted according to the "To Order’ B/Ls". So the letter of indemnity can't be signed twice by the bank, and it obviously comes under forgery. As a port agent, I won't be responsible for this goofups, and it will be a matter between the bank and the consignee.