Definition
A bill of lading is a document issued by a carrier to the shipper that acts as a receipt for goods loaded, evidence of the contract of carriage, and, when negotiable, a document of title. Whoever holds an original negotiable bill of lading can claim the goods at the destination, which makes it central to international trade and payment.
Also called: BOL, B/L, Ocean bill of lading
Bill of lading in practice
The bill of lading lists the shipper, consignee, ports, vessel, description and quantity of goods, and the condition in which they were received. A "clean" bill means the goods were loaded without visible damage.
In documentary payments, the seller sends the bill of lading through the banks with the commercial invoice. The buyer only gets the document, and so the goods, after paying or accepting a draft, or when a letter of credit is honored.
For air freight the equivalent is an air waybill, which is not a document of title. Domestic trucking also uses straight, non-negotiable bills of lading.
Example
A Vietnamese coffee exporter ships 20 tonnes to Hamburg. The shipping line issues a negotiable bill of lading, which the exporter presents to its bank with the commercial invoice to collect payment under a letter of credit.
Frequently Asked Questions
What is the difference between a bill of lading and a commercial invoice?
The commercial invoice is the seller's bill to the buyer for the goods. The bill of lading is the carrier's receipt and transport contract, and may control who can collect the goods.
What is a telex release?
An arrangement where the original bill of lading is surrendered at origin, so the carrier releases the goods at destination without the paper originals being sent.
Related terms
- Commercial invoice A commercial invoice is the official invoice used for international shipments that customs authorities rely on to assess duties and taxes.
- Letter of credit A letter of credit is a commitment by the buyer's bank to pay the seller a set amount, provided the seller presents documents that exactly match the terms, such as a commercial invoice, bill of lading, and packing list.
- Incoterms Incoterms are standard three-letter trade terms published by the International Chamber of Commerce that define who pays for shipping, insurance, and customs, and where risk passes from seller to buyer in an international sale.
- Packing slip A packing slip is a document included in a shipment that lists the items and quantities inside the package.
This page is for general information only and is not legal, tax, or financial advice. Rules change and vary by location, so consult a qualified lawyer or accountant about your situation.