Question

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

Answer 1

Bill of lading is an evidence of contract for the carriage and delivery of goods sent by sea for certain freights. The legal document is issued by a carrier to a shipper which specifies the type, quantity and destination of the goods being carried. It is a legal document between the carrier and the shipper, where every detail is mentioned to securely deliver the package. Upon the delivery of the product, the recipient should also sign the Bill of Lading.

The Bill of lading is an important document which facilitates International Trade Transaction

- If there is any conflict during the International transaction regarding the quantity, quality of transaction then bill of lading becomes the primary evidence. So it helps companies to settle disputes thus gives confidence to parties engaged in international transactions

- Bill of Lading acts as a document. If you are a buyer and has the bill of lading, even though the goods are in transit. You will be called as the owner. If you want to sell the goods, then you can easily give the bill of lading to the third party. So it helps International buyers to do trade smoothly

- Banks provide letter of credit on the bills of lading. So it helps seller to gain confidence while delivering goods. If the buyer defaults in payment, then the bank will pay

All the above mentioned advantages of Bill of Lading helps to facilitate International Trade Transaction