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hello friends,

can any one tell me what are the possible advantages issuing bank may have if the bill of lading is issued "to order" and blank endorsed instead of a "to the order of issuing bank"

regds

shahriar

Dear Shahriar,

If the b/l is issued “to order blank endorsed” instead of “to the order of the issuing bank”, the issuing bank may have the following advantages:

· Not liable to take any action in connection with the goods to which the b/l relates.
· Not liable to any party (carrier, agent, port authorities...) for any liabilities (unpaid freight, demurrage, quay rent ...) in respect of the goods to which the b/l relates.
· No endorsement is made either to the applicant to enable him to take delivery of the goods or to the shipper in case the documents are discrepant and rejected.

In despite of such above mentioned advantages, for the purpose of being able to control the goods until the applicant has fulfilled his obligations under the contract for opening LC, the issuing bank would like the b/l to be made out to its order rather than the one to order blank endorsed.

Best regards,
Nguyen Huu Duc

dear duc,

that was really helpful. but i request a bit more from you.

you said,
"No endorsement is made either to the applicant to enable him to take delivery of the goods or to the shipper in case the documents are discrepant and rejected."

few days back i heard an amazing case where the BL was to the order of issuing bank. the presentation was discrepant and the issuing bank returned the document without any endorsement on the BL saying that it must return the document as it has received. whats your opinion.

one more issue, does this blank endorsement and to the order of issuing bank has anything to do with the title of the goods. i think there is.

some experts say, the reason for an LC to demand a bill of lading made out "To order and blank endorsed" instead of directly consigned to the same issuing bank is to put the issuing bank, in an endorsee position, in order to enjoy a better title than the shipper/beneficiary or a straight consignee.

though such statement makes me confused. a Bill of lading is not a pure negotiable instrument. then how come the endorsee gets better title over the shipper?

looking for your comments

regd

shahriar

I want to add something:
If the b/L is "to order and blank endorsed" than the consignee box of the b/l is should be made out "To order of the Shipper" Not to the order of Issuing bank.

when there is no endorse, a B/L will be "Endorsed endorsed in Blank that means it is endorsed "to Bearer."

Blank endorsement constitutes a bank as a non-party to the contract of carriage in the Bill of lading.So they can avoid potential risk in case of disputee.For example short shipment,payment of freight etc.

Blank endorsement gives bank perfect title of the Bill of Lading.

As the Bill of Lading endorsed in blank,so no need for the bank to endorse it back to the beneficiary.Acutual delivery is enough.

Hi Shahriar,

You’ve made a good comment. Truly appreciated.

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If the discrepant documents, including the b/l made out to the order of the issuing bank, are to be returned to the presenter, the issuing bank may, but is not obligated to, endorse the b/l back to the shipper or to the party that has endorsed the b/l to the issuing bank.

The b/l consigned to a named consignee is a straight b/l which is not transferable. Only the consignee named in the straight b/l can take delivery of the goods. Therefore, if the b/l is consigned straight to the issuing bank instead of to its order, only the issuing bank can take delivery of the goods and it can not transfer the title of the goods to the applicant by making an endorsement on the reverse side of the b/l. In this case the issuing bank must give the applicant a separate letter of authorization to take delivery of the goods.

In addition, under the b/l indicates a straight consignee as the issuing bank, the issuing bank may encounter some other disadvantages. e.g., be liable to related parties such as carrier, port authorities ... for unpaid freight, quay rent, demurrage and other liabilities.

It is because of such disadvantages that a wise issuing bank never requires b/l to be issued straight to its name.

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I agree with you that the b/l made out to order blank endorsed and the b/l made out to the order of the issuing bank have relation with the title of the goods.

B/l is a document of title. If the b/l is made out to order blank endorsed, the party that is the holder in due course of such a b/l will become the lawful owner of the goods. Suppose that 1/3 of the “to order bank endorsed” b/l is forwarded to the applicant, the applicant can present the b/l to the carrier to take delivery of the goods. He may make use of this gap to delay his obligation towards the issuing bank

To avoid this possible risk and for the purpose of being able to control the title of the goods until the applicant has fulfilled his obligation under the contract for opening L/C, the issuing bank would like the b/l to be issued to its order rather than the one issued to order blank endorsed. Once the applicant has fulfilled his obligation towards the issuing bank, the issuing bank will transfer the title of the goods to the applicant by endorsement of the b/l. In case, for some reason, the b/l is required to be issued to order blank endorsed, the issuing bank would insist that a full set of the b/l be presented to its counter.

‮ :?
Regarding the statement “the reason for an LC to demand a bill of lading made out "To order and blank endorsed" instead of directly consigned to the same issuing bank is to put the issuing bank, in an endorsee position, in order to enjoy a better title than the shipper/beneficiary or a straight consignee”, to tell the truth, the statement has also made me confused like you.

The endorsee in the above statement may be understood as the issuing bank - the holder in due course of the “to order blank endorsed” b/l the full set of which is presented to the issuing bank’s counter. Yet, I do not understand how the endorsee can enjoy a better title than the shipper. Maybe, only the expert that gave such a statement can tell us what he meant by saying so.

Best regards,
Nguyen Huu Duc

thank you duc..

Shahriar