Can I telex release a negotiable bill of lading..??
Can I telex release a negotiable bill of lading..??
Maybe because it is one of the most important documents in global trade, there seems to always be a degree of uncertainty around a bill of lading, which type to issue, how many to issue etc..
This question is part of this uncertainty and many people have doubts on what is a Telex Release, how it works and under what circumstances a Telex Release maybe issued..
In relation to what is Telex Release and how it works, you can read my article dedicated to Telex Release..
In this particular post, I will cover the circumstances under which a Telex Release maybe issued and whether a telex release can be done for a negotiable bill of lading..
To start off with, let me jog your memory a bit on the “types of bill of lading”..
A Bill of Lading (B/L), is an important transport document that has 3 basic purposes or roles..
Evidence of Contract of Carriage
Receipt of Goods and
Document of Title to the goods
Based on the above roles, there are a few variations of the B/L (let’s call it Types), important among which are as below :
Straight Bill of Lading
Seaway Bill of Lading
Negotiable Bill of Lading or Order Bill of Lading
1) When a B/L is issued in Original(s) to a “named” consignee it is referred to as a “Straight B/L”.. A straight B/L is a NON-NEGOTIABLE & NON-TRANSFERABLE DOCUMENT and is one of the most popular and common form of bill of lading issued..
When a straight bill of lading is issued, the cargo may be released ONLY to the named consignee and ONLY upon surrender of at least 1 of the original bills issued.. This condition for surrender of original bill for a Straight Bill depends on the country and its jurisdiction as some countries do not require this..
This B/L satisfies roles 1 & 2 above fully and does not satisfy role 3 (Document of Title) as the document is not negotiable or transferable..
2) When a B/L is issued to a “named” consignee but without any originals it is termed as a “Seaway B/L“.. This B/L is also a NON-NEGOTIABLE & NON-TRANSFERABLE DOCUMENT..
When a Seaway B/L is issued, the cargo may be released ONLY to the named consignee.. Since no originals are issued in the case of a Seaway B/L no surrender is required and the release may also be termed as an Express Release and is mentioned as such on the body of the B/L and manifest..
A Seaway B/L is usually issued
for inter company shipments like from ACME Company Hollywood to ACME Company in the Middle of the Australian Outback or
where the shipment takes place between two different companies but there are no negotiations required between the two either directly or via bank for release of the cargo and
the shipper doesn’t need to submit an original B/L to anyone to secure his payment
This B/L satisfies roles 1 & 2 above and does not satisfy role 3 (Document of Title) as the document is neither negotiable nor transferable..
Because of their non-negotiable and non-transferable nature, it is possible for a TELEX RELEASE to be issued for these two types..
3) When a B/L issued is in Original(s) and consigned “TO ORDER” or “TO ORDER OF SHIPPER” or “TO ORDER OF XYZ BANK” it is termed as “Negotiable B/L or Order Bill“..
This B/L satisfies all of the above 3 roles..
When a negotiable bill of lading is issued, the cargo may be released ONLY to the party to whom the bill of lading has been endorsed to and only after they surrender at least 1 of the issued originals with proper endorsements.. Remember that there is no real limitation on the number of original bills of lading that may be issued..
These endorsements are done on Page 1 (usually referred to as the reverse of the bill of lading).. Due care must be taken to ensure that the delivery is given to the final endorsee as it is possible for a negotiable B/L to be endorsed or transferred to another company or a chain of companies..
Below are the permutations that I have seen so far being used in negotiable bills of lading in the consignee field and the relevant endorsements required..
Bill of Lading consigned to
Endorsements Required on the bill of lading
When consigned to a named consignee, the bill of lading is known as a Straight Bill of Lading, and in the case of a Straight Bill of lading, the release maybe given only to the named consignee and this bill of lading is not negotiable or transferable..
When consigned to a named consignee, the bill of lading is known as a Straight Bill of Lading, and in the case of a Straight Bill of lading, the release maybe given only to the named consignee and this bill of lading is not negotiable or transferable..Since the consignee is a private individual, release may be effected only after verification of Original ID of the person presenting the OBsL for release..
To Order or To Order of ZYX
Shipper’s endorsement stating DELIVER TO THE ORDER OF “ZYX Client” and ZYX’s company stamp and sign in case he is taking the final delivery or his endorsement stating, DELIVER TO THE ORDER OF “ABC Client” (if the cargo has been further sold)….
To Order of Bank
Shipper’s endorsement stating DELIVER TO THE ORDER OF “XYZ BANK” and banks’ endorsement stating, DELIVER TO THE ORDER OF “ZYX Client” and ZYX’s company stamp and sign in case he is taking the final delivery or his endorsement stating, DELIVER TO THE ORDER OF “ABC Client” (if the cargo has been further sold)..
Now to the question “Can I telex release a negotiable bill of lading”..??
The purpose of the shipper requesting the shipping line for a negotiable bill of lading is that because this bill of lading is a negotiable instrument, the shipper can endorse the bill of lading and sell the goods further to other parties who in turn can sell it to someone else through endorsing the same bill of lading..
Remember what I mentioned above that one of the roles of the bill of lading is “Document of Title to the goods”.. So the release will be given to whoever holds this duly endorsed “Document of Title to the Goods”..
When there is a Letter of Credit (L/C) involved, it may require the shipper to submit all originals of the bill of lading to the bank.. Once the bank receives these originals and all the conditions of the L/C are satisfied, they will pay the shipper what is due to them.. But all the originals of the bill of lading will remain with the bank till they have been paid by the actual receiver’s bank..
So since the shipper has no originals with him/her, he/she cannot surrender anything to the shipping line and therefore A TELEX RELEASE CANNOT BE ISSUED.. This means only the rightful consignee can take release of the goods after paying their bank..
As I mentioned, a telex release is simply a message advising the destination agent of the shipping line that the shipper has surrendered one or all of the original negotiable bills of lading that were issued and that release maybe given to the consignee without presentation of any original bills of lading..
So, in conclusion, when a negotiable bill is issued, at least one duly endorsed original bill of lading is required for release at destination and therefore a telex release cannot be issued for a Negotiable Bill of Lading..
Any alternate views welcome with examples..