A Canadian seller and a Danish buyer entered into a contract for the sale of 490 tires. The carrier handed over the tires to the buyer on presentation of ID. The buyer never paid the purchase price. The Maritime and Commercial High Court believed that the instructions to the carrier were undoubtedly that delivery was to be made only on presentation of a bill of lading. The carrier was held liable for the loss.
A Canadian seller and a Danish buyer entered into a contract for the sale of 490 tires. The tires were to be carried from Singapore to Denmark. The Canadian seller contracted with his usual freight forwarder, who appointed a carrier to perform the carriage.
The freight forwarder and the carrier had not previously worked together.
The Danish buyer never paid the purchase price to the seller. Because of the freight forwarder's and the seller's long-standing business relationship, the freight forwarder covered the seller's loss of USD 27,330.85 which equalled the purchase price. The freight forwarder then brought legal action against the carrier.
The freight forwarder believed that the carrier was not entitled to deliver the goods to the buyer because the buyer had not presented a bill of lading on delivery. The freight forwarder had informed the carrier in an e-mail that the goods were to be delivered on the buyer’s presentation of a “house bill of lading”.
Only an unsigned draft of the bill of lading was attached to the e-mail, and the carrier never received a copy of the final document. In the opinion of the carrier, the goods had been delivered correctly because the buyer's presentation of ID was sufficient. The reason given by the carrier was that e.g. due to the missing signature the document sent by the freight forwarder was not a bill of lading, but only a sea waybill.
Bills of lading and sea waybills
A bill of lading is a negotiable shipping document. The holder of the bill of lading also has the right to deal with the goods and demand delivery of the goods from the carrier. A sea waybill is not a negotiable shipping document. Consequently, there is no requirement for presentation of the sea waybill on delivery of the goods. Instead the carrier is to deliver the goods to the recipient named in the sea waybill on presentation of ID.
The Maritime and Commercial High Court: If in doubt, the carrier should have sought clarification
The Court believed that the freight forwarder's instructions to the carrier that delivery of the goods was to be made only on presentation of the freight forwarder's house bill of lading was a clear and unambigious agreement about a bill of lading. Consequently, the carrier should have been aware that a correct delivery to the buyer required presentation of the original bill of lading.
The freight forwarder had not sent a copy of the final bill of lading to the carrier. The Court stated that this circumstance did not imply that the instructions were ambigious. The carrier could not on this background alone assume that it was a sea waybill.
When in doubt about the delivery instructions, the carrier should have sought clarification. He could relatively easy have done so in an e-mail to the freight forwarder.
The carrier was therefore held liable for the loss of USD 27,330.85.
When a carrier receives instructions for delivery against presentation of a bill of lading, he must follow these instructions. This applied whether or not the carrier has received a copy of the final document. If in doubt about whether the document is a bill of lading or a sea waybill, it is important that the carrier seeks to clarify this question.
In certain places in the world, including countries in Asia and South America, only bills of lading are considered safe and reliable shipping documents. Therefore, it may be necessary to use bills of lading in carriages to and from these countries. As the carrier of goods to and from these countries, one should be extra careful if the content of the instructions is ambigious.
[Judgment by the Maritime and Commercial High Court on 14 March 2013. Case no. S-7-12]