Negotiable Bill Of Lading

A negotiable bill of lading is a bill of lading in which the title of goods in international trade can be transferred or endorsed to a third party. It serves the main purposes of being a title and cargo receipt document and establishing the transport agreement between buyer and seller.

A negotiable bill of lading is a legal document that plays a key role in ensuring proper shipment, transportation, and cargo receipt across international borders. Maintaining consistency in the receiver and sender documentation prevents any theft, misplacement, or loss of cargo shipment. It also helps one to confirm the recipient's successful receipt of the cargo.

A negotiable Bill of Lading is a legal document representing the ownership of the cargo shipment being sent from the sender to the recipient. Moreover, it has the transferability of ownership from the real shipper to another bank or buyer acting as a third party in the absence of physical delivery of goods themselves. In addition, the Transferability of ownership makes it an important tool for international trade.

A negotiable bill of lading could be transferred or endorsed by a third party from the original party, so the holder of the bill could claim ownership over the arrived cargo goods at the destination port. As a result, shipment financing and ownership transfer between the sender & recipient involved in the trade transaction are facilitated.

Most international traders use the NBL as collateral for their loans. It happens because the NBL depicts the monetary value of goods being shipped to the exporter or importer. Banks, on the other hand, accept NBL as collateral for loans permitting the finance of shipments of exporters in the absence of any immediate payment. `

There are two main types of a negotiable bill of lading:

Straight Bill of Lading: it allows cargo shipment delivery to the person whose name appears on it.

Order Bill of Lading permits cargo shipment delivery to any person who has the original NBL by presenting it to the customs.

Apart from these, characteristics of a negotiable bill of lading have the following technicalities involved as it functions as an important legal trade document internationally:

• One has to ensure Proper endorsement and transference of the document significantly.
• There has to be no mistake in the transfer process; otherwise, ownership disputes may arise, preventing the release of goods or delay in the delivery of shipments.
• NBLs are subjected to the country of issue, meaning they may have different requirements and use in different countries.
• Any non-compliance with the law of the country of origin or receipt may make the importer or exporter face a legal issue.

Therefore, any mistake might lead to a delay, or legal issues may crop up, so one must get help from a negotiable bill of lading sample available online.

Let us go through a few examples to understand the topic. 

Example #1

Suppose Billy has to buy two cargos of crude from Saudi Arabia. As the amount of money involved is quite large, Billy takes a loan from its bank using NBL as collateral. Therefore, the NBL gets endorsed by the bank and kept in its custody as long as the trader clears off the collateral loan.

Example #2 

A seller in New York sends a consignment of clothes to a buyer in Britain on terms of credit, meaning that the buyer has to pay for the goods later. The seller avails an NBL from the transportation company to pay off the credit and secure the transaction, where NBL acts as the title and receipt of the goods. 

After that, NBL is endorsed and sent to the seller's bank as collateral to secure the buyer's extended credit. It makes the bank the title holder of the goods until the buyer makes the payment. If the buyer pays in full, it becomes its owner; otherwise, if the buyer defaults, the bank gets the right to sell the goods and recover the funds.