History of the Bill of Lading
The use of a paper bill of lading can be traced back to the 14th century. In its primitive form, it was a receipt indicating the nature of the cargo and the quantity. In the early days, the owner of the goods would often travel with the cargo and sell it at destination. At that time, the function of the bill was simpler: when the vessel arrived at its destination, the owner of the goods would produce the bill to the master and direct him to release the cargo to his buyer. As commerce became more complex and volumes increased, traders did not travel with the goods and needed to give the master instructions: the custom therefore developed off writing delivery orders on the bill telling the master who to contact at the discharge port.

By the 19th century, the utility of bills of lading was developed further as documents of title capable of automatically transferring contractual rights under the bill to the endorsee of the bill. Legislative developments in the 20th century, including the Hague and Hague-Visby Rules, further defined the rights and obligations applying to the carriage of goods under bills of lading.

The 21st century has seen a yet further, and in some ways long-overdue, development: the acceptance of electronic bills of lading (eB/Ls).

For interesting facts about the development of bills of lading (B/Ls) and some of the stories behind current law and practice, go to Interesting Facts.

Functions of the Bill of Lading
The bill of lading is a document issued by a carrier which acknowledges receipt of the cargo, contains terms of carriage and may operate as a document of title. Taking each of these key functions in turn:

(a) Receipt: The B/L records the fact that the cargo has been loaded on the vessel and is evidence of the facts stated in it. Therefore, a statement in a B/L that a specific quantity of goods were shipped on board in apparent good order and condition is evidence of the quantity and external condition of the goods at the time they were shipped. As a general rule, an endorsee of the B/L can rely on these facts when taking delivery of the goods and can claim against the carrier if the goods do not match their description in the B/L.
(b) Contract of Carriage: It contains or evidences the contract of carriage. Normally, the terms on which the shipper will be entitled to use the carrier’s ship are set out in the charterparty between the carrier and the shipper. However, in the hands of a Buyer to whom the B/L has been transferred by the Seller, the terms of the B/L will prevail over the terms of the charterparty, although the terms of the charterparty will often be incorporated into the bill (to a certain extent) by reference.
(c) Document of Title: if the bill is negotiable (as to which, see Types of B/Ls below), it is a document of title which identifies who can demand the goods at the discharge port. Linked to its function as a document of title is the fact that it provides a mechanism for the transfer of rights arising under the B/L to, and for the imposition of liabilities arising under it on, persons who were not originally parties to the B/L. A B/L endorsed to a Buyer thereby entitles the Buyer to demand delivery of the goods and to bring a claim against the carrier under the B/L if, for example, there is a short delivery or the goods delivered are damaged.

Types of B/Ls
(a) Liner B/L: A liner bill of lading derives its name from break bulk general dry cargo vessels trading on a regular "liner" service and the term covers any non-charterparty bill of lading. A fully set out liner bill can stand alone, although it is often preceded into existence by a booking note or space charter.

(b) Charterparty B/L: A charterparty bill is a bill of lading which is designed for use with a voyage charterparty and derives the majority of its terms from the governing charterparty.

(c) Negotiable and Non-Negotiable B/Ls:

• If a B/L uses the words ‘to order’ or ‘bearer’ or ‘holder’ or is left blank in terms of who is the consignee, then the B/L is negotiable and can be transferred by delivery or endorsement.
• A Non-Negotiable B/L is a B/L which is only transferable from the shipper to the consignee. If the consignee box in the B/L is filled in with a name and the words ‘to order’ or similar are not included, then the B/L is non-negotiable. If a B/L is not negotiable it cannot be transferred to any other person. Also known as a Straight B/L. 

(d) Bearer B/Ls: a bill need not contain the name of the person or entity intended to take delivery of the cargo. In some cases, the identity of such entity will be unknown at the time of shipment or it will be confidential. In these circumstances, the 'Consignee' box is left blank and possession of the bill is crucial: whoever has physical possession of a bearer bill may demand delivery of the cargo.

(e) Charterer’s B/L: If a charterer signs the B/L in his own capacity, and not as agent for the shipowner, then the charterer will be the carrier under the B/L responsible for the safe delivery of the cargo. This would be rare in the tanker business. The normal course if for the signature to be by, or on behalf of, the owner or demise charterer or his servant (employee), which makes the bill an ‘owner’s’ bill.

Transfer of a Negotiable B/L
Endorsement and transfer of a Negotiable B/L transfers the right to possession of the cargo. There are three types of endorsements:
(a) Endorsement "in full", i.e., the signature of the holder is accompanied by the name of the endorsee, making him for the time being the consignee;
(b) Endorsement "in blank", as a result of which the bill becomes deliverable to the bearer or to his order. The right to possession of the cargo may be transferred by simple physical delivery of a bill with the Consignee box blank, a "bearer" bill and a bill endorsed in blank.
(c) "Straight" Endorsement, which converts a negotiable B/L into a non-negotiable B/L by consigning it to a specific consignee (without words such as to order).

Key Terms of a Charterparty B/L
A B/L clearly identifies the Consignor/Shipper, the Consignee (unless it is a bearer bill), the load and discharge port, the quantity and quality of cargo loaded, etc. What are its other, key terms which are generally included?
(a) Terms on the back of the B/L: short form charterparty B/Ls tend to have few terms on the reverse. These usually consist of a Clause Paramount (which contractually incorporates the Hague or Hague Visby Rules if they do not automatically apply), General Average (which specifies the general average regime which will apply in case of dispute), New Jason Clause (regarding the parties’ obligations to contribute to general average) and the Both-to-Blame Collision Clause (which deals with cross and counterclaims in the event of a collision). Other clauses depending on the trade route may include War Clauses, Ice Clauses and Strike Clauses.
(b) Charterparty Terms: A charterparty B/L will always have on the front a space to refer to the governing charter. Depending on the scope of the incorporating clause, the courts will determine which of the charterparty terms the parties intended to be incorporated in the B/L. (The very general expression “all terms as per charter dated [ ]” will only serve to incorporate those terms which strictly relate to the loading, carriage and discharge of the cargo: in such a case the arbitration clause in the charterparty will likely not be deemed incorporated. Compare this to a broader term such as that found in the CONGENBILL “All terms, conditions, liberties and exceptions of the Charter Party dated as overleaf, including the Law and Arbitration Clause, are herewith incorporated”, which will incorporate the arbitration clause as well as any charter exceptions. In either event, however, an effective incorporation clause will not result in all the terms of the charterparty being incorporated in the B/L. This is primarily because third parties are likely to acquire rights and obligations under the B/L, and so the courts have developed detailed rules which govern what terms can be incorporated. The terms incorporated must make sense in the context of a bill of lading and must not be inconsistent with its express provisions.
(c) Mandatory Conventions: there are a series of conventions which provide a legal regime governing the rights and obligations of shippers, carriers and consignees. As noted by Stephen Mills in his guide to Bills of Lading, “The intention of the conventions is to provide a balanced regime of rights and obligations so that the cargo owner can expect a certain standard of care from the shipowner in maintaining his ship and in caring for the cargo; and the shipowner can be protected from claims where, despite his maintenance and care, the cargo is damaged.” Their terms are compulsorily applicable to B/Ls issued in a country which has implemented one of these Conventions in its own domestic law: any provisions in the B/L which are inconsistent with the applicable Convention are deemed void. The 3 key Conventions which are in effect currently are The Hague Rules 1924 (the US is a key contracting state), The Hague-Visby Rules 1968 (these are in force in the majority of key trading nations) and The Hamburg Rules 1992 (which have had very limited uptake). A new set of Rules, The Rotterdam Rules, were recently signed but have yet to come into force. These will be covered in greater detail in the context of electronic bills of lading.
(d) Law and Jurisdiction: Bills of lading rarely expressly include a choice of law clause. Most commonly, and assuming a sufficiently wide incorporation clause, the law and jurisdiction provisions of the charterparty will therefore apply. Arbitration clauses are very common for disputes arising in connection with Charterparties and bills of lading.

A Liner B/L essentially incorporates the same type of information and clauses, but does so in one document, rather than incorporating terms by reference. Of course, mandatory Conventions will also apply to Liner B/Ls.

Time Limits for Bringing Claims
As noted in INTERTANKO’s A Practical Guide to Tanker Bills of Lading, “a claimant for loss of or damage to or in connection with cargo carried under a bill of lading [is required] to commence appropriate legal action within a given period of the date on which the goods were or ought to have been discharged. This period is one year under the Hague and Hague-Visby Rules. The later convention extends this time in cases where a carrier has agreed to pay, or has paid, a cargo claim and seeks an indemnity for this liability from a third party under a different contract (HR/HVR Art III,r.6 cf. HVR Art.III,r.6 bis). Under the Hamburg Rules the time limit for commencing action is two years (with a similar extension mechanism for indemnity claims to that in HVR). These time limits can be extended by agreement, although only after the claim has arisen.”