What is a bill of lading (B/L)? Types and functions

A bill of lading (B/L) is an instrument used in sea transport that combines three distinct legal functions in a single document. It is issued by the carrier, or an agent acting on its behalf. Under Turkish law, the provisions on bills of lading are found within the Turkish Commercial Code.

The three functions of a bill of lading

• Receipt function: It documents that the cargo has been handed over to the carrier in the stated quantity, packaging and apparent condition.
• Evidence of the contract of carriage: The port of loading and discharge, the parties, the freight payment method and the terms of carriage appear on the front and back of the document.
• Document-of-title function: Whoever lawfully holds the bill of lading has the right to claim the cargo on arrival. The document represents the goods.

Leaving the consignee box blank does not mean the bill is to bearer; in practice this is often treated as “to the order of the shipper” or is considered ambiguous and causes problems. Instead of leaving it blank, the entry must be written explicitly.

The third function is what sets a bill of lading apart from documents such as the CMR consignment note, the air waybill (AWB) and the sea waybill. The goods can change hands while still at sea; the sale is completed by transferring the document. This is also why letters of credit are so widely used in sea transport: the bank holds the document and thereby obtains legal control over the goods through the document (indirect possession).

Order, straight and bearer bills of lading

Type	Consignee field	Transfer	Typical use
Order B/L	“to order,” “to order of shipper,” “to order of … Bank”	By endorsement on the back	Letter of credit, documents against payment
Straight B/L	Buyer’s name written explicitly	Cannot be endorsed	Advance payment, intra-group shipment
Bearer B/L	“to bearer” entry	By transfer of possession	Rare in practice, high risk of loss

A common misconception is that presentation of an original is not required for a straight bill of lading. On most routes the carrier still requires either the original or a properly executed telex release (the carrier’s release notice to its destination agent).

The difference between Master B/L and House B/L

A Master B/L (MB/L) is issued by the carrier, most often a container line or a contracting carrier that charters or operates the vessel; it need not be the shipowner. On the shipper side it typically names the freight-forwarding organiser at the port of loading; on the consignee side, the correspondent agent at the port of destination.

A House B/L (HB/L) is issued by the freight-forwarding organiser or the NVOCC. Here the shipper is the actual seller and the consignee the actual importer. In consolidated (LCL) shipments, multiple House B/Ls exist under a single Master B/L.

The delivery chain works as follows: the importer presents the House B/L to the organiser’s destination agent, the destination agent named as consignee on the Master B/L pulls the container from the line, and a delivery order is then issued. Some letters of credit carry a clause stating “House B/L not acceptable”; this condition must be checked at the contract stage.

Clean bills of lading and claused bills of lading

A clean bill of lading contains no notation about defects in the goods or packaging. A claused (dirty) bill of lading carries statements such as “three cartons crushed,” “drums rusty,” or “packaging wet.”

Under a letter of credit, the bank looks for a clean document. A clause can indicate that the goods were not delivered in conformity with the contract, which is grounds for a discrepancy. In that case the bank may deem the document non-compliant and refuse it; payment then depends on the applicant accepting the discrepancy (waiver).

A frequently confused point: notations such as “said to contain” (STC) and “shipper’s load, stowage and count” do not make a bill claused. These are standard phrases indicating that the container was received sealed and that its contents were not counted by the carrier.

Originals, copies and the number of copies

A bill of lading is usually issued in three original copies (3/3, “full set”) plus unnumbered copies. How many originals were printed is stated in a separate field on the face of the document. Once delivery has taken place against one of the originals, the others become void. Copies carry the notation “non-negotiable” and cannot be used for delivery.

If the letter of credit requires “full set of original bills of lading,” all the originals printed must be presented to the bank; a partial presentation is grounds for a discrepancy.

Another critical distinction is between “received for shipment” and “shipped on board” notations. Letters of credit generally require the on-board notation along with the loading date.

Telex release and express release

Telex release is when the shipper surrenders all originals in its possession to the carrier at the port of loading. The carrier then notifies its destination agent that the cargo may be released without presentation of an original. The buyer only shows identification and a release letter.

Express release means no originals are printed from the outset; the document is issued directly as an express bill or a sea waybill.

Both remove the seller’s control over the goods. They are used when payment has already been collected in advance, where a relationship of trust exists, or for intra-group shipments. A telex release is not used in letter-of-credit or documents-against-payment transactions; a sea waybill is generally not preferred there either, but because UCP 600 article 21 also governs the non-negotiable sea waybill, some letters of credit accept or require one.

Why the sea waybill and the AWB are different

A sea waybill is a receipt and evidence of the contract of carriage, but it is not a document of title. It cannot be endorsed, the goods cannot be sold while in transit, and presentation is not required for delivery. The carrier delivers to the named consignee after identity verification. It is preferred on short routes to avoid demurrage caused by document delays.

Its air-transport counterpart, the AWB (air waybill), is likewise not a document of title. It is issued to a named party, cannot be endorsed, and presentation is not a condition for delivery. The reason is practical: air cargo often arrives before the documents do. In air transport, the bank’s control over the goods is secured not by endorsement of the document but by naming the bank in the consignee field.

Common mistakes and points of attention

• Loss of the original bill of lading. Without an original, the carrier generally requires a bank-guaranteed letter of indemnity (LOI) to release the cargo. The process takes longer, and demurrage and storage charges keep accruing while the container waits at the port. Splitting the original set instead of sending it all at once with a single courier is a common precaution.
• Naming the wrong party as shipper. The shipper on the document should be consistent with the exporter shown on the invoice, customs declaration and certificate of origin, to avoid problems at customs. Under a letter of credit, UCP 600 article 14(k) does not require the shipper named on the bill of lading to be the beneficiary; even so, consistency across the documents avoids problems in practice. This mismatch is common when the manufacturer and the exporter are different companies.
• Mismatch with letter-of-credit conditions. The description of goods, port names, notify party, freight payment notation (prepaid/collect), on-board date and number of copies must match the letter of credit text exactly. The draft bill of lading must always be checked before it is issued; correcting it after issuance is not always possible, and where it is, a fee applies.
• Writing “to order” and forgetting to endorse it. Where the consignee field reads only “to order” or “to order of shipper,” the buyer cannot claim the cargo with an unendorsed bill; where it reads “to order of [buyer’s name]” or “to order of … Bank,” the named party can claim the cargo without a further endorsement.
• Originals remaining uncollected despite a telex release request. The line only carries out the surrender once all printed originals have been returned.
• Mismatch between VGM and the bill-of-lading weight. A declared discrepancy leads to document correction and delay.
• Rushing switch B/L requests. Issuing a second set before the first set has been fully collected leads to two valid documents circulating for the same cargo.

The choice of document type (original set, telex release, or sea waybill) should be decided together with the payment method; sea transport and customs processes are then planned around that choice.