Bills Of Lading 2 Notes

BILLS OF LADING (2)

((i) As Document of Title (ii) As Transferring Contractual Rights)

SUMMARY

NOTE: under a Letter of Credit arrangement, the buyer pays the bank, and the bank pays whoever holds the LoC (i.e. the seller)

• This transfers the risk of non-payment from the seller (who has to chase the buyer in the absence of the LoC) to the bank (who is now the one chasing the buyer)

• But that assumes that the bank has paid out – that’s why the mere opening of a LoC (even irrevocable) is insufficient to transfer property

  • And bank will only pay out against conforming documents

Autonomy principle -> the separation and independence of the letters of credit from the underlying contract for the credit in respect of which the letter of credit is issued

Documents of Title

Document of Title At Common Law

• What qualifies as a document of title at common law?

  • When there is a custom at common law to the effect that the document gives possessory rights

• What is its significance?

  • It gives you constructive possession of the goods

• The short answer is that generally, only order or bearer bills are documents of title at common law

  • Exceptions being Mate’s Receipt from SG to Sarawak

Document of Title under Factors Act

• What qualifies?

  • Any document listed under s1(4)! E.g. B/L, dock warrant, warehouse-keeper’s certificate etc

• What is its significance?

  • Not the same as at common law!

• What is the significance of being able to say that your document falls within 1(4)?

  • You can rely to s2(1)

  • And other sections like S24 and S25

  • Also helpful in relying on statutory exceptions to the nemo dat rule

  • Such statutory exceptions usually refer to documents of title as referred to in s1(4)

Is an order B/L a document of title?

• At common law

  • Yes

  • But NOTE: it does not automatically transfer constructive possession -> there must be intention to pass constructive possession (Future Express)

    • For e.g. in Future Express, because the bank knew that the goods were discharged and long gone, transfer of the B/L to the bank did not transfer constructive possession

• Under Factors Act?

  • Yes, clearly

Is a straight B/L or sea waybill a document of title?

• What is the difference between a sea waybill and a straight B/L?

  • Sea waybill simply asks the carrier to deliver to the person named in the sea waybill

    • No need to produce

  • But you need to produce a straight B/L at delivery (Rafaela S)

• Is either a document of title at common law?

  • No

  • Rafaela S says straight B/L is a document of title in ONE sense

    • For the HV rules! Where it refers to a “B/L or some other similar document of title”

    • Which is unfortunate phrasing, because it clearly doesn’t mean the same thing as document of title at common law

• Is there any other difference between the two?

  • No

• Does a straight B/L count as a document of title under s1(4) Factors Act?

  • Likely yes, since you have to produce it to claim delivery

• What about sea waybills?

  • Unclear, it might fall within “any other goods”

  • But then you don’t have to produce it to claim delivery

Is a ship’s delivery order, delivery order, or warrant a document of title?

• Ship’s delivery order

  • An order to the party in actual possession (e.g. the ship/carrier) to deliver the goods to another

  • Person giving order is likely to be the owner of the goods (e.g. seller)

  • Telling the ship to deliver the goods to the buyer

  • Usually used when a seller is trying to break up a bulk cargo covered by the same B/L

• Delivery order?

  • Given by the person in actual possession

• The confusion here is that COGSA uses the terminology of “ship’s delivery order”, but what it means by SDO is actually a DO! Since it refers to an undertaking by the carrier

• Are they documents of title at common law?

  • NO – The Julia

• Under Factors Act, is it a document of title?

  • Yes!

  • What about a delivery warrant?

    • YES, covered under Factors Act 1(4) a swell

  • NOTE: distinguish between a warrant and a delivery order! (see below)

• What is attornment?

  • The bailee (carrier) recognises that the goods are held on behalf of another

• Ship’s delivery order -> an order TO the ship to deliver

  • Cf Ship’s delivery warrant -> an undertaking BY the ship to deliver

• Ship’s delivery warrant

  • A document issued by the person in actual possession of the goods, undertaking to deliver the goods to someone (usually the buyer)

  • Sometimes said to amount to an attornment

• Confusing: COGSA 1992 uses the language of a ship’s delivery order, but what constitutes a SDO under COGSA is strictly speaking a ship’s delivery warrant (because it has to be an undertaking by the carrier)

• Both are documents of title under the Factors Act

  • S.1(4) says ‘warrant or order’, which implies there’s no difference

  • Waren Import [1975] seems to require a ship’s delivery warrant - seems to require an undertaking from someone in actual possession

Electronic pin codes?

• At common law? No

• Under FA? No (not a document)

  • However, Glencore shows that it’s possible to utilise electronic codes as a means of fulfilling obligations

Mate’s receipts

• What is a mate’s receipt?

  • Just an acknowledgement that the goods have been loaded on board, usually exchanged for a B/L

• Are they a document of title?

  • NO (Nippon Yusen) – except between Singapore and Sarawak (Kum v Wah Tat Bank)

  • There is a custom between SG and Sarawak that they are documents of title

  • But elsewhere in the world, they are NOT documents of title at common law

• Under FA?

  • Yes, under “any other document”

  • Parties can sometimes try to use “mate’s receipts” to create security (e.g. Nippon Yusen, where bank told carrier not to issue a B/L except against a MR, but it doesn’t really work)

• Thus, the short answer is that generally, only order or bearer bills are documents of title at common law

Transferring contractual rights and liabilities

Transfer of Bill of Lading

• When A transfer B/L to B

• Rights?

  • Transferee gains rights under s2(1) COGSA

  • Transferor loses his rights (s2(5))

  • But...

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