Is a Delivery Order a legal document..??

Someone recently asked me whether a delivery order is a legal document..

Let us see if it is a legal document.. By definition,

A Delivery Order is a release document issued by the carrier releasing the cargo to the consignee mentioned in the bill of lading”

It is issued by the carrier in exchange for

  1. One or all duly endorsed Original Bill(s) of Lading or a duly authorised Bank Guarantee (in the absence of an original bill of lading)
  2. A Telex Release confirmation from the loading port or principal confirming surrender of one or all Original bills of lading issued for the shipment
  3. A copy of a Seawaybill issued

Only with this delivery order the consignee can clear his cargo with customs and take delivery of the cargo from the port or terminal or depot or wherever it is stored..

image for deliver toUCP 600/ISBP considers a Delivery Order only as a document that is used in relation to the transportation of goods and not as a contract of carriage or as a transportation document as defined in UCP 600 articles 19-25..

Be that as it may, since a delivery order is issued in exchange for a Bill of Lading which is a legal document and is issued to the legal receiver of the cargo, in that sense a delivery order and the release maybe considered as “legally binding”..

A Delivery Order can be considered as the FINAL step in the import cargo release process..

Therefore, it is imperative that the Delivery Order is issued to the right entity and in the below table you can see the endorsements that are required on a bill of lading before release of the delivery order (depending on how the bill of lading is consigned)..


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Bill of Lading consigned to Endorsements Required on the bill of lading
A Company When consigned to a named consignee, the bill of lading is known as a Straight Bill of Lading, and in the case of a Straight Bill of lading, the release maybe given only to the named consignee and this bill of lading is not negotiable or transferable..
Individual’s Name When consigned to a named consignee, the bill of lading is known as a Straight Bill of Lading, and in the case of a Straight Bill of lading, the release maybe given only to the named consignee and this bill of lading is not negotiable or transferable..Since the consignee is a private individual, release may be effected only after verification of Original ID of the person presenting the OBsL for release..
To Order or To Order of ZYX
Shipper’s endorsement stating DELIVER TO THE ORDER OF “ZYX Client” and ZYX’s company stamp and sign in case he is taking the final delivery or his endorsement stating, DELIVER TO THE ORDER OF “ABC Client” (if the cargo has been further sold)….
To Order of Bank Shipper’s endorsement stating DELIVER TO THE ORDER OF “XYZ BANK” and banks’ endorsement stating, DELIVER TO THE ORDER OF “ZYX Client” and ZYX’s company stamp and sign in case he is taking the final delivery or his endorsement stating, DELIVER TO THE ORDER OF “ABC Client” (if the cargo has been further sold)..

A point to be noted here is that these days due to the advanced technologies there may not be an actual physical Delivery Order issued to the client particularly in the container business..

A lot of the ports/terminals are on-line with the shipping lines these days and the delivery order maybe in the form of an update in the port or customs system or in the form of an EDI message..

In such cases, the release in the system maybe considered as a Delivery Order but still the process of release MUST BE FOLLOWED..

Do you have any alternate views on whether a Delivery Order is a legal document or maybe you have some experience with its legality that you would like to share..??

 

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7 comments on “Is a Delivery Order a legal document..??”

  1. By Bola. Reply

    To my mind a Delivery Order can not amount to a legal document. Let’s look at it from the purpose or function a delivery order serves. It is a document which enables the consignee to clear his goods from the port as the person entitled. It does nothing more than to present the holder as the “person entitled” to receive the goods. With this function of the delivery order it is hard to see how it can fit in as a legal document.
    Thanks

  2. By ADVM Reply

    A Delivery Note can be used by Approved Exporters for the purpose of proving preferential origin (and benefit from reduced customs duties). Would that be another reason to consider this document as a legal one?

  3. By Fawnwear ltd Reply

    My shipper released the goods from port without bank enforcement. As a result importer’s bank back all original docs without making any payment. Total value was USD 105,000.00
    PL ADVICE. Thanks.

  4. By Marc Greenberg Reply

    Point well taken as it relates to a steamship company or carrier issuing a delivery order.

    However in the majority of cases (when the routing is other than store door) the delivery order is actually issued by the customs broker or in some cases the freight forwarder or OTI.

    Secondly, from an insurance perspective clauses either listed on the delivery order or not listed on the delivery order have an impact on liability.

    Therefore when one says a legal document, I wonder what the definition of legal is in the context of this article.

    • By erwin

      does it say that overseas a DO is the same as the booking confirmation here in the USA?

    • By MOHAMMED FAISAL

      According to UCC a DO refers to an order given by an Owner of a goods to a person in possession of them (the Carrier during transit or WharehouseMan when Stock) directing the person to deliver the goods to a person named in order. The Uniform Document of Title Act Permits the use of negotiable delivery orders (if the order directs delivery to a named person or order). However it is still necessary to single out delivery orders for special treatment. Until the delivery order is accepted by the bailee who subsequently has possession on consignment.

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