What does it mean by duly discharged in terms of bill of lading..??

Duly discharged bill of lading

We have seen that a bill of lading fulfills 3 functions :

  • Evidence of Contract of Carriage – entered into between the “Carrier” and the “Shipper or Cargo Owner” in order to carry out the transportation of the cargo as per the sales contract between the buyer and the seller..
  • Receipt of goods – as proof that the carrier has received the goods from the shipper or their agent in apparent good order and condition..
  • Document of title to the goods – which means that the goods may be transferred to the holder of the B/L which then gives the holder of the B/L (not in the physical sense) the rights to claim the goods or further transfer it to someone else..

The issuance of the bill of lading by the shipping line is just the beginning in the process of transfer of goods from seller to buyer.. This transfer CANNOT be legally completed if the bill of lading has not been duly discharged..

Duly discharged does not refer to the discharging of the cargo covered in the bill of lading, but rather the completion of the endorsement process of the bill of lading..

Ok what is this endorsement process and why is it required..??

A bill of lading is a versatile document which can be controlled as required by the sales contract, or by the Incoterms used, or by the seller and buyer depending on their relationship..

In one of my articles I elaborated on which is the most important function of a bill of lading and why..

When a bill of lading is issued as a Negotiable Bill of Lading, the process of negotiation and transfer of goods is just beginning and naturally it needs to be closed.. duly discharged bill of ladingThis can be done only through the process of endorsement..

It is important for the shipping line to remember that they are only carrying the cargo entrusted to them by the cargo owner and that they must follow the instructions that the shipper on the bill of lading gives them as far as the release of the cargo is concerned..

Remember there is a difference between an exporter and a shipper..

In a negotiable bill of lading, these instructions maybe in the form of endorsements and the shipping line and/or their agents at the destination must take cognisance of the type of bill of lading issued and the endorsements required on the bill of lading before releasing the cargo..

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 toEndorsements Required on a Negotiable bill of lading
To Order or To Order of ZYX
  • Shipper’s endorsement stating DELIVER TO THE ORDER OF “ZYX Client” (who could be the actual receiver) and
  • ZYX’s company stamp and sign in case he is taking the final delivery or
  • ZYX’s endorsement stating, DELIVER TO THE ORDER OF “ABC Client” (if the cargo has been further sold)..
To Order of XYZ Bank
  • Shipper’s endorsement stating DELIVER TO THE ORDER OF “XYZ BANK” and
  • XYZ bank’s endorsement stating, DELIVER TO THE ORDER OF “ZYX Client” (who could be the actual receiver) and
  • ZYX’s company stamp and sign in case he is taking the final delivery or
  • ZYX’s further endorsement stating, DELIVER TO THE ORDER OF “ABC Client” (if the cargo has been further sold)..

If anyone else has seen any other permutations or combinations, would be interested to know.

Once the release is granted to the nominated/endorsed consignee, a bill of lading may be considered to be duly discharged meaning the cargo has been released to the legal party in accordance with the endorsements required on the bill of lading following the instructions of the cargo owner..

Prior to issuing release, the shipping line should also request the cargo owner to give the shipping line an original letter of authorisation allowing the clearing agent or forwarder (yes there is a difference between clearing agent and freight forwarder) to handle the shipment on their behalf and accept the release..

This is in the interest of making this cargo release watertight and to avoid any chance of incorrect release to someone other than the authorised receiver as there is one or more original bills of lading involved..

In the case of Straight Bill of Lading which is neither negotiable nor transferable, release should be given only on surrender of 1 of the issued originals or upon receipt of a telex release confirmation from the Port of Load or where the bill of lading is surrendered..

It is also worthwhile to remember that there is a difference between a telex release and express release and also that generally a telex release is not done on a negotiable bill of lading..

In some companies they put an “ACCOMPLISHED” stamp across the bill of lading usually across the signature at the bottom right to indicate that the cargo release has been done and completed, mainly for audit purposes..

But I have been told that not everyone follows these endorsements to the T.. Some are strictly following same while others are content with releasing cargo to whoever is in possession of the bill of lading and are not seeking any endorsement or authorisation letter (in the case of release to an agent)..

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*** Republished with some updated information ***


21 thoughts on “What does it mean by duly discharged in terms of bill of lading..??

  1. Dear Hariesh

    Good day to you,

    I am regular reader of your articles. Nice to learn from top to bottom of freight terms.
    For your kind permission, I may use some text of your article in my blog.
    Thanks for your support.
    Keep writing.

  2. Wjhat doest “To Order Of Shipper ” means

    for example ABC is Shipper and XYZ is Consignee, Bank is HSBC Bank
    As per instruction of LC ” bills of lading made out to the order of shipper, endorsed in blank, marked: Freight Prepaid (↗), and notify applicant and HSBC Bank –address, country quoting this DC number

    so I this case in consignee column BL should indicate ” TO THE ORDER OF ABC” and notify Applicant and bank??

    is this correct or it should be the same word of LC ” TO THE ORDER OF SHIPPER”

    Please clarify

  3. Could you pls clarify- if “to order” b/l , can shipper no to allow discharging if cargo value not payed ( bulk gargo)?

    • Hello Alexey, in the case of bulk cargo, the bill of lading becomes a contract of carriage and the terms will be as dictated in the Charter Party.. So this must be clearly indicated in the charter party, at what stage and on whose permission discharge can be allowed..

  4. Pls clarify, what checks a Master must to when receiving OBL at dish of cargo

    Sud he
    1) Simply take the BL from agent/presenter and start cargo dish ops

    OR

    2) Master to ask a letter also from the receiver of the cargo confirming to release the cargo against presentation of OBL

    or

    3) Master should demand someone from the receivers company to board the vessel and show his ID card and then only Master to start dish ops

  5. Dear Hariesh and Readers,
    Regarding Straight BL you said ” some countries do not require original bill to release the cargo and even if you (shipper) have the Originals of the Straight Bill, the consignee maybe able to secure release depending on the country..”

    Please give me example On which country that above role applied ?
    thank you,

    • Good question Wawang.. While there is no “full list” of such countries anywhere, this rule may apply in different countries but subject to the law under which the bill of lading issued is covered.. For example if a bill is covered under US COGSA, cargo under a straight bill of lading maybe released to named consignee after it is proven they are the actual receiver, without presentation of any original bill of lading..

  6. Dear Reader,
    1. May i can change consinee name to other buyer in Straigh BL? of course i still keep all of original BL. in this case assume the buyer will not settled the balance payment as agreed.
    2. The new contract said : 90 % payment after cargo arrived and the rest after checking at buyer warehouse.
    What kind of Consignee term I should use for safe seller position?
    thank you
    Wawang

    • Hello Wawang, normally under such circumstances I would recommend you issue bill of lading with Consignee as “To Order of Shipper”.. The problem with issuing Straight Bill is that some shipping lines in some countries do not require original bill to release the cargo and even if you have the Originals of the Straight Bill, the consignee maybe able to secure release depending on the country..

  7. Hi, I am wondering how the “bill of lading” reaches the consignee. From what I read so far, this bill is issue by the shipping line to the exporter (the original document). How does the consignee sitting in another country get possession of the “original”? Does the exporter send the consignee a scanned copy of the bill of lading?

    • Hello Kunal, the shipper will courier the BL to the consignee if it is original.. If it is not, then an electronic copy is sent to the consignee.. Trust this clarifies..

  8. First of all, I would like to thanks for all posts, it have been very helpfull to me.

    I would like to know, refering to a straight BL, why the endorsement of consignee is required prior discharging of the cargo? What i´ve seen so far, Owners always request consignee signature on the OBL in order to release the cargo, is that just to confirm receipt of the cargo? is there any other reasons?

    thanks you all….

    • Hello Fabiano, sorry for getting back only now.. In a straight bill there is no requirement for endorsement by consignee as it would be superfluous as the cargo may not be delivered to any one else in any case a straight bill of lading is a non-negotiable and non-transferable..

  9. What is the limitation on 3 OBLs? Why 3….I’ve had customers request 5+ OBLs to be issued. When I said ‘no’….they asked why, and now I’m stumped.

    Not sure if this ties into the debate of properly endorsing the OBL….but if surrendering an endorsed OBL negates the other OBL’s, what’s the issue with producing more than 3 OBLs?

  10. What i have noticed is that most shipping lines require you to surrender all the 3 obls. They will put a release stamp and give you two obl back, one for your record and the other for Customs or Bank. They do not normally look at indorsements, but i have noticed that overseas like China, India Turkey, USA they are very strick on To Order Bills. Shipper must endorse at the back of the OBLs before coouriering same to receiver. Otherwise, cargo will not be released.

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