A Delivery Note is Perhaps a Substitute of a Bill of

Lading: Do You Agree with this Statement?

Introduction
In commercial transactions, documents play a vital role
in facilitating the smooth transfer of goods from the
seller to the buyer. Two common documents used in
such transactions are the Bill of Lading and the Delivery
Note. The statement that a delivery note is perhaps a
substitute for a bill of lading raises questions regarding
the nature, functions, and legal implications of both
documents. This essay critically analyses whether a
delivery note can act as a substitute for a bill of lading,
considering their legal definitions, functions, and
authorities.
BILL OF LADING
Neither common law nor existing legislation affecting
bills of lading or the terms of carriage where the bill of
lading is used provide for the definition. It’s essence is
to be gathered from the various functions its assumes.
Thus can be defined as a document issued by a carrier
(or its agent) to acknowledge receipt of goods for
shipment. It serves three primary functions:
1. Receipt of Goods – It confirms that goods have
been received in good condition by the carrier
2. Evidence of Contract of Carriage – It acts as proof
of the contract between the shipper and the
carrier.
 3. Document of Title – It represents ownership of the
goods, allowing the holder to claim possession of
the goods at the destination
There are various references in the law related to the
bill of lading. For instance, Sale of Goods Act 1979,
Carriage of Goods by Sea Act 1992, Bills of Lading Act
1855, The Hague 1924 and Hague-Visby Rules 1968,
Hamburg Rules 1978 and other statutes.
Nature of bill of lading.
It is a receipt, evidence of the contract of carriage, a
contract of carriage and a document of title depending
on whether the holder of the bill of lading is the ship
owner, consignee or endorsee.
1. Bill of lading as a receipt;
In the hands of the shipper, the bill of lading is a receipt
for; a
• A quantity of goods received
• The condition of goods received
• Leading remarks.

2. Bill of lading as evidence of contract of

carriage;
A bill of lading, even though it normally contains the
terms of carriage, is regarded in the hands of the
shipper as evidence of the contract of carriage, since
the contract with the shipper is likely to have been
concluded orally long before the issue of the bill of
lading, and it is possible that the document varies some
of the agreed terms or contains terms that have not
been agreed to by the parties. According to Lush J in
Crooks v Allan1, a bill of lading is not the contract,
but only evidence of the contract; and it does not follow
that a person who accepts the bill of lading which the
ship owner hands him necessarily, and without regard
to circumstances, binds himself to abide by all its
stipulations. If a shipper of goods is not aware when he
ships them, or is not informed in the course of the
shipment, that the bill of lading which will be tendered
to him will contain such a clause, he has a right to
suppose that his goods are received on the usual terms,
and to require a bill of lading which shall express those
terms. Where the terms contained in the bill of lading
do not reflect the terms agreed orally, evidence
regarding the oral agreement may be submitted by the
shipper.
In The Ardennes case 2, the shipper of a
consignment of oranges was assured by the ship’s
agent that the vessel would sail directly to London and
arrive there before 1 December. The ship, however,
stopped at Antwerp on her way to London and arrived
at London on 4 December. When sued for breach of
contract by the shipper, the ship owner relied on the
bill of lading which contained a clause giving the ship
liberty to deviate during the course of her voyage. The
court, however, came to the conclusion that the oral
evidence put forward by the shipper was admissible.
Lord Goddard CJ clearly acknowledged in his
judgment that ‘a bill of lading is not, in itself, the
contract between the ship owner and the shipper of the
goods, though it has been said to be excellent evidence
of its terms, the contract has come into existence long
before the bill of lading is signed.
The judgment from the Court of Appeal in Cho Yang
Shipping Co Ltd v Coral (UK)3Ltd, affirms the above
view: in English law, the bill of lading is not the contract
between the original parties but is simply evidence of it
(for example, The Ardennes, Indeed, though contractual
in form, it may in the hands of a person already in
contractual relation with the carrier (for example, a
character) be no more than a receipt (Rodocanachi v
Milburn)4. Therefore, as between shipper and carrier,
it may be necessary to inquire what the actual contract
between them was; merely to look at the bill of lading
may not in all cases suffice. It remains necessary to
look at and take into account the other evidence
bearing upon the relationship between the shipper and
the carrier and the terms of contract between them .
The terms upon which the goods have been shipped
may not be in all respects the same as those actually
set in the bill of lading . . .
3.Bill of lading as contract of carriage
The view that the bill of lading is evidence of the
contract of carriage is correct only in so far as the
holder of the bill is the shipper. Upon endorsement to a
third party (that is, the consignee or endorsee) in the
hands of that third party, the bill of lading is the
contract of carriage. Any oral or written agreement
between the shipper and the ship owner not expressed
on the bill of lading will not affect the third party on
grounds of lack of notice.
In Leduc v Ward4, the endorsee of a bill of lading
sued the ship owner for loss to cargo as a result of
deviation. The ship owner contended that they were not
liable, since the shipper was aware, at the time of
shipment, that the ship would deviate. The court held
that anything that took place between the shipper and
the ship owner not embodied in the bill of lading could
not affect the endorsee. The endorsee acquired his
rights of suit and liability in respect of the goods by
virtue of s 1 of the Bills of Lading Act 1855, which
provides that ‘every consignee . . . every endorsee . . .
shall have transferred to and vested in him all rights of
suit, and be subject to the same liability in respect of
such goods, as if the contract contained in the bill of
lading had been made with himself’. According to Lord
Esher MR:. . . it has been suggested that the bill of
lading is merely in the nature of a receipt for the goods,
and that it contains no contract for anything but the
delivery of the goods at the place named therein. It is
true that, where there is a charter party, as between
the ship owner and the charterer, the bill of lading may
be merely in the nature of a receipt for the goods,
because all the other terms of the contract of carriage
are contained in the charter party; and the bill of lading
is merely given as between them to enable the
charterer to deal with the goods while in the course of
transit; but, where the bill of lading is indorsed over, as
between the ship owner and the endorsee, the bill of
lading must be considered to contain the contract,
because the former has given it for the purpose of
enabling the charterer to pass it on as the contract of
carriage for the goods.
 4.Bill of lading as document of title
A document of title is a legal document that gives the
holder the right to possess, use, and transfer ownership
of goods. It means the person who holds the document
has the legal authority to claim the goods from the
carrier (shipping company).
It acts like a symbol for the goods because the goods
cannot be physically delivered until the ship arrives.
Constructive Possession
If a person holds the bill of lading, it is treated as if they
possess the goods themselves (constructive
possession).
The transfer of the bill of lading from the seller to the
buyer is like a symbolic delivery of the goods.
The buyer can present the bill of lading to claim the
goods when the ship arrives.
In Sanders v Maclean, Bowen LJ described the bill of
lading as “A key to unlock the door of the warehouse
(ship) where the goods are stored.”

 Selling Goods While in Transit

The buyer can sell the goods while they are still at sea
by endorsing (signing) the bill of lading and giving it to
another party (third party).
 The third party then becomes the holder of the bill
of lading and can demand delivery of the goods on
arrival.
Only order bills (those marked "to order" or "to
assigns") can be transferred to others.
Straight bills (made out to a specific person without the
option to order or assigns) cannot be transferred and
are not considered documents of title.
Therefore a bill of lading has three functions, which are
to evidence the contract of carriage which contains
contractual terms, to provide a receipt for the goods
which shows its condition and to accommodate a
document of title which allows to sell the goods even
the buyer has not got them physically.
Due to these functions, the importance of the role of
the bill of lading is undeniable and it facilities a
business acquisition manageable. Additionally, the use
of the bill of lading, provides safety and confidence in
international trade to the parties.

DELIVERY NOTE
A Delivery Note is a document issued by the seller to
accompany goods during delivery, confirming that
goods have been delivered to the buyer or their agent.
It typically contains:
 Description of goods
 Quantity of goods
 Date of delivery
 Signature of the receiving party
It lists the items included in a shipment, their quantity,
and other relevant details to ensure both the sender
and receiver have accurate information about the
delivery.

However, unlike a bill of lading, a delivery note does

not act as a document of title or proof of a contract of
carriage. Its primary purpose is to confirm delivery
rather than transfer ownership.

Based on the definitions and differences outlined, a

delivery note cannot act as a substitute for a bill of
lading. This is because the delivery note lacks the
essential function of transferring ownership or acting as
proof of the contract of carriage. Courts have
consistently upheld the importance of the bill of lading
in commercial transactions.

In Sanders Bros v. Maclean & Co (1883), thPe court

emphasized that the bill of lading is not only a receipt
but also a document of title, allowing the holder to deal
with the goods as if they were the owner. A delivery
note, by contrast, serves only as a receipt and cannot
transfer ownership.
Also in Motis Exports Ltd v. Dampskibsselskabet
AF 1912 A/S (2000), the court reaffirmed that a bill of
lading provides legal protection to third parties dealing
with goods, something a delivery note cannot offer.
In conclusion, while both the bill of lading and delivery
note serve as evidence of receipt of goods, their legal
implications are significantly different. A bill of lading is
a crucial document in international trade, serving not
only as a receipt but also as a document of title and
contract of carriage. On the other hand, a delivery note
is merely a confirmation of delivery and does not carry
the same legal weight. Therefore, a delivery note
cannot be regarded as a substitute for a bill of lading.
The authorities cited affirm that the two documents
serve distinct purposes and cannot be used
interchangeably.

Footnotes
(1)(1879) 5 Q.B.D. 38.
(2)[1951] 1 K.B. 55.
(3)

QN.2 GIVE HIGHLIGHTS OF THE DECISION IN

WINBLE & SONS VS. ROSENBURG & SONS (1913)
3 KB 743
Summary of the case
The plaintiff sellers sold the defendants 200 bags of
rice under FOB, (Free on Board) contract. The
defendant (buyer )sent instructions for shipping,
leaving it to the seller to nominate a ship. On 24
August, the goods were loaded but the buyer was not
notified. On 25 August, the ship sailed but the following
day it was lost. Neither party had insured the goods.
The issue at hand was whether the sellers on the facts
of the case were liable.
The key question was: At what point did the risk and
responsibility for the goods pass from the sellers to the
buyers under an FOB contract?

Judgment and Reasoning:

The judges who contributed to the decision and their
key rulings were:
1.Lord Justice Hamilton
He emphasized that under an FOB contract, the seller’s
duty is to place the goods on board of the ship
nominated by the buyer at the agreed port of shipment.
Once the goods are placed over the ship’s rail (i.e.,
loaded onto the ship), the risk of loss or damage passes
to the buyer.
The seller must ensure the goods are properly delivered
to the shipping vessel, but any delays or risks that
occur after the goods are on board are the buyer’s
responsibility — not the seller’s.
Lord Justice Hamilton’s definition highlighted that the
key point of risk transfer is when the goods physically
cross the ship’s rail, which became a widely accepted
principle in commercial law regarding FOB contracts.
 2.Lord Justice Buckley:
He clarified that the seller’s duty is not merely to place
the goods at the disposal of the ship but to ensure the
goods are actually placed on board. However, if the
buyer’s nomination of the ship or any delay by the ship
causes the delay, the seller is not liable.

3.Lord Justice Kennedy:

He agreed with the others and stressed that an FOB
contract places the risk on the buyer from the moment
the goods pass over the ship’s rail. The seller must
fulfill their obligation by delivering the goods to the port
and ensuring they are loaded on the nominated ship,
but any subsequent delay caused by the buyer’s
arrangements is not the seller’s responsibility.

Significance to Free on Board contracts:

The case clarified that in FOB contracts:
 The seller’s obligation is to deliver the goods on
board the buyer’s nominated ship.
 Risk passes to the buyer once the goods are on
board, provided the seller has performed their
obligations.
 Delays caused by the buyer’s actions or the ship’s
readiness are not the seller’s responsibility.
In conclusion this decision solidified the principle that
under FOB contracts, sellers are only responsible for
making the goods available at the agreed place and
time—not for delays beyond their control.