08 ADAMS Signing bills of lading

SIGNING BILLS OF LADING – PROBLEMS AND SOLUTIONS
Chris Adams
Steamship Insurance Management Services Limited
A Typical Problem
The m.v. “Problematic” is chartered to “Unscrupulos Maritime” under an NYPE form to
load a full cargo of bulk grain at a loadport in China for discharge in Rotterdam. Loading is
by means of bags that are lifted aboard the ship and then opened on a grating that is
placed over the hatch square. The grating is intended to catch foreign matter as the grain
is bled from the bags into the holds. However, the Master continually interrupts the loading
because he says that the cargo being loaded shows traces of fungus, and is infested with
insects. He also tells the shippers that he will not be able to issue clean mate’s receipts.
The charterparty authorises the charterers to issue bills of lading on the Master’s behalf,
always provided that they are in conformity with the mate’s receipts.
The shippers protest against the Master’s intention to issue claused mate’s receipts, and
say that there is nothing wrong with the cargo which fully complies with the specification in
the sale contract. A letter of indemnity is offered, either by the shippers, charterers, or
both, in consideration of the Master issuing unclaused mate’s receipts. The Master
contacts his owner for advice, by which time loading is completed and the surface of the
cargo in all of the holds reveals no apparent problem with the cargo. What is to be done
to protect the owner’s interests?
The Issuance of Bills of Lading – General Principles
The Functions of the Bill of Lading
The bill of lading is an extremely important document that has a number of functions:-
i. It serves as a receipt for the cargo and describes the apparent order and condition of
the goods on shipment. The bill of lading also makes reference to the quantity and
weight of the goods.
ii. It is evidence of the contract of carriage.

iii. Except when stated to be non-negotiable, the bill of lading is a negotiable document
of title.
In its function as a document of title, the bill of lading represents the goods and makes it
possible for the buyer to deal with those goods at sea. The holder of the bill of lading is
entitled to demand delivery of the goods from the carrier when the vessel arrives at the
port of discharge.
This paper will be examining issues that are related to functions (i) and (iii) above.
The Information Contained Within the Bill of Lading
After the carrier has received the goods, Article III, rule (3) of the Hague and the Hague-
Visby Rules requires that on the demand of the shipper, the carrier must issue a bill of
lading showing:-
(a) The leading marks, as furnished in writing by the shipper, that are necessary for the
identification of the goods.
(b) Either the number of packages or pieces, or the quantity, or weight as furnished in
writing by the shipper
(c) The “apparent order and condition” of the goods
However, there is no obligation on either the carrier, his agent, or the master, to show in
the bill of lading any marks, number, quantity or weight if they have reasonable grounds
for suspecting that such details do not accurately represent the goods actually received,
or if they have had no reasonable means of checking such particulars.
Most of the problems arising out of the issuance of bills of lading concern points (b) and
(c) above.
Mate’s Receipts
When cargo is received on board, a mate’s receipt will be issued to acknowledge receipt
of the goods. The description of the cargo contained within the mate’s receipt will in due
course be transferred into the bill of lading. Any deficiencies in the condition of the cargo
should therefore be recorded in the mate’s receipt. This is particularly important when the
vessel is on time charter when the charterparty may authorise the charterers to issue bills
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of lading on the Master’s behalf, but always in conformity with the mate’s receipts. If the
owner is to ensure that the bills of lading accurately reflect the condition of the cargo when
loaded, assuming of course no breach by the charterers of their obligations under the
charterparty concerning the issuance of the bills, it is imperative that the mate’s receipts
accurately record the description and the apparent order and condition of the cargo.
Apparent Order and Condition
Statements in bills of lading as to the apparent order and condition of the goods that they
represent are vitally important in relation to the sale of those goods, and claims for loss or
damage that may be evident at the time of discharge or delivery. When goods are sold by
documentary credit transactions, the bill of lading assumes an extremely important role in
representing the condition of those goods. It is therefore imperative that it does so
accurately. Article III rule (4) of the Hague-Visby Rules provides that that the carrier is
estopped from denying the accuracy of the information contained in the bill of lading when
it has been transferred to a third party acting in good faith. This therefore emphasises the
need to ensure that the representations about the cargo that are contained in the bill of
lading are as accurate as possible.
Most forms of bills of lading contain words acknowledging that the cargo has been
received on board the vessel in “apparent good order and condition”. This is not an
acknowledgement by the carrier that the cargo was in good order and condition on
shipment, only that it appeared so. What is apparent about the condition of the goods is
something that has to be determined only by reasonable inspection by either the carrier or
his Master. Furthermore, the apparent condition refers to what is visible, and not the
internal condition of the goods, and condition is not synonymous with quality. The Master
must make up his own mind whether the cargo that is shipped satisfies the description of
its order and condition in the mate’s receipts or bills of lading that have been presented for
signature. The law does not require him to be an expert on the particular cargo. Neither
does it require him to have any greater knowledge or experience of the cargo than any
other reasonably prudent Master.
It follows that if the goods are not in apparent good order and condition, this statement
should be deleted, or qualified by clausing the mates’ receipt or bill of lading to describe
the actual order and condition of the goods as is apparent to the carrier or the vessel’s
Master.
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Quantity or Weight
It has already been mentioned that under Article III rule (3b) of the Hague/Hague-Visby
Rules, the carrier has to issue on the demand of the shipper, a bill of lading that shows
either the number of packages or pieces, or the quantity or weight, as the case may be, as
furnished in writing by the shippers. With regard to the quantity statement it appears that
the carrier is only required to state either the number of packages, or the quantity, or the
weight. Therefore, whilst a statement as to one of these measures is obligatory, it follows
that the others may be qualified. Most forms of bill of lading contain a printed clause to the
effect that:-
“Weight, measure, quality, quantity, condition, contents and value unknown”
Is the carrier allowed to incorporate such standard reservation clauses, or would such a
clause amount to a derogation of liability as envisaged under Article III rule (8) of the
Hague/Hague-Visby rules, and therefore be null and void?
Descriptions such as:-
50,000 bags of sugar in 50kg bags, said to weigh 2,500 MT
are commonly encountered. The English courts have given full effect to clauses such as
“weight unknown” or “quantity unknown” or “said to be/weigh”. It has been held that when
such clauses are included in the bill of lading it is not even prima facie evidence of such
weight or quantity. In order to sustain a claim for shortage, it is necessary for the claimant
to produce other evidence to prove that the stated quantity/weight of cargo was shipped
on board.
Sale of Goods by Documentary Credit
The function of a bill of lading as a document of title, enables it to facilitate the
international sale of goods by documentary credit. The financing of these transactions is
by letter of credit. In the same way that any individual who is making a face to face
purchase would wish to satisfy himself about the condition of the goods he is buying
before parting with his money, so similar precautions are applied to sales under
documentary credit. Through the mechanism of the letter of credit that the purchaser
establishes through his bank, a “check” is made on the condition of the cargo before the
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purchase price is remitted to the seller. This is not a check made by physical examination
of the goods, but a documentary check. The purchaser stipulates to his bank that before
parting with any money, the bank must satisfy itself that the bill of lading that is presented
by the shipper to support his claim for payment, must show that the goods were loaded to
the vessel in apparent good order and condition. In common parlance, the letter of credit
stipulates that the bill of lading is issued “clean” or “clean on board”.
A “clean” transport document is defined under the Uniform Customs and Practices for
Documentary Credits (UCP 500, Art 32) as one which bears no clausing or notation that
expressly declares a defective condition of the goods and/or the packaging. Consequently
it is immediately apparent that statements in the bill of lading concerning the apparent
order and condition of the goods represented by that document are of fundamental
importance in the contract of sale. If the bill of lading is not “clean”, the purchaser’s bank
will refuse to make payment under the letter of credit, the shipper will not then be paid,
and considerable commercial inconvenience to the shipper may well result. Of course
such inconvenience will be entirely self inflicted if the condition of the goods on shipment
was such that the Master was entitled to clause the bill to reflect those shortcomings. No
one can have sympathy with any trader who seeks to pass off damaged goods for sound
and thereby take a commercial advantage of an innocent purchaser. Equally, if it is
apparent that the cargo when loaded is not in apparent good order and condition, the
issuing of a “clean” bill of lading will have the effect of causing the purchasers to pay for
the goods on the basis of a document that seriously misrepresents their condition. The
issuance of claused bills of lading that should have been clean, and clean bills of lading
that should have been claused will have serious consequences which will be discussed in
more detail later in this paper.
The requirement for a “clean on board” bill of lading in the terms of a letter of credit can
often create unnecessary problems. The banks that handle these documentary credit
transactions, are not on the whole well known for their flexibility. If the letter of credit
stipulates that the bill of lading must be issued “clean on board” the clerk handling the
transaction may be reluctant to accept that this requirement is satisfied by a bill of lading
that simply bears no clausing to qualify the apparent good order and condition of the
goods. There is often a need on the part of the bank to see the words “clean on board”
written on the bill of lading. There seems to be a lack of understanding that this
requirement for “clean on board” bills of lading arises from two separate UCP
requirements for “clean” and “on board” bills of lading. In other words, the goods must be
in apparent good order and condition, and they must actually be on board the carrying
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ship in order to trigger payment under the letter of credit. The shipped onboard
endorsement generally arises in those cases where the goods are received by the carrier
at the terminal “for shipment” – for example containerised cargo. A “received for shipment”
bill of lading would be issued to act as a receipt, and then endorsed “shipped on board”
after the goods were actually loaded. There is a very respectable view that a “clean on
board” endorsement is totally unnecessary, and adds nothing to the statement made in
the bill as to the apparent order and condition of the cargo. However, there is possibly a
need for some caution. If a bill describes goods as being in apparent good order and
condition but they are not, and this could not be detected on reasonable inspection by the
Master, is there a danger in some less sophisticated jurisdictions that the “clean on board
“ endorsement might be taken as qualifying the statement as to the apparent order and
condition, and taken as meaning that the goods were in fact in good order and condition
on loading. In view of the potential for this sort of interpretation to expose carriers to
unjustified liability, they should be slow to endorse bills of lading “clean on board” simply in
order to satisfy the bureaucratic requirements of the intermediary banks.
Issuance of Bills of Lading – the Problems
Clean and Claused Bills of Lading
It goes without saying that bills of lading should only be issued “clean” if in fact the cargo
on shipment was in apparent good order and condition. If it is not, the Master should
ensure that the bills of lading are claused to reflect the apparent order and condition of the
goods. If bills of lading are not claused when they ought to be, the carrier will be exposed
to liability for the loss and damage to the cargo that is represented by the remarks omitted
from the bill. The carrier is thus incurring liability for loss and damage that has occurred
before the goods came into his custody.
If it should be apparent to the Master during the course of loading the cargo that it is not in
apparent good order and condition, he should clause the bills of lading to reflect his
observations. For the Master to clause the bills it is sufficient that he should be of the
honest belief that the cargo is not in apparent good order and condition, and that that view
could properly be held by a reasonably observant Master, even if all Masters would not
necessarily agree. The terms in which the bills of lading should be claused, are also a
matter for the judgement of the Master. He should use terms that reflect the actual
condition that is apparent, and care should be taken to ensure that the reservations are
not overstated.
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This solution of course works well when the vessel is trading for the owner’s account, and
the Master or the owner’s agent is responsible for issuing the bills of lading. In this
situation, there is a high degree of control over the issuance of documents. However,
when the vessel is on charter, it is often a term of the charterparty that the charterers or
their agents are to be authorised to issue bills of lading, provided that they are in
conformity with the mate’s receipts. In this situation, the Master or Chief Officer must
record any remarks as to the apparent order and condition of the cargo on the mate’s
receipts, and hope that the charterers will comply with their obligation under the
charterparty to transfer those same reservations to the bills of lading.
This loss of control over the process for issuing the bills of lading can result in serious
consequences for the shipowner. Often, for commercial reasons, the charterer may
decide to ignore the reservations in the mate’s receipts, and issue the bills of lading clean.
It is frequently the case that although the charterer’s form of bill of lading has been issued,
the shipowner is nonetheless the carrier, and it is the shipowner who is then exposed to
the liabilities that result from the failure to clause the bills. Whilst a remedy will exist
against the charterers for the consequences of their breach, enforcing that remedy may
be extremely difficult, particularly if the charterer has limited means. Even if it should be a
term of the charterparty that the charterer has insurance to cover his liabilities, the
benefits of that will be illusory in the event of a failure to transfer remarks from the mate’s
receipts. The conduct of the charterers that is associated with this breach, will generally
be sufficient to prejudice any insurance cover that they may have arranged.
When it is the owner who is issuing the documents, failing to issue bills of lading that
correctly reflect the apparent order and condition of the cargo on loading can have very
serious consequences. Quite apart from the inevitable exposure to liability for damage
that should have been described in the bills, there can also be the added complication of a
loss of insurance protection for the liabilities thereby arising.
The P&I Clubs cover their Members for liabilities costs and expenses as defined in the
Club’s Rules and the vessel’s Certificate of Entry. In connection with liability for cargo loss
and damage, the Steamship Mutual’s Rules, in common with those of all other
International Group Clubs, provide as follows:-
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“Unless the Directors shall in their absolute discretion otherwise determine, there
shall be no recovery ……. in respect of the Member’s liability or expenses arising
out of:
(iv) a Bill of Lading, Way Bill or other document containing or evidencing a contract
of carriage issued with the knowledge of the Member or his Master with incorrect
description of the cargo or the condition or quantity thereof.”
Consequently, where the Member or his Master knowingly issues a bill of lading that does
not accurately record the apparent order and condition, or quantity of the cargo, Club
cover for the resulting liabilities will only be available at the discretion of the Club’s Board
of Directors. The shipowner could then be exposed to a substantial uncovered liability,
and the difficulty and expense of arranging a guarantee to release his vessel if it should
be arrested by the claimants in order to obtain security for their claim.
Where offending bills of lading are issued by charterers without the knowledge of the
Member of the vessel’s Master, these adverse consequences will not necessarily apply.
Club cover should be available for the resulting cargo liabilities, and to support the cost of
seeking a recovery from the charterers. However, this will not be the case if the Member,
or the Maser knew that the charterers had not properly claused the bills.
Sometimes there may be a bona fide difference of opinion between the shipper and the
carrier concerning the condition of the cargo. In such situations it is probably sufficient as
a matter of English law for the Master to endorse the bill with general words of
reservation, although it is preferable that the bills are claused specifically to reflect his
assessment of the cargo’s condition.
Clean Bills of Lading and Letters of Indemnity
The most frequent problem experienced by owners is where the cargo that has been
loaded is not in apparent good order and condition, but in order to avoid the documents
being rejected under the terms of the letter of credit, the shipper or charterer demands a
clean bill of lading. In many such cases, the owner will be offered a letter of indemnity in
exchange for the Master agreeing to issue a clean bill of lading. In most jurisdictions such
letters of indemnity may be unenforceable because the act of issuing a clean bill in such a
situation amounts to a fraudulent misrepresentation of the condition of the cargo to the
ultimate purchasers.
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The case of Brown Jenkinson v. Percy Dalton – 1957 2 QB 621 concerned a shipment of
barrels of orange juice. The barrels were old, frail and leaking, and the shipper was told
that the carrier intended to clause the bill of lading. A letter of idemnity was offered,
accepted, and a clean bill was issued. The receiver successfully claimed against the
carrier on the basis of the clean bill, and the carrier then sought to claim under the letter of
indemnity but was denied a remedy. The court was anxious to eliminate the lax practice of
resorting to letters of indemnity when goods were known to be damaged. The carrier
argued that he had not intended to defraud the receiver because he knew that he could be
sued because of the clean bills. The court however ruled that this did not matter. The
lessons to be learned from this decision are that if there is a bona fide difference of
opinion about whether the cargo is damaged or not, or if the defect is minor, a letter of
indemnity should be enforceable. However, if it is obvious that the goods are in fact
damaged, an indemnity becomes of limited value.
Even where the shipper or charterers may be content to honour the indemnity, problems
may nonetheless be encountered because of arguments that the damage found on
discharge was not the same, or was more extensive than that noted at the time of loading.
In addition, the carrier will always have the problem in such situations of a lack of Club
cover for the liabilities to which he is exposed.
In circumstances where the bills of lading are to be issued by the charterer, the
acceptance of a letter of indemnity is likely to prejudice the remedy that would otherwise
exist under the charterparty for the charters failure to issue claused bills. If the letter of
indemnity is also unenforceable, the owner will potentially be left in a much worse position
than if he had simply relied upon his remedy under the charter.
Unnecessary or Excessive Clausing of the Bills of Lading
Whilst it is most usually the case that claims arise because of allegations that the Master
issued clean bills, when the condition of the cargo justified clausing, problems can equally
well occur in circumstances where the bills are claused when there is no basis for doing
so. This was highlighted in a recent decision of the English Admiralty Court concerning a
vessel called the “David Agmashenbeli”. During the loading of a cargo of urea, the Master
observed that it contained contaminants and was of a dirty colour. The mate’s receipt was
claused with the wording “Cargo discoloured also foreign materials e.g. plastic, rust,
rubber, stone, black particles found in cargo”. The Master refused to sign bills of lading
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without the same clausing, whilst the shippers insisted on receiving clean bills of lading to
satisfy the letter of credit requirements, because their surveyor disputed that the cargo
was not in apparent good order and condition. Impasse resulted. The vessel proceeded
on her voyage without bills of lading being issued. Consequently the shippers could not
obtain payment under the letter of credit. Freight under the sub charter was not paid, and
charter hire was withheld under the time charter. Eventually the shippers agreed to accept
claused bills under protest, but when these were presented to the bank they were not
accepted because they were not clean. This gave the receivers the opportunity to
negotiate to receive the cargo at a reduced price, because of both the clausing, and the
fact that the market value of urea had fallen since the cargo was loaded. The shippers
sought to claim their losses from the owners.
The shippers argued that the statement in the bill of lading as to the apparent order and
condition of the cargo had to be objectively accurate. They said that it was not sufficient
for the Master to simply state what he honestly believed to be the apparent order and
condition. The court rejected the shippers’ arguments, and held that a Master is entitled to
clause the bill if he honestly takes the view that the cargo is not in apparent good order
and condition.
The terms in which the Master chooses to clause the documents are also a matter for his
own judgement, but the terms used should reflect reasonably closely the actual apparent
order and condition of the cargo and the extent of any defects that are exhibited.
Factual and expert evidence in the “David Agmashenbeli” led to the judge concluding that
there had been some contamination of the cargo, but the extent of this was so slight that
no reasonably observant Master would have seen fit to refer to it in the mate’s receipt. It
was also found that there had been some discolouration of the cargo. The shippers had
described the cargo as “white”. This fact and the extent of the discolouration evident on
loading led the court to conclude that a reasonable Master ought to refer to such
discolouration in the documents. However, it was also held that the Master’s description of
the cargo as “discoloured” was misleading because there was no indication that he was
only referring to about 1% of the cargo. A reasonable Master would have qualified the
statement to avoid creating a misleading impression. Consequently it was held that the
carriers were in breach of their duty under Article III, rule (3) of the Hague-Visby Rules to
issue a bill of lading stating the apparent order and condition of the cargo.
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One might feel that having found in favour of the shippers, a judgment in their favour was
likely to follow. Notwithstanding this breach of duty, the court then had to consider if the
shippers had suffered a loss as a result of this breach. The court concluded that the
Master would have been acting reasonably if he had claused the bills in such a way that
made the extent of the discolouration clear. In such circumstances, the shippers would still
not have received a clean bill to present to the bank, and since the market price had
already fallen they would have been compelled to reach a settlement with the receivers
similar to that which eventually resulted. Consequently on the particular facts of this case,
the shippers failed to show that the Master’s actions had caused them any loss. However
it is perfectly conceivable that over zealous action on the part of a Master in different
factual circumstances could well expose the carrier to liability.
Cargo Damaged after Loading
It is not uncommon for cargo to become damaged, or to suffer a casualty during or after
loading on the vessel, but before the bill of lading is issued. Should the bill of lading be
issued clean or claused?
If the goods were in apparent good order and condition after being received into the
charge of the carrier, the Master or his agent (Article III, rule 3), a clean bill of lading
should be issued.
In the case of “”The Galatia” – 1979 2 LLR 450 a cargo of bagged sugar suffered damage
by fire and extinguishing water at the port of loading. The damaged goods were
discharged. A separate bill of lading that was issued for the damaged goods
acknowledged that they had been shipped in apparent good order and condition, but the
bill was claused as follows:
“Cargo covered by this bill of lading has been discharged Kandla view damaged by
fire and/or water used to extinguish for which general average declared.”
The Court of Appeal held that the bill of lading was clean. The clausing did not render it
unclean because it related to damage after shipment. Predictably, the bill had been
rejected by the banks involved in the sale transaction because of the clausing.
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Ante-dated bills of lading
Letters of credit under which cargoes are purchased are opened for a specific period of
validity. In order for the bank to make payment, it must be satisfied that the goods were
shipped onboard the vessel within the period of validity of the letter of credit. The date of
the bill of lading is a representation that the goods were on board the vessel on that
particular date.
There may be delays in the vessel’s approach voyage to the load port, or delays on the
part of the shippers in delivering their cargo to the port. If the result of these delays is that
the cargo will not be loaded on the vessel before the date of expiry of the letter of credit,
the shipper will encounter a number of difficulties. He will not be able to obtain payment
without an extension of the letter of credit being agreed. That may or may not be possible.
Even if an extension is possible, the buyer might wish to exploit this difficulty to negotiate
a better price for the goods, particularly if the market for the commodity has fallen in the
intervening period.
Rather than face these problems, a shipper might instead ask the carrier to back date the
bills of lading to indicate that the goods had been loaded some time earlier than was
actually the case. There are no justifiable grounds for ante-dating bills of lading no matter
what might be said by the shipper, and any such request should be declined. Letters of
indemnity also offer no solution, for the same reasons as apply in relation to clean bills of
lading that should have been claused. A carrier who issues an ante-dated bill of lading is
acting to deceive the ultimate purchasers of that cargo, and is exposed to very serious
consequences. There should be no temptation to give in to the blandishments of shippers
where the period of ante-dating is only a day or so. The degree of ante-dating is irrelevant,
and the consequences no different whether the bills are ante-dated by one day or one
month.
Quite apart from being exposed to liability towards the purchasers of the cargo because of
the ante-dating, the carrier will also find that he has no insurance coverage for that
liability.
The Steamship Mutual’s Rules, in common with those of all other International Group
Clubs, provide as follows:
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“Unless the Directors shall in their absolute discretion otherwise determine, there
shall be no recovery ……. In respect of the Member’s liability or expenses arising
out of:
(iii) the issue of an ante dated or post dated Bill of Lading, Way Bill or other
document containing or evidencing the contract of carriage.”
Ante-dating is therefore something that is to be completely avoided.
Steel cargoes
A great number of the requests for guidance and assistance that a P&I Club receives in
relation to issuing of bills of lading concern steel cargoes. It is usually extremely difficult
for Masters to accurately describe the condition of various types of steel product on
shipment. For this reason many Club Certificates of Entry contain clauses requiring the
Member to have a pre-loading survey in the event the vessel carries steel. In this way the
Member and his Master can have the reassurance that the cargo is being inspected prior
to loading by a surveyor who is an expert in the commodity and who will know precisely
how to describe the conditions it exhibits. A steel pre-loading survey will often contain
extensive remarks on individual items of the cargo, and the surveyor’s list of exceptions
should be referred to in, and appended to, the mate’s receipts and the bills of lading.
Sometimes a carrier might be asked to desist from incorporating the surveyor’s remarks in
the bills, and to use a so-called “Retla” clause instead. This clause derives its name from
the case Tokio Marine & Fire Insurance Company Limited v. Retla Steamship Company –
1970 2 LLR 91 .
Steel pipes were carried from Japan to the United States. At the time of loading the cargo
showed visible signs of rusting and wetness, and remarks such as “heavy rust”, “white
rust”, and “rusty” appeared on the tally documents and the mate’s receipts. The bill of
lading showed that the cargo had been received in “apparent good order and condition,
unless otherwise mentioned in this bill of lading”. The detailed remarks were not shown.
Instead next to the signature box was a “rust” clause. These clauses typically read as
follows:
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“IRON OR STEEL
The terms “apparent good order and condition” when used on this Bill of Lading
with reference to iron, steel, or metal products does not mean that the Goods,
when received, were free of visible rust or moisture. If the Merchant so requests a
substitute Bill of Lading will be issued omitting the above definition and setting
forth any notations as to rust or moisture which may appear on the mate’s or tally
clerk’s receipts.”
A replacement bill of lading was not requested. Had it been, the evidence was that the bill
would have been issued incorporating all the remarks in the mate’s receipts. On
completion of the voyage a claim was made for the damages that were evident on
shipment. The court found that the bill of lading was qualified by the clause, and paid
particular attention to the location of the clause – immediately below the apparent good
order and condition statement. It was also found that the fact the shipper did not demand
a replacement bill was evidence that a demand had not been made of the carrier to issue
a bill of lading showing apparent order and condition as per Article II rule (3) of the Hague
/Hague-Visby Rules.
The use of a Retla clause to avoid more conventional clausing of the bills of lading should
be approached with considerable caution. The option to substitute the bill of lading for one
containing more detailed reservations is strongly suggestive of collusion between the
shipper and the carrier to the detriment of the eventual purchaser of the cargo. For
obvious reasons, the shipper wants to have a bill of lading that is as clean as possible.
The purchaser might assume, with some justification, that the fact that a substitute bill was
not issued meant that there were no significant remarks. The preferred course from the
Club’s perspective would be to insist upon conventional clausing.
Liquid Cargoes
Liquid cargoes present their own particular problems associated both with the description
that is to be given to the cargo, and the quantity that is loaded to the vessel. It is
impossible for the Master to see the cargo in the conventional sense, other than through
the use of samples, and the measurement of the quantity loaded to the vessel is often
fraught with difficulty and ship’s figures rarely agree with those of the terminal. The subject
of liquid measurement and shortage claims is a topic in its own right that goes beyond the
scope of this paper.
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Most problems at the port of loading arise because the Master disputes the shore figures
that the shipper wishes to be inserted into the bill of lading. It should always be
remembered that under Article III of the Hague/Hague-Visby Rules, no carrier or Master is
bound to show in the bill of lading any quantity or weight which he has reasonable
grounds for suspecting not accurately to represent the goods actually received, or which
he has no reasonable means of checking.
In the “Boukadora” – 1989 1LLR 393 the Master had been presented with a bill of lading
for signature that stated “a cargo said to be and described as [fuel oil]”. The shore loading
figures were then shown. The Master wanted to insert a reference to the ship’s figures
which were different, and delay resulted. The charterers argued that there was no need
for the Master to include the ship’s figures since there was no representation in the bill as
to quantity because of the “said to be” qualification. The court commented:
“There is an appreciable risk that merely identifying the figure as a shore
measurement would not necessarily be sufficient to prevent a representation from
arising, and the position in other jurisdictions may be even less favourable for the
shipowner or the Master”.
The Solution to the Typical Problem
Hopefully the contents of this paper will be of some assistance in appreciating the
difficulties and the pitfalls that need to be avoided. As always, the owner is strongly
recommended to contact his P&I Club for advice.
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