“To Order” Endorsements on Bills of Lading

When a Letter of Credit asks for Bills of Lading with a phrase such as “Bills of Lading made out To Order and Blank Endorsed” this means that the Consignee Box on the Bill of Lading has to literally state the words “To Order”. Charles Williams of Thomas Cooper and Stibbard points out that because the Bill of Lading is a document of title, the holder or a named consignee endorsing the reverse side of the bill can negotiate a bill of lading made out “To Order”. This is recognised by mercantile law. This means that property or security interests in the goods, which the Bill of Lading represents, can be transferred by a simple endorsement rather than by a formal assignment.

Although no reference to a “To Order” statement is made in Article 20 of UCP 600, in the International Standard Banking Practice, Article 102 it does state that “If a bill of lading is issued to order or to order of the shipper, it must be endorsed by the shipper. An endorsement indicating that it is made for or on behalf of the shipper is acceptable.”

To endorse a Bill of Lading, the holder of the Bill of Lading (usually the Beneficiary of the Letter of Credit) has to sign on the back of the Bill of Lading. It is a good idea to ensure that the person endorsing the back of the Bill of Lading is the same signatory signing all the other documents in the presentation (although, of course, this does not apply to third party documents, such as Certificates of Origin and Insurance Certificates). Although a signature is accepted by both Shipping companies and banks as an endorsement, it is good practice to always state after the signature the phrase “For and On Behalf of .. (name of Beneficiary).”

If the shipment is going to Africa, the Middle East and some countries in South America and the Far East (always check with the applicant on this matter), it may be necessary to also put a company stamp on the back of the Bill of Lading, but it is important that the mark made by the stamp is in accordance with the wording on the Letter of Credit. Many years ago I was told by a bank that documents presented for a shipment to China were discrepant because we had stamped an endorsement on the back of the Bills of Lading with the company stamp. This company stamp spelt out the word LIMITED in full, whilst the Letter of Credit had used the abbreviation LTD. The bank insisted this was a discrepancy because LIMITED and LTD were different words!

Maria Narancic from Point to Point Export Services is an independent international trade adviser who assists organisations world wide with their international trade projects, documentation, Documentary Credits and import/export training.  She is based in the United Kingdom.  If you require any further assistance with the matters mentioned above, please do contact us by e-mail on info@point-point.com or check out other articles on International Trade on the Point to Point Export Services website at www.point-point.com.

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