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Stale bill of lading

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Typography

Stale bill of lading. This is generally a bill of lading that is presented to the bank or delivered to the consignee after the cargo reaches its destination.

The term may also be used for a bill of lading that is produced to a bank for payment on documents but which has been produced after the expiry date of the credit. Yet another use of the phrase is where the bill of lading is issued well after the loading of the cargo referred to in the bill has been loaded.

In the sale of goods under the documentary credit system, stale bills of lading may be most significant. The terms of trade are also important as are the terms of the contract of sale. In Hansson v. Hamel, 1922, there was a CIF contract for the sale of goods. The goods had to be shipped from Norway between March and April, 1920. The cargo was shipped during the contract period but transshipped at Hamburg in May. The sellers tendered documents to the buyers, including a bill of lading issued at the transshipment port by the agent of the ship into which the cargo was transshipped. The tender of the documents was held not to be a good tender because the bill of lading issued many days after the cargo was originally shipped gave the buyers no protection between original shipment at Norway and transshipment at Hamburg. It was held that the goods under the bill of lading in a CIF sale must have been shipped under it at the contractual port of shipment. It was also held that the bill of lading with the correct date of shipment (see Fraud and bills of lading especially the section dealing with falsely dated bills of lading) must be signed and issued within a reasonable time of the commencement of carriage.

The shipment was, in effect, a through shipment and a through bill of lading may have been good tender under the CIF contract. However, the document that is tendered as a through bill of lading will not be the document envisaged in the CIF contract if it is a bill of lading issued, not by the original carrier, but by the “on carrier” from an intermediate port.

In a more recent case, The ’Galatia, 1980, the ship loaded a cargo of sugar. The sugar was sold on C and F terms. After part of the cargo was loaded, 200 tonnes of the sugar was destroyed by fire and the water used to extinguish the fire. This sugar was discharged at the loading port. However, a “clean” bill of lading was issued for the damaged cargo which, after all, was in good order and condition when it was actually shipped. (See also Clean bill of lading.) This bill of lading was issued on 6 April 1975. The loading of the original 200 tonnes had been completed on or before 24 March 1975. This was about 13 days before the issue of the bill of lading issued on 6 April 1975. The loading of the original 200 tonnes had been completed on or before 24 March 1975. This was about 13 days before the issue of the bill of lading.

The buyers claimed that they did not have to pay for the damaged sugar despite the contract being for payment on presentation of documents including clean bills of lading. One argument for the buyers was that because the bill of lading was stale the sellers of the sugar were not entitled to be paid the price. However, the judge at first instance said:

“... this is prima facie a long interval of time and 13 days was held to be fatal in Hansson ‘s case. However ... in that case the bill of lading was issued not only after the ship had sailed but after it had arrived in another country... All that is required is that ... (bills of lading) ... should be issued within a reasonable time of completing loading. Here the intention was that there should be a single bill of lading covering the whole parcel. This would have been issued on or about Apr. 6 when loading was completed. In the event, the bill of lading was split and both bills were issued on this date. The buyers did not object to the other bill of lading as being stale and I do not think that they can object to this one on this ground. It was issued as soon as practicable after the completion of the loading of the whole parcel and at or about the time when the ship sailed.” 

 

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