Bill of Lading

The bill of lading initiates the shipment and is the most important single document of the shipping process. It performs two key functions. First, it serves as the contract of carriage. By accepting the goods and signing this document, the carrier contractually agrees to haul the goods described from the named pickup point, via the routes indicated, to the consignee’s delivery address. When a carrier does not complete the haul successfully, the offense is a breach of contract, which constitutes the legal basis for most freight claims actions.

Second, the bill of lading serves as a receipt for the goods shipped. Without a copy signed by the carrier, the shipper would have little or no proof of carrier liability in the event the shipment was lost or destroyed.

In addition, in case of disputes, the bill of lading may provide documentary evidence of title to the goods. The presumption is that the holder of the original bill of lading is the owner of the goods. Historically, the issue of ownership for goods in transit has been significant for traffic management, because the legal custom was to tie the risk of loss and, thus, the claims administration task, directly to the passage of title. The adoption of the Uniform Commercial Code (UCC) by nearly every state, however, has diminished the significance of this issue. The UCC allows the parties to establish provisions in the sales contract that decouple the risk of loss from the passage of title. Therefore, the sales contract may allow title to pass to the buyer after loading at origin, but the seller still assumes the risk of loss or damage to the shipment in transit.

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