Legal Definitions - ocean bill of lading

An ocean bill of lading is a critical legal document used in international trade specifically for goods transported by sea. It serves three primary functions:

• It acts as a receipt issued by the shipping carrier to the shipper, confirming that the goods have been received in good condition for transport.
• It represents a contract of carriage between the shipper and the carrier, outlining the terms and conditions under which the goods will be transported from the port of loading to the port of discharge.
• It functions as a document of title, meaning whoever legally possesses the original ocean bill of lading has the right to claim the goods at their destination. This makes it a negotiable instrument that can be bought, sold, or used as collateral while the goods are in transit.

Essentially, it is the maritime equivalent of a freight bill, specifically tailored for shipments crossing oceans.

Examples:

• A furniture manufacturer in Vietnam sells a large shipment of custom-made wooden tables to a retail chain in the United States. Once the tables are loaded onto a container ship at a Vietnamese port, the shipping company issues an ocean bill of lading to the manufacturer. This document confirms the receipt of the tables, details the voyage to the U.S. port, and allows the manufacturer to transfer ownership of the tables to the U.S. retailer by endorsing the bill of lading. The retailer will then use this document to claim the tables upon arrival.

• A coffee importer in Germany purchases several tons of green coffee beans from a plantation in Brazil. When the beans arrive at the port of Hamburg, the German importer must present the original ocean bill of lading to the shipping carrier to take possession of the coffee. Without this document, the carrier would not release the goods, as the bill of lading proves the importer's legal right to the shipment and acts as the contract for its delivery.

• A textile company in India needs to secure financing for a large export order of fabrics to a buyer in the United Kingdom. Their bank agrees to provide a loan, using the goods in transit as collateral. To facilitate this, the Indian company provides the bank with the ocean bill of lading for the fabric shipment. This document serves as proof of the goods' existence and value, allowing the bank to hold title to the fabrics until the loan is repaid, thereby mitigating the bank's risk.