In this article we will discuss about, what is Negotiable Bill of Lading, Why endorsement is required, who should endorse and what are the endorsements required.
What is Negotiable Bill of Lading ?
When a Bill of Lading is issued in Original and consigned “To Order” or “To Order of Shippper” or “To Order of XYZ Bank” it is termed as “Negotiable Bill of Lading”
Why is Endorsement Required on Negotiable Bill of Lading ?
Destination port agent will issue release of cargo only after at least 1 of the issued original B/L are surrendered and after checking the endorsements on the back of the B/L as it is possible for this type of B/L to be endorsed or transferred to another company
Endorsement Rules as per ISBP 745
Bill of Lading will have to be endorsed according to the terms of the LC to make a complying presentation under UCP600 and ISBP 745. ISBP 745 has below rules related to endorsement:
D17 a. When a multimodal transport document is issued “to order” or “to order of the shipper”, it is to be endorsed by the shipper. An endorsement may be made by a named entity other than the shipper, provided the endorsement is made for [or on behalf of] the shipper.
Endorsement of Bill of Lading
Below are the permutation and combination of consignee and the endorsements required on the negotiable bill of lading for that consignee.
|Bill of Lading consigned to||Endorsements Required on a Negotiable bill of lading|
|To Order or To Order of ABC
|To Order of EFG Bank||
1. LC ask for a BL ‘to order and blank endorsed’. Presented BL is issued ‘to order’ but not endorsed. This discrepancy was accepted by applicant. Can that BL to be endorsed by issuing bank in favour of applicant, to enable him to take delivery of goods
Answer: The B/L cannot be endorsed by the issuing bank as they are not the consignee and rightly so not a party to that B/L. The applicant’s choices are several:
- Present the B/L to the carrier at destination who will contact the carrier’s issuing office for shipper’s approval to release the goods;
- Send full set of original B/Ls back to the shipper for endorsement and return;
- Endorse the B/L themselves purporting to be the agent of the shipper;
- Negotiable” means transferable by delivery and “instrument” means a written document by which a right is created in favor of some person.
- Endorsement: Signing of an instrument on back, face or slip annexed to it for the purpose of negotiation. It can be endorsed by Drawer/ Maker, Holder or Payee is called endorsement under Negotiable Instruments Act, 1881
- Negotiable Instruments Act 1881: “Endorsement “in blank” and “in full”.— 5 [(1)] If the endorser signs his name only, the endorsement is said to be “in blank,” and if he adds a direction to pay the amount mentioned in the instrument to, or to the order of, a specified person, the endorsement is said to be “in full”; and the person so specified “endorsee”.—is called the “endorsee” of the instrument.”