The two documents part ways at the discharge port.
With an order or bearer bill of lading the cargo goes to the holder of an original, while with a sea waybill it usually goes to the named consignee on identification. Bill of lading vs sea waybill, in the end, is a question of how long the seller wants a say over the cargo.
What the bill controls, and what it does not
In The Rafaela S Lord Steyn put the bill’s job in three parts: receipt for goods shipped on a particular vessel, memorandum of the contract of carriage, and document of title. The last one lets the consignee take delivery, or sell the goods on by endorsing the bill. A waybill is not a document of title, only the contract of carriage or evidence of it.
In English law the parties’ intention decides when property in specific or ascertained goods passes (s. 17 of the Sale of Goods Act 1979), so a ship leaving port settles nothing, and what the bill passes is control of delivery, Bowen LJ’s “key” to the warehouse door.
The receipt part is where Hague-Visby comes in. On request the carrier shows the leading marks, the packages or quantity or weight, and the apparent order and condition of the goods (Article III(3) in the schedule to the Carriage of Goods by Sea Act 1971). Nothing in the Article makes a bill void for lacking one of them, and the carrier need not state marks, number, quantity or weight it doubts or cannot check.
Straight bills, telex releases and indemnities
The case itself concerned four containers of printing machinery damaged on the last leg of a carriage treated as covered by a Durban straight bill naming the buyer. The carrier said a straight bill is not “a bill of lading or any similar document of title”, so the Rules did not apply and the lower US COGSA limits did. The House of Lords disagreed and applied the Rules (The Rafaela S [2005] UKHL 11). Lord Bingham read the phrase expansively and saw no reason not to give effect to the requirement that an original be surrendered for the goods, so in English law this straight bill had to be presented. The Carriage of Goods by Sea Act 1992 is narrower for its own purposes, because s. 1(2)(a) excludes from “bill of lading” any document that cannot be transferred by indorsement or delivery. ITIC, an insurer of ship agents, says some countries treat a straight bill like a waybill.
In a telex release the originals are surrendered at one port, usually the load port, and the cargo is released at another. With a letter of indemnity the carrier delivers without the bill and relies on the indemnity. ITIC calls delivery to a party without an original a breach of the bill of lading contract, and an indemnity does not relieve the carrier of liability to the cargo owner.
Who instructs the carrier under a waybill
The 1992 Act defines a sea waybill as a receipt that evidences the contract of carriage and names the person to whom the carrier will deliver, and under the CMI Uniform Rules for Sea Waybills of 1990, which apply only if the contract adopts them, the carrier delivers on proper identification. Under Rule 6 only the shipper may instruct the carrier. Unless the applicable law prohibits it, the shipper may also change the consignee’s name until the consignee claims delivery at destination, on reasonable notice and an indemnity for the carrier’s extra cost. The shipper may pass that right to the consignee, but only by the time the carrier receives the goods.
Bill of lading vs sea waybill: choosing for the sale
Under a letter of credit the credit’s terms decide which document the bank will take. To tie delivery to payment, an order bill works as long as nobody bypasses the originals. A straight bill that must be surrendered can do the same job where the governing law treats it that way. A waybill gives the seller less.
Resale afloat favours the order bill. It passes down the chain with the goods, whereas under the CMI Rules a waybill needs the holder of the right of control, normally the shipper, to name a new consignee.
A wrong bill can reach customs too. In the United States the manifest repeats the quantities from the carrier’s ocean bills of lading, and the master, the owner or anyone directly or indirectly responsible is liable for the lesser of $10,000 or the domestic value of the goods when merchandise found on a vessel bound there is off the manifest or does not agree with it (19 U.S.C. 1584). The penalty falls away if Customs accepts that clerical error or other mistake made the manifest incorrect and the other conditions are met.
Frequently asked questions
Does an electronic bill of lading carry the same weight as paper?
In UK law it can. The Electronic Trade Documents Act 2023, s. 3(2), gives an electronic trade document the same effect as an equivalent paper one, provided the system meets the reliability conditions in s. 2(2), such as letting only one person control it at a time. The Act lists the bill of lading as a paper trade document.
What can a mistaken telex release cost?
ITIC's 2012 claims review reports one Netherlands case in which a shipper told the load port agent to release one of two containers consigned to the same company, and the discharge port agent released both. The consignee never paid for the second box. The shipper's lawyers pursued the EUR 76,000 cargo value against the shipping line, and the claim settled at EUR 66,000, which was then claimed from the discharge port agent.
Can an unpaid shipper still stop delivery after the buyer holds an original bill?
ITIC's release guidelines, which are insurer guidance and not law, say an unpaid shipper may instruct the carrier not to release, even where the cargo is under a sea waybill or the receiver holds an original negotiable bill, and that the carrier and its agent cannot ignore the instruction. It adds that the courts may have to decide who is entitled to the cargo.