Importance of Bill of Lading
1. Contract: The BOL is an agreement between the shipper, the seller or exporter of the goods, and the shipping carrier. It specifies the terms and conditions of the shipping. It specifies the nature and amount of the commodities being carried. It also covers the agreed-upon location, the agreed-upon freight rate or costs, and the obligations and duties of both parties.
2. Receipt: The bill of lading functions as both a contract and a receipt. It verifies that the carrier got the items from the sender in the condition specified in the paperwork. When the carrier takes ownership of the cargo, the BOL validates the number and apparent condition of the items, shielding both parties from any claims of mis-shipments or damage.
3. Title Document: In some cases, the BOL can serve as a title document, especially when commodities are sold and transferred while in transit. By approving the BOL to the new owner, the shipper can transfer ownership of the goods, making the BOL an important negotiable instrument in international trade.
4. Legal Document: The bill of lading is an important legal document. Customs authorities, port officials, and other regulatory organizations in many nations rely on the information included in the BOL to correctly handle freight shipments. It provides important cargo-related information such as description, weight, and value, which is needed to calculate import duties, taxes, and other costs.
5. Segregation of Duties: Essentially, a bill of lading serves as uncontested documentation of transportation. Furthermore, a bill of lading provides for the separation of tasks, which is an essential component of a company’s internal control framework for preventing theft.