... and circumvent the presentation rule
IN OUR first two articles we looked at the problems caused by the rule that goods may only be delivered to a cargo recipient against presentation of an original bill of lading. As we have seen, letters of indemnity are often used to overcome the problems caused by the presentation rule, but these are not risk free.
One ingenious method of circumventing the presentation rule is to arrange for the original bills of lading to be sent with the vessel from the port of loading to the port of discharge. Whilst it is unclear how frequently this device is used in South Africa, it is apparently increasingly common overseas where it occurs in several forms.
For instance, a full set of original bills, made out to the order of the consignee, can be sent with the vessel or only a single original.
Alternatively, the bills are sometimes made out to the order of the shipper, or, in its most extreme form, original bills are sent with the consignee box left blank.
There are, of course, obvious risks associated with this practice. Most importantly it exposes the cargo recipient to the risk of the shipowner's fraud or that of its crew. The shipper too would be deprived of its remedy for damages suffered as a result of delivery without presentation in circumstances where it had allowed the bills of lading to be sent with the vessel.
All the problems associated with bills of lading raise the question of whether it is necessary to use them at all. Next time, we shall look at the advantages of seawaybills as an alternative to bills of lading.
