Bill of lading

• A bill of lading describes the shipment, serves as a contract between the shipper and carrier, and documents evidence of the title of the goods.

The bill of lading is a legal contract for transportation services that binds both parties to all provisions contained in it and to the terms and conditions on the back of it.

The Department of Transportation (DOT) regulations for bill of lading requirements are found in 373.101 and apply to for-hire common carriers who do not otherwise have a contract with shippers. This regulation requires that certain information be shown on the bill of lading, including:

1. Names of consignor and consignee,
2. Origin and destination points,
3. Number of packages,
4. Description of freight, and
5. Weight, volume, or measurement of freight (if applicable to the rating of the freight).

There are three distinct functions of a bill of lading:

1. A receipt issued by a carrier to a shipper for goods received for transportation. It states the place and date of the shipment and describes the goods, their quality, weight, dimensions, identification marks, condition, etc., and sometimes their value.
2. A contract naming the parties involved, the specific rate or charge for transportation, and the agreement and stipulations regarding the limitations of the carrier’s common law liability in the case of loss or injury to the goods. It also lists other obligations assumed by the parties or matters agreed upon between them.
3. Documentary evidence of title to the goods. “Negotiable” bills of lading are made out “to the order of” a consignee and the carrier may only deliver the cargo to the person in possession of this original bill of lading. When a negotiable bill of lading is negotiated, the person to whom it is negotiated receives title to the goods. Non-negotiable bills of lading, commonly known as straight bills of lading, do not convey title to the goods.
   • Straight (uniform) bill of lading: Non-negotiable document used to provide that the shipment is to be delivered directly to the party whose name is shown as consignee. The carrier does not require its surrender upon delivery except when needed to identify consignee. It is clearly marked “non-negotiable.”
   • Order bills of lading: Negotiable bill of lading that consigns the goods “to the order of” the person named. It differs from the “straight” bill of lading because it is assignable and negotiable. This bill of lading is printed on yellow paper to distinguish it from a straight bill of lading. The use of order bills of lading is quite limited in the United States.

As a contract, the bill of lading serves the same purpose as any other contract between two parties. The face of the bill of lading provides for the entry of information required for the transportation of the freight. The reverse side usually contains the terms and conditions of carriage.

However, the bill of lading does differ from the ordinary contract in one respect: The terms and conditions, primarily dealing with claims and liability issues, are prescribed by statute. These terms and conditions are part of the bill of lading contract, whether they are printed on the form or not. Participants in the bill of lading contract are assumed to be familiar with these terms and conditions.

Bill of lading retention period

To satisfy the Federal Motor Carrier Safety Administration (FMCSA) requirements, a non-hazardous material bill of lading must be retained by a motor carrier, broker, household goods freight forwarder, or water carrier for a period of one year from the date of the document, or until any claim or dispute involving the transportation of freight based upon the document is resolved (Part 379).

Bill of lading formats

The straight bill of lading has long been the industry standard. However, there are other acceptable formats in use today. The carrier, who is responsible under the regulations for issuing the bill of lading, may choose the format that the company will use. In the case of a shipper issued bill of lading, the driver should be able to recognize the specific provisions their employer requires. Otherwise, the signature on the bill of lading may bind the carrier to unwanted contract provisions.