Draft Uniform Documents of Title Act 1995

PART 2 - BILLS OF LADING: SPECIAL PROVISIONS

Liability for non-receipt or misdescription

8 (1)    Subject to subsection (2),

(a)    a consignee of a non-negotiable bill who has given value in good faith; or

(b)    a holder of a non-negotiable bill to whom a negotiable bill has been duly negotiated

who relies upon the description of goods contained in the bill of lading may recover from the issuer damages caused by the misdating of the bill or the non-receipt or misdescription of the goods.

(2)    A consignee of a non-negotiable bill shall not recover damages from the issuer

(a) where the document indicates that the issuer does not know whether any part or all of the goods in fact were received or conform to the description, as where the description is in terms of marks or labels or kind, quantity, or condition or the receipt; or

(b) the description is qualified by "contents or condition of contents of packages unknown","said to contain", "shipper's weight, load and count" or the like, if that indication be true.

(3)     Where goods are loaded by an issuer who is a common carrier, the issuer must count the packages of goods if package freight and ascertain the kind and quantity if bulk freight.

(4)    A shipper

(a)    shall be deemed to have guaranteed to an issuer the accuracy at the time of shipment of the description, marks, labels, number, kind, quantity, condition and weight, as furnished by the shipper; and

(b)    shall indemnify the issuer against damage caused by inaccuracies in any of the particulars mentioned in paragraph (a).

(5)    The right of the issuer to an indemnity mentioned in subsection (4) shall in no way limit the issuer's responsibility and liability under the contract of carriage to any person other than the shipper.

(6)    In the circumstances mentioned in subsection (2) "shipper's weight, load and count" or other words indicating that the description was made by the shipper are ineffective except as to freight concealed by packages.

Legislation

UCC 7-301; Carriage of Goods by Water Act (Can.), Article III.

Comment

1.    The provision attempts to rationalize the law relating to misdescription of the goods contained in a bill of lading. At common law, a bill of lading is evidence of the facts stated in it. The provision will not protect the shipper if it is proved that the described goods were not in fact delivered to the issuer. Rather, it applies in favour of third parties who rely upon the description of the bill. In this respect, the provision codifies the common law position. See Smith v. Bedouin Steam Navigation Co. [1896] A.C. 70; Compania Naviera Vasconzada v. Churchill & Sim, [1906] 1 K.B. 237. It provides some further guidance where terms such as "shipper's weight, load and count" are used.

2.    At common law, it was held that the master of a ship has no authority, real or apparent, to sign a bill of lading where the goods that have not been put on board. See Grant v. NorNay (1851) 10 C.B. 665; Erb v. Great Western Railway Co. of Canada (1881) 5 S.C.R. 367. This meant that the carrier was not liable either to the shipper or an endorsee of the bill. A similar rule prevailed in the United States. Section 4 of the Bills of Lading Act (Can.) provides that a bill of lading is conclusive evidence in favour of a consignee or endorsee for valuable consideration of the shipment as against the master or other person signing the bill of lading, notwithstanding that the goods or some part thereof may not have been shipped. However, this does not give the holder or consignee any right against the carrier. The Uniform Documents of Title Act changes the law by making the issuer of the bill responsible for non-receipt. This is made clear by the definition of "issuer" which provides that an issuer "includes any person for whom an agent or employee purports to act in issuing a document if the agent or employee has real or apparent authority to issue documents, notwithstanding that the issuer received no goods or that the goods were misdescribed or that in any other respect the agent or employee violated his instructions."

3.    The provision remains subject to other federal law which may alter the position in relation to certain kinds of bills of lading. See Proceedings of the Uniform Law Conference of Canada, 1991, at pages 378 and 379. For example, the

Schedule of Rules Relating to Bills of Lading under the Carriage of Goods by Water Act, R.S.C. 1985, c.C-27 provides similar rules governing bills of lading in relation to the carriage of goods by water in ships carrying goods from any port in Canada to any other port, whether in or outside Canada.

4.    The shipper's erroneous report to the carrier concerning the goods may cause damage to the carrier. The indemnity provision which is found in Article 111(5) of the Schedule to the Carriage of Goods by Water Act and in UCC 7-301(5) should be included so that it will extend to all types of bills of lading.

Through bills of lading

9 (1)    The issuer of a through bill of lading or other document embodying an undertaking to be performed in part by a person acting as the issuer's agent or by a connecting carriers is, subject to any agreement to the contrary, liable to anyone entitled to recover on the document for any breach by any person acting as the agent of the issuer or by the connecting carrier of its obligation under the document.

(2)    Where a person, other than the issuer, is to perform an undertaking contained in a through bill of lading or other document, that person is subject, with respect to that person's own performance while the goods are in that person's possession, to the obligation of the issuer.
(3)    A person is discharged from an obligation under subsection (2) by delivery of the goods to another person pursuant to the document, and is not liable for breach of an undertaking contained in the bill of lading by any other person or by the issuer.

(4)    The issuer of a through bill of lading or other document shall be entitled to recover from the connecting carrier or any other person in possession of the goods when the breach of the obligation under the document occurred:

(a)    the amount required to be paid to any person entitled to recover on the document for the breach; and

(b)    the amount of any expense reasonably incurred by the issuer in defending any action brought by any person entitled to recover on the document for the breach.

Legislation
UCC 7-302

Comment

1.    Through bills of lading are used when the initial carrier uses the services of other carriers in delivering the goods. When this involves more than one mode of transport the bill is sometimes referred to as a "combined transport bill of lading".

2.    The common law position is far from clear as "[t]he multiplicity of different

types of through bills of lading makes it difficult to lay down hard and fast principles governing the liabilities and relationships of the various parties involved" (Scrutton on Charterparties, (19th ed. 1984) at p. 377). At common law, the rule in relation to successive railway companies was that the company receiving the goods from the shipper was prima facie liable as carrier for the whole distance, but it was less clear whether this rule applied to other kinds of through bills of lading (Scrutton on Charterparties, (19th ed., 1984) at pp. 377-8). The provision adopts the rule that the issuer of the through bill of lading is responsible, unless it is excluded by the terms of the bill.

3.    The provision also makes it clear that any connecting carrier holds the goods on the terms which are set out in the bill of lading even though the connecting carrier did not issue the document. Accordingly, the connecting carrier must honour a proper demand for delivery and obtain the benefits or the excuses for non-delivery and limitations of liability provided for the original bailee. At common law, the connecting carrier could not obtain the benefit of such clauses unless an agency relationship was established between the carriers. See Gill Manchester Ry. Co. (1873) L.R. 8 Q.B. 186.

4.    The issuer of a through bill of lading may become liable for the fault of another person, and the provision gives the issuer a right of recourse against that person.

Diversion; reconsignment change of intructions <

10(1)    Unless the bill of lading otherwise provides, the carrier may deliver the goods to a person or destination other than that stated in the bill or may otherwise dispose of the goods on instructions from

(a)    the holder of a negotiable bill,

(b)    the consignor on a non-negotiable bill notwithstanding contrary instructions from the consignee,

(c)    the consignee on a non-negotiable bill in the absence of contrary instructions from the consignor, if the goods have arrived at the billed destination or if the consignee is in possession of the bill, or

(d)    the consignee on a non-negotiable bill if the consignee is entitled as against the consignor to dispose of them.

(2)    Unless the instructions referred to in subsection (1) are noted on a negotiable bill of lading, a person to whom the bill is duly negotiated can hold the bailee according to the original terms.

Legislation
UCC 7-303


Comment

1.    At common law, the bill of lading was not regarded as a contract of carriage, but only evidence of its terms. Where, however, a negotiable bill of lading was negotiated to a holder, the bill of lading was regarded as the contract of carriage and the holder could therefore hold the carrier to its terms. See Leduc v. Ward (1888), 20 Q.B.D. 475. This feature of the law is codified in the provision.

2.    The position at common law in relation to non-negotiable bills of lading is less clear. Although the non-negotiable bill of lading may name someone other than the consignor, the contract is concluded between the consignor and the carrier. The uncertainty will place the carrier at considerable risk if a conflict arises between the consignor and the consignee. The provision contains rules which indicate the extent to which the carrier may follow the instructions of the consignor or the consignee.

Bills of lading in a set

11 (1)    No person shall, except where customary in overseas transportation, issue a bill of in a set lading in a set of parts.

(2)    Any issuer who issues a bill of lading in contravention of subsection (1) is liable to a holder of a bill of lading for any damages caused thereby.

(3)    Where a bill of lading is lawfully drawn in a set of parts, each of which is numbered and expressed to be valid only if the goods have not been delivered against any other part, the whole of the parts constitute one bill.

(4)    Where a bill of lading is lawfully issued in a set of parts and different parts are negotiated to different persons, the title of the holder to whom the first due negotiation is made prevails as to both the document and the goods even though any later holder may have received the goods from the carrier in good faith and discharged the carrier's obligation by surrender of that holder's part.

(5)    Any person who negotiates or transfers a single part of a bill of lading drawn in a set is liable to the holders of that part as if it were the whole set.

(6)    The bailee is obliged to deliver against the first presented part of a bill of lading lawfully drawn in a set.

(7)     A bailee who makes a delivery in accordance with subsection (6) shall be discharged from any obligation as a bailee on the whole bill.

Legislation
UCC 7-304

Comment

1.    The use of bills of lading in a set arose when communications were slow and the risk of loss of a bill of lading was not inconsiderable. As early as 1882 the practice was criticized by Lord Blackburn as unnecessary in light of speedier forms of communication (Glyn, Mills, Currie & Co. v. East and West India Dock Co. (1882), 7 App Cas. 591 at 605). The practice greatly increases the potential for fraud since the parts may be transferred to different persons. The provision attempts to discourage the practice by permitting it only where it is customary in overseas trade.

2.    Where a bill in sets is lawfully issued, the provision codifies the common law rule that the holders take priority in the order in which the parts were negotiated (Barber v. Meyerstein (1870), L.R. 4 H.L. 317) and the rule that the carrier may, in ignorance of the fact that a part had been transferred to some other party who would be entitled to priority, deliver the goods against another part of the set (Glyn, Mills, Currie & Co. v. East & West Dock Co. (1882) 7 App. Cas. 591).

Destination bills

12(1)    Instead of issuing a bill of lading to the consignor at the place of shipment, a carrier may, at the request of the consignor, procure the bill to be issued at destination or at any other place designated in the request.

(2)    Upon the request of anyone entitled as against the carrier to control the goods while in transit and on the surrender of any outstanding bill of lading or other receipt covering the goods, the issuer may procure a substitute bill to be issued at any place designated in the request.

Legislation
UCC 7-305

Comment

The provision relating to "destination bills" is designed to resolve problems associated with high speed air or truck transportation in which the goods may arrive at their destination before the bill of lading can arrive by mail. This can be particularly inconvenient for carriers by truck or by air who do not have terminal facilities where shipments can be held to await the consignee's appearance. The provision authorizes the carrier, at the request of the consignor, to arrange for the issuance of the bill at the destination or some other point.

Altered bills of lading

13 Where in a bill of lading there is an unauthorized alteration or filling in of a blank, the bill shall be enforceable according to its original tenor.

Legislation
UCC 7-306

Comment

1.    There is some common law authority to the effect that an alteration of a bill of lading will render it a nullity if the alteration goes to the essence of the contract but less fundamental alterations the instrument remains alive. (Kwei Tek Chao v. British Traders and Shippers Ltd., [1954] 2 Q.B. 459.) The provision adopts the rule that an alteration does not void the bill, but leaves it enforceable according to its original tenor.

2.    The provision should be contrasted with the treatment of warehouse receipts in which a bonafide purchaser may treat the filling in of a blank in a negotiable warehouse receipt as authorized. A similar rule is not provided in the case of bills of lading on the theory that they must often be prepared by truck drivers and others away from the issuer's place of business. The validity of the completion of the blanks would, therefore, depend upon an agency analysis.

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