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Bill of Lading Dispute in international sales of goods

In international sales of goods, Bill of Lading are essential documents for the buyer to pick up the goods, handle customs clearance procedures, resell the goods, and request compensation from the carrier or insurance company. According to international trade practices, in most cases, the seller is obligated to submit various documents related to the goods to the buyer. The buyer and seller generally stipulate in the contract that the buyer shall make payment for the goods on the condition that the seller hands over the shipping documents. The Convention stipulates that the transfer of documents related to the goods is a primary obligation of the seller.

Among these shipping documents, the most important one is the bill of lading. The bill of lading is the proof of ownership of the goods and the main basis for payment against documents. The legal relationships involved in bill of lading are also very complex, and bill of lading disputes often occur.

The types of bill of lading disputes are as follows.
1. Disputes between the buyer and seller arising from backdated bills of lading When both parties of the international goods buyer and seller decide to use a letter of credit for transactions, the seller shall ship the goods according to the shipping date specified in the letter of credit. If the actual shipment date of the goods is later than the shipment date specified in the letter of credit, and the carrier changes date on the bill of lading according to the shipper’s request, so that the bill of lading meets the requirements of the letter of credit and the contract. This behavior is called backdating. Article 30 of the Convention stipulates that the seller must deliver the goods in accordance with the provisions of the contract and this Convention, hand over all documents related to the goods, and transfer ownership of the goods; Article 33 stipulates that the seller must deliver the goods on the specified date. It can be seen that the backdated bill of lading is actually a breach of the seller’s contractual obligation to deliver within the specified date. Since the seller failed to ship the goods on the specified shipping date in the contract, the buyer has the right to demand compensation for the losses.

2. Disputes arising from late arrival of bills of lading
The bill of lading is a proof of ownership of the goods, and the buyer cannot pick up the goods without it. If the goods under the international contract for the sale of goods have arrived at the destination port and the buyer has not yet received the bill of lading, the buyer will pay the warehouse fees, delaying fees, causing disputes.

3. Disputes arising from improper date of bill of lading
Article 36 of the Uniform Customs and Practice for Documentary Credits (International Chamber of Commerce Publication No. 500, hereinafter referred to as the “Uniform Customs and Practice”) stipulates that there are two situations where the issuance date of the bill of lading submitted by the seller can be earlier than the issuance date of the insurance policy: firstly, the letter of credit clearly stipulates that the buyer agrees to accept such documents; The second is that the insurance policy stipulates that the insurance liability shall take effect from the date of issuance of the transportation document. In addition, the date of issuance of the bill of lading and insurance policy submitted by the seller must be appropriate, otherwise there is a risk of bank refusal and disputes.

From the above types of bill of lading disputes, it can be found that the seller often bears a significant responsibility for the bill of lading disputes. Because in most international sales of goods, the seller is generally responsible for the shipment of the goods, and the carrier issues the corresponding bill of lading as a condition for the seller’s negotiation. If the seller encounters problems during loading, invoicing, and delivery due to improper performance of the contract, it is easy to cause bill of lading disputes. So, in order to prevent bill of lading disputes, the seller needs to fulfill the contract accurately, issue a bill of lading in accordance with the requirements of the letter of credit and the contract, and timely deliver the complete set of shipping documents to the bank.



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