Shipping documents

Shipping documents

Contents

Under a typical international sales arrangement, the buyer won't want to pay you unless you give them proof that you've delivered the goods to the carrier, and a guarantee that they can collect the goods.

This is done by using shipping documents showing that goods have been delivered according to the contract. Letters of credit issued by banks in your favour will solve any concerns you might have about not getting paid after the goods are shipped.

The shipping documents involved vary from transaction to transaction and from carrier to carrier. The most common are the bill of lading and the waybill.

Bill of lading

A bill of lading confirms delivery on board a named ship and records the carriage terms. It's also proof of ownership of the goods and is transferable by the buyer. This means that the buyer can sell the goods on by transferring the bill of lading rather than waiting to get physical delivery of the goods. This is the most commonly-used shipping document.

A bill of lading can be used in 3 ways:

Bill of lading as a receipt for goods

A bill of lading can be used as proof that goods have been shipped or received for shipment by the shipping company. The bill has to be signed by the ship owner, by the master or other agent on the ship owner's behalf.

Bill of lading as evidence of the contract of carriage

A bill of lading can be used as evidence of the contract of carriage by which the goods are transported. This contract is between the shipping company and the person arranging for their transport.

Bill of lading as a transferable document of title to goods

If the buyer wants to sell the goods by transferring the bill of lading, it must be drafted as an 'order' bill. This is a bill under which the carrier agrees to deliver the goods at their destination to a named consignee (the receiver of the goods) or to their 'order or assigns'.

The buyer has to pay attention to the following before they accept the bill of lading:

  • The bill has to state the shipment date accurately. The production of a bill of lading with an inaccurate shipment date allows the buyer to reject the goods
  • The bill has to be a 'clean' bill of lading stating that the goods have been shipped and received in apparent good order and condition. If the bill doesn't state this, it's a 'claused' bill and highlights that there's something wrong with the goods.

Waybill

If a negotiable document of title isn't needed, you can agree to use a waybill instead of a bill of lading. Like a bill of lading, it can be used as a receipt and as evidence of the contract of carriage. But unlike a bill of lading, it doesn't constitute a transferable document of title to goods.