The Ocean Bill of Lading

The Ocean Bill of Lading

The Ocean Bill of Lading (OB/L) is evidence of the delivery of goods to the carrier as

well as constituting a contract of carriage between the shipper and the ocean freight

carrier.

The Ocean Bill of Lading, when fully executed, constitutes the actual deed to the goods

being shipped and is an official "document of title". Essentially, this means that the

Ocean Bill of Lading can be used to meet banking requirements in issuing letters of credit

as the bank may use this document to retain control over the merchandise.

Three Originals: Ocean Bills of Lading are traditionally completed with three signed

originals being issued. These are distributed as follows:

2 copies are forwarded to the Consignee under separate cover

The Shipper as a back-up document retains 1 copy

The consignee surrenders one original B/L to the Ocean Carrier at final destination in

order to effect release of the shipment. There are three possible instructions on an O B/L depending on how the goods are to be transferred from shipper to consignee for the shipment:

Straight Bill of Lading: States the Consignee's actual name, meaning that the when

the consignee or its agent present any one of the original bills of lading, the carrier must deliver the shipment into the consignee's possession.

"To Order" Bill of Lading: Consigns the goods to the shipper, title of the goods only

being transferred through the shipper's (or in some cases, the bank's) endorsement by stamp or signature. Once this O B/L is properly endorsed, the holder or named party

becomes owner of the goods.

"The Bearer" Bill of Lading: This rare option states that the carrier must deliver the goods to the party with the original bill of lading. This option might be used in the case of goods sold on a commodity exchange. It is important to note that the copy of the O B/L first given to the ocean carrier takes precedence from a legal perspective and renders the other two copies null and void.