What Is the Difference Between Sea Waybill and Original Bill of Lading?
The shipping industry uses multiple documents to establish rules and regulations, especially regarding transport by sea.
The terms may confuse those new to the business when deciding how to protect their legal rights.
The Bill of Lading and Sea Waybill are two of the most important documents when it comes to the transport of goods by sea. But how do they differ? Here we’ll take an in-depth look at these documents and determine when one is more favourable than the other.
Bill of Lading: UK Definition
A document which regulates sea-borne cargo in international trade is called the Bill of Lading. UK businesses follow national sea carriage laws, which adhere to International Conventions.
The 1978 Hamburg Rules, the 1968 Hague-Visby Rules, and the 1924 Hague Rules are legal rulings that dictate the proper issuance of cargo transport documents, including the Bill of Lading. UK-based companies use it to protect all involved parties and outline their contractual obligations.
Consequently, a Bill of Lading has three roles:
- It serves as the receipt of the goods
- It functions as a document of title
- It acts as proof of a contract of carriage
Receipt of the Goods
The carrier and the shipper use the Bill of Lading as a receipt of the goods. When a third party receives the title, the document becomes a contractual agreement between the third party and the carrier.
Documents of Title – When Does Title to Goods Pass?
These documents are commonly referred to as negotiable. However, it’s more accurate to describe them as transferrable.
A Bill of Lading allows you to transfer cargo ownership to third parties. But when does title to goods pass? You can pass it to another party until delivery. The document remains valid so long as it’s appropriately endorsed. In a way, the process is quite similar to endorsing cheques. As a result, carriers are obligated to surrender the cargo to whoever has the original Bill of Lading at the appropriate location.
Only the rightful holder can endorse and transfer the Bill of Lading. To do so, they must amend the document by adding the third party’s name. The changes take effect when the original holder signs the endorsement.
Contract of Carriage
As mentioned, a Bill of Lading is proof of a contract of carriage. Thus, it’s a binding agreement between the customers and the carrier, allowing the latter to transport goods by sea. Additionally, the agreement stipulates the responsibilities, obligations, and conditions of all involved parties.
Therefore, a Bill of Lading is invaluable in minimising disputes over cargo ownership.
Bill of Lading: What Does It Regulate?
A Bill of Lading holds carriers accountable for the following:
- Ensuring that the cargo description matches the delivered goods
- Releasing the cargo to the appropriate party at the agreed location
- Ensuring that the cargo remains damage-free during transport by sea
But how does this work in practice?
If you purchase 1,000 shirts from a supplier in Taiwan, the shipper will deliver your order to the carrier. Also, they’ll add a description stating the boxes carry 1,000 shirts. If you receive the shipment and realise it contains only 500 shirts, a violation of the Bill of Lading has occurred. The agreement entitles you to receive compensation for the rest of the shipment. Moreover, it allows the carrier to take legal action against the shipper, provided they have properly documented the mistake.
To avoid such scenarios, most carriers put “claims to contain” in the Bill of Lading. Hence, they’re only responsible for damage or loss during cargo transportation.
A carrier issues a Sea Waybill to the shipper in exchange for the shipment.
At first glance, a Sea Waybill has much in common with a Bill of Lading. Despite their apparent similarity, the two documents differ in several ways that we’ll discuss shortly.
A Sea Waybill serves two primary functions in transport by sea:
- It acts as proof of a contract of carriage
- It’s a receipt of the goods between the shipper and carrier
The above points illustrate how Bills of Lading and Sea Waybills are similar. But unlike the former, the Sea Waybills don’t act as a “documents of title.” This is arguably the most notable difference between the two documents.
Consequently, we can describe a Sea Waybill as non-negotiable or non-transferable. The shipper can only release the transported cargo to a specific consignee. Due to the agreement’s fixed nature, the consignee doesn’t have to deliver the Sea Waybill to the shipper to receive the cargo. However, they must show some proof of identity.
If the shipper wants to change the document’s instructions, they must submit a written request to the carrier, who may or may not accept the amendments.
A Sea Waybill is typically preferred when the consignee pays for the cargo in advance. Furthermore, it’s common practice to issue a Sea Waybill when there’s a high level of trust between the consignee and shipper.
For example, for trades between related businesses, the shipper and recipient are the same corporation, so a Sea Waybill is sufficient to facilitate the transportation of goods.
Also, Sea Waybills are suitable for trades where no sales occur during transport. In such instances, only a Bill of Lading can transfer ownership of the goods to a third party.
Therefore, Sea Waybills eliminate excess paperwork and courier fees.
The most significant difference between Sea Waybill and Bill of Lading is that the former is non-transferable, while the latter is negotiable or transferable.
Small and mid-size businesses usually prefer to pay for cargo in advance and rarely sell the goods during transport. For that reason, they benefit more from using a Sea Waybill.
Sea Waybill and Bill of Lading – How Do They Compare?
Navigating the shipping industry can be complicated, especially if the trade involves the transport of goods by sea. Fortunately, shippers, carriers, and other parties can rely on contracts like Sea Waybills and Bills of Lading to protect their rights. As a Bill of Lading contains more extensive stipulations, the paperwork exchange can cause significant delays.
On the other hand, a Sea Waybill simplifies transport by sea, making it a quicker and more cost-effective solution for small and mid-sized businesses. It covers similar areas as a Bill of Lading, although it doesn’t function as a “document of title.”
Should you have any further questions about Sea Waybills, Bills of Lading, or transport of goods by sea, reach out to a reliable freight forwarder like GenX Freight.
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