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Saturday, 6 November 2010

The Importance of a Bill of Lading

A bill of lading is normally identified by its three functions:
1. As a receipt for goods shipped
2. Evidence of the contract of carriage
3. Document of title.

In the case Silver v Ocean Steamship Co Ltd [1930] a cargo of cans of frozen eggs were "shipped in apparent good order and condition for delivery subject to conditions" in London. On arrival at the discharge port, a large number of the cans, containing the eggs were dented or perforated. Some were large gashes, whilst others merely pin hole perforations. The shipowners tried to avoid liability for damage and loss by alleging some of the damage had occurred prior to shipment.

The court held that the shipowners were estopped by the fact that bills of lading had been claused noting the apparent good order and condition of the cargo, from proving that the cans were seriously gashed at the loadport.

In this case, the bill of lading is used as a receipt for goods shipped. It’s even described the condition of the goods (apparent good order and condition). The shipowner cannot blame the shipper prior to the shipment, because the bill of lading is an evidence for good condition of shipment. However, if the shipowner says so, the burden of proof falls upon him.

M. Devine, Carriage of Goods by Sea: Contracts of Affreightment Obligation
Rights of Suit in Respect of Carriage of Goods by Sea
Silver v Ocean Steamship Co Ltd [1930]

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