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Bill of lading related problems - Masters responsibility

From the viewpoint of both the carrier and the shipper, documents which demonstrate the amount and the condition of cargo carried on the ship are essential. The bill of lading is the most important of such documents. The Rules provide for the bill of lading to be a record of the quantity of cargo and its apparent order and condition at the time the cargo is entrusted to carrier's care and responsibility (see Hague Rules, Article III, rule 3).

Without ever having seen the cargo, prospective buyers often decide to purchase goods on the basis of the description in the bill of lading. If bills of lading are issued which inaccurately describe the cargo the consequences may be extremely costly for the carrier. Therefore, it is essential that all the information on the face of the bill of lading is checked carefully.

The carrier is under an obligation to verify the amount of cargo and to verify its condition and identifying marks at the time the cargo comes into his custody and care. The Master should ensure that all the proper arrangements are made for this purpose and should seek clarification from owners if they have not been made.

chemical tanker navigation at sea
The carrier will be unable to avoid liabilities which arise as a result of a failure to check the cargo unless a check is not reasonably possible. Furthermore, endorsements on the bill of lading, such as "shipper"s figures”, "figures as per shore tally”, "quantity and condition unknown”, or "said to be…”, will seldom absolve the carrier of blame if he, being able, has failed to check the particulars of the cargo to his own satisfaction.

The Master should not state anything in the bill of laind which he believes to be inaccurate. If the bill of lading does contain inaccurate information, the Master should correct it with an appropriate clause before signing it.

In addition to the bill of lading, there are many other documents which record the quantity and condition of the cargo. The mate"s receipt, cargo manifest, stowage plans, tallies, and draft surveys, as well as notebooks, correspondence, and reports are all of great evidential value. The carrier will rely on such documents to demonstrate the condition and quantity of the cargo at the time it was entrusted to hin and defend any claim for loss or damage.

The B/L is presented to the Master by the Shipper or the Agent in the port of loading, usually three originals and one set of copies. The weight of the cargo loaded is determined by ship and shore figures. Usually the shore figures are used on the B/L.

The following items have to be checked carefully before the B/L is signed:
  • Cargo destination and weight
  • Bill of Lading number
  • Date of issue: always the final loading date
  • Date of charter party, as indicated in the voyage orders
  • Information regarding ship: name, nationality, name Master, etc.
  • Method of payment of freight Freight as per c/p Freight prepaid Collect freight Other
  • Correct port of discharge.
  • Cargo commingling Clause

The three original Bs/L must be signed personally by the Master and not by a rubber stamp. All other Bs/L prepared, apart from the agreed originals are to be stamped “Copy – Not negotiable”.

A blank B/L must never be signed. In special circumstances – by prior agreement from the Owners – the Ship’s Agent may be authorised to sign the completed Bill on behalf of the Master. In this case clear instructions must be given by the Master to the Agent on the procedure to be followed. On all occasions however the Agent before signing the B/L must contact the Master concerned who in turn will advise if a clean B/L may signed or endorsed with the quantity in dispute or a Letter of Protest issued in lieu of clausing the Bill of Lading.

If the Ship’s figures differ more than 0.5% from the Bill of lading figure, and clausing of the Bill of Lading is not acceptable to the Shipper, the Master should contact the management office for further instructions.

As soon as agreement is reached on all points, all Bs/l are to be signed by the Master. Usually the Master will be provided with an original B/L, sometimes only a copy. The departure telex/e-mail to the management office should include the type of Bs/l remaining on board.

A Bill of Lading endorsed with “Freight Prepaid” should never be signed without prior approval from the Owners or management office.

The original Bill of Lading (or Delivery Note) covering the cargo, duly endorsed by Consignee or Receiver has to be presented to the Master prior commencement of discharge. In the port of loading the Master is often given an original B/L for the receiver of the cargo. If the Master is able to determine beyond any doubt the identity of the Receiver in the port of discharge, he may give him the B/L in exchange for a receipt. Otherwise, the original B/L is to be given to the Agent in the port of discharge in exchange for a receipt in which he is obligated to give the cargo to it’s rightful Receiver.

If an original Bill of Lading cannot be presented on arrival of the vessel the management office is to be informed immediately and the Master should act according to the instructions given.

A solution could be the discharge of the cargo against the issue of a ‘Letter of Indemnity’ (LOI), provided the Owners have agreed to it. In such a letter the Charterer or Shipper guarantees to hold the vessel/owners free of responsibility for the consequences for delivering the cargo without the availability of an original B/L.

Another possibility which may be considered, after approval from Owners, is for the cargo to be discharged into customs bonded storage, from which it will only be released to Receivers after the original B/L is presented or LOI received.

When the Master signs the B/L, the Master does so, not on behalf of the Charterers or Shippers, but on behalf of the Owners. The B/L is an Owner’s document, and it is the Master’s responsibility to ensure, to the best of his ability, that it is properly prepared and signed. This applies whether the ship is employed on a Voyage or Time Charter.

The Charterers / Shippers cannot require the ship to agree to issue of Bills of lading with a description of the cargo which is not in accordance with the cargo actually loaded. Furthermore, we have to point out that situations like this give rise to potential prejudice of the Owner,s P&I Cover, because the Club rules state that a claim arising from a bill of lading being issued, with the knowledge of the Owner or Master, with an incorrect description of the cargo, quantity or its condition, can only be paid at the discretion of the P&I Club Directors.

Masters are to ensure they/their officers always take steps/measures to satisfy themselves that the condition of the cargo presented for loading accords with the description of the cargo in the documents given to the ship - mate’s receipts / bills of lading / cargo manifest etc.

If the B/L contains inaccurate or misleading statements about the quality or quantity of the cargo it covers, then Owners will be liable for the consequences, at least in the first instance. The Master’s main concern must be, to see that this cannot happen.

Therefore it is essential that the Master clauses directly on the bills the correct condition of the quality and quantity of cargo if these two items have not be properly described in the document presented to him for signing. If he wants assistance with the wording to be used in the clausing, he should call the commercial office who may engage the local P & I representative for advice. If this is not acceptable to Charterers / Shippers then they will need to find other cargo to load which does accord with the description which they want to appear in the Bills of lading.

Masters are also to ensure that the current charter party for the voyage is onboard and understood by all Officers, this includes notifications to be made when a potential dispute arises. The timing of such notifications is critical in such cases, if time constraints due to onboard operations, a telephone call to the Commercial Operator will suffice until a formal email with relevant backup detail can be sent.

It may not always be easy for the Master to separate the differing responsibilities with regards to the commercial operations of the vessel. If in doubt, always refer to your management office /commercial operator for clarification and support.

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Reference publications

  • Equipment Manufacturers Instruction Manuals
  • MARPOL – 73/78 (latest consolidated edition)
  • International Safety Guide for Oil Tankers and Terminals (ISGOTT)
  • CFR 33 parts 125 to 199
  • Ship to Ship Transfer Guide (Petroleum)
  • MSDS for particular cargo carried
  • Chemical Tank Cleaning Guide
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