Bills of Lading Case Study

Bills of LadingWhen the carrier accepts goods for shipment or forwarding, the carrier ordinarily issues tothe shipper a bill of lading in the case of land or water transportation or an airbill for airtransportation. This instrument is a document of title and provides rights similar to thoseprovided by a warehouse receipt. A bill of lading is both a receipt for the goods and amemorandum of a contract stating the terms of carriage. Title to the goods may be transferredby a transfer of the bill of lading made with that intention.Bills of lading for intrastate shipments are governed by the Uniform CommercialCode (UCC). For interstate shipments, bills of lading are regulated by the Federal Billsof Lading Act (FBLA).
Contents of Bill of LadingThe form of the bill of lading is regulated in varying degrees by administrative agencies.Prior to the revisions to Article 7, negotiable bills of lading were printed on yellow paper,and nonnegotiable or straight bills of lading were printed on white paper. This colorcodingmay continue as commercial practice for those documents reduced to writtenform, but new commercial practices will evolve regarding the use of records.21As against the good faith transferee of the bill of lading, a carrier is bound by therecitals in the bill as to the contents, quantity, or weight of goods.22 This means that
the carrier must produce the goods that are described or pay damages for failing to do so.
This rule is not applied if facts appear on the face of the bill that should keep the transfereefrom relying on the recital.NegotiationA bill of lading is a negotiable bill of lading when by its terms the goods are to be deliveredto the bearer or to the order of a named person.23 Any other bill of lading, suchas one that consigns the goods to a named person, is a nonnegotiable or straight bill oflading. Like transferees of warehouse receipts who take by due negotiation, holders ofbills of lading who take by due negotiation ordinarily also acquire title to the bills andtitle to the goods represented by them.Rights of a transferee are defeated by the true owner, however, when a thief deliversthe goods to the carrier and then negotiates the bill of lading. The thief had no title to thegoods at any time.WarrantiesBy transferring for value a bill of lading, whether negotiable or nonnegotiable, the transferormakes certain implied warranties to the transferee. The transferor impliedly warrantsthat (1) the bill of lading is genuine, (2) its transfer is rightful and is effective to transferthe goods represented by it, and (3) the transferor has no knowledge of facts that wouldimpair the validity or worth of the bill of lading.2421-2c Rights of Common CarrierA common carrier of goods has the right to make reasonable and necessary rules for theconduct of its business. It has the right to charge such rates for its services to yield it a fairreturn on the property devoted to the business of transportation.C

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