A Brief Introduction About the Bill of Lading Form
What is a Bill of Lading?
As per the bill of lading definition, it is a legal document containing information of the goods being transported by the seller to the recipient through a shipper.
When it comes to shipping or receiving goods, a bill of lading is an essential document. The nature of the commodities being shipped and the quantity are mentioned in this agreement. All the destinations through which the shipment has to pass are mentioned in this document, and the shipment is verified at every point, and the document is signed at every point as a token of confirmation. The freight carrier name is also included in this agreement.
This document protects the interest of the buyer, seller, and shipper. This document ensures the successful delivery of the shipment. If there are any delivery-related problems, this document can be used to find the source of it.
Who Takes the Bill of Lading Form? – People Involved
This agreement is entered into by the parties to the agreement, the seller, the shipper, and the recipient.
The seller is the party that is sending the goods, the shipper is responsible for safely delivering the goods, and the buyer is the purchaser of the goods.
The document serves as proof that the required goods have been delivered as agreed.
Purpose of the Bill of Lading Form – Why Do You Need It?
You may be interested in purchasing goods from another state or country, and the only way these goods can be delivered to you is through air, sea, rail or road or a combination of these routes.
As is common with any form of transport, there is a possibility that the goods might be lost in transit, especially when multiple modes of transport are involved.
The sender or seller of the goods might have checked the type and quantity of goods being sent, but the same might either be misplaced or damaged in transit.
When goods are being sent through a freight carrier, then there are multiple transfer points, and the problem might have occurred at any of these points.
When you send goods with a bill of lading form, they are checked at every point and verified before the form is signed. This ensures that you can pinpoint the stage at which the problem occurred and take the required action.
This form is a legal document that protects the interest of all parties to the agreement.
For the seller, the form is proof that the right type and quantity of goods were shipped. If, as the buyer, you that the shipment was not received in proper condition, you can locate the point at which the problem happened.
[ Also Read: Distribution Agreement ]
Contents of the Bill of Lading Form – Inclusions
This agreement has to include all the information about the goods being sent along with the specific type and quantity.
The following information should be included in this agreement:
- Parties to the agreement: The names of the parties to the agreement, the seller and the recipient
- Complete communication address: The address of the seller or consignor must be provided as well as that of the buyer
- Purchase Order Number: This number is used to identify the shipment
- Special instructions that the carrier is required to follow
- Pickup date: The date on which the goods are going to be collected by the customer
- Description of goods: A precise description of the goods which would include the item type, the actual quantity, the weight of the goods and the material used in the creation of the goods
- Type of packing: The form should specify whether the items were packed in pallets, cartons, crates or drums
- NMFC freight class: The National Motor Freight Traffic Association classification ensures that the shipment adheres to fair measures and standardized freight pricing
- Department of Transportation (DOT) hazardous material designation: This will certify whether the shipment is hazardous or not.
- Signatures of the shipper and carrier: The form should be signed by both the shipper and the carrier.
- Declaration by the shipper: There should be a declaration by the shipper that the goods have been classified and packaged as per the DOT specification
- Statement by the shipper: The shipper will state that delivery will be made only on full payment of charges and other lawful fees
How to Draft the Bill of Lading Form?
Points to Consider While Preparing the Bill of Lading Form
A bill of lading template may be referred to while creating a form, and you can customize it to your requirement.
Below are the points that need to be considered while drafting this agreement:
- Names of the parties to the agreement and the relationship between them
- Address of the seller and the buyer must be provided in detail
- The regulations governing the shipment
- Liability limitation for loss or damage: The applicable sections which limit the liability for any loss or damage
- Space should be given for the signature of the shipper or seller and the carrier. The pickup date should be entered next to the signature of the carrier
- Options should be given regarding the loading of the trailer, whether the shipper or driver has loaded it
- There should be provisions made for entering the name of the entity who has counted the freight. It could be the shipper or driver
- Space should be provided for the COD or Cash on Delivery amount
- Carrier information section should mention the quantity and type of the handling unit, the type, and quantity of the package, the commodity description, and the NMFC No and class
- Customer Order information should include the SCAC no, freight charge terms, Customer order number and additional shipper information
The buyer or customer should negotiate the shipment charges with the seller before confirming the purchase. The seller, in turn, should discuss the shipment cost with the freight carrier.
The freight carrier that is finally chosen should provide the most economical rates for the shipment. The seller should send the shipment after selecting the freight carrier.
Benefits & Drawbacks of the Bill of Lading Form
The benefits of having a bill of lading form are:
- Protection of interest: The interest of the parties to the agreement, the shipper, and the recipient are protected. In case the goods are delivered in a damaged condition, then the customer can take the sender to court. The seller can prove through the agreement that the right type and quantity of goods had been delivered. The third-party responsible for inspection will then be held liable
- Tracking the error: When the customer receives the consignment in a damaged condition, then it is possible to go through the bill of lading to find out at which point of inspection the damage or loss occurred and remedial action taken
The drawbacks of having a bill of lading form are:
- Realizing a claim: Even though this agreement documents the entire delivery process, and it is possible to locate the point of damage conveniently, the realization of the claim from the insurance company is a tedious process. Tracking the point at which the problem occurred is itself a long-drawn-out process.
- Disclaimer: If there are problems beyond the control of the freight carrier, then the customer cannot take any action against them. There is a disclaimer in the contract to this effect, and this protects the carrier
What Happens in Case of Violation?
This form is meant to protect the interests of the seller, freight carrier, and the customer.
The seller is supposed to check the type and quantity of goods being shipped, including the packaging at the point of shipment. This should be documented in the bill.
It is the responsibility of the freight carrier to ensure that the goods are properly checked at the point of inspection and the relevant form signed only after proper verification.
The customer needs to check the goods at the point of delivery and ensure that the goods delivered to match the details mentioned in the form.
If the seller manipulates the form through some mala fide intention and the freight carrier somehow overlooks that, then the customer or buyer can take both to court for violation of the contract. The seller and freight carrier would not only have to pay the value of the goods being delivered but also penal charges along with any legal costs incurred by the customer.
If the customer defaults in payment to the seller, then that is a violation of the contract(1) by the customer. Who would then have to not only pay the seller the value of the goods shipped but also any extra charges paid to the freight carrier, penalties, and legal charges incurred for making a claim?
If you intend to buy goods which require to be transported or want to supply goods to a client through a freight carrier, then a bill of lading form is advisable.
This form contains all the details of the type and quantity of items being shipped, the purchase order number, all information relating to the carrier, the final destination, the value of the consignment, and so on.
This official document is important for all parties to the agreement, including the shipper, the recipient, and the freight carrier.
The document is checked against the actual goods at multiple checkpoints, and any discrepancy is noted before the form is signed.
The form ensures that the seller gets their payment as it is explicitly mentioned that final delivery to the customer is possible only when full payment is made to the seller. The payment to the seller would also include the freight carrier charges, so unless payment is made, delivery won’t be made.