Definition
An Order Bill of Lading is a negotiable instrument used in the shipping industry that allows for the transfer of ownership of the goods outlined in the bill. Like other negotiable instruments, this type of bill of lading can be endorsed and transferred by the holder to another party, who can then claim the rights to the shipment. This document is crucial for commercial trade and logistics, ensuring that a shipper can sell and transfer ownership of the goods even after the shipment has commenced.
Examples
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International Trade: A company in the United States ships machinery to a buyer in Germany. The shipper can endorse the order bill of lading to sell the machinery to another German company if the initial buyer fails to make the payment.
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Collateral for Loan: A trader uses the order bill of lading as collateral to secure a loan from a financial institution. The institution then holds the bill, and by extension, a claim on the goods.
Frequently Asked Questions (FAQ)
1. What is the primary purpose of an Order Bill of Lading?
The primary purpose of an order bill of lading is to act as a negotiable instrument that can be transferred to another party, giving them rights to the goods specified in the bill.
2. How is an Order Bill of Lading different from a Straight Bill of Lading?
An order bill of lading is negotiable and can be endorsed to a third party, whereas a straight bill of lading is non-negotiable and consignment-specific, meant for delivery to a particular recipient.
3. Which parties are typically involved in an Order Bill of Lading?
The involved parties typically include the shipper (or consignor), the consignee (or the party to whom the goods are consigned), and the carrier (or the shipping company).
4. Can an Order Bill of Lading be used domestically?
Yes, while more common in international trade, an order bill of lading can also be used for domestic shipments within the same country, wherever negotiable documentation is beneficial.
5. How does endorsement work with an Order Bill of Lading?
The holder of the bill of lading can endorse it by signing it over to another party. This endorsement transfers the rights to the shipment to the new holder.
Related Terms
1. Negotiable Instrument: A written document that guarantees the payment of a specific amount of money to the holder or assignee upon demand or at a set time.
2. Straight Bill of Lading: A non-negotiable bill of lading that is consigned to a specific party and not transferable.
3. Freight Forwarder: An intermediary who helps companies arrange the transportation and shipping of goods from the manufacturer to the market or final point of distribution.
4. Consignee: The individual or party to whom goods are shipped and officially delivered.
5. Carrier: A company or individual responsible for the transportation of goods from one place to another.
Online References
Suggested Books for Further Study
- “The Handbook of International Trade and Finance” by Anders Grath.
- “Bills of Lading: Law and Practice” by Richard Aikens.
- “Maritime Law” by Christopher Hill.
- “Export/Import Procedures and Documentation”, by Thomas E. Johnson and Donna Bade.
Fundamentals of Order Bill of Lading: Transportation and Logistics Basics Quiz
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