Deciphering the differences: Bill of lading vs. charter party bill of lading

Trade Finance Global / Introduction to Letters of Credit | 2024 Guide / Deciphering the differences: Bill of lading vs. charter party bill of lading

Deciphering the differences: Bill of lading vs. charter party bill of lading

In international trade, precise documentation is paramount to ensure smooth transactions. Among the array of documents used, it is important to understand the distinctions between a bill of lading and a charter party bill of lading.

Key concepts of bill of lading

A bill of lading (BL) is a legal document issued by a carrier to a shipper acknowledging the receipt of goods for shipment. It serves as a contract of carriage, evidence of title to the goods, and a receipt for the cargo.

Functions: A bill of lading’s primary functions include documenting the terms of the shipment, confirming the receipt of goods, and outlining the carrier’s obligations for transporting the cargo to its destination.

Legal implications: As a legally binding document, the bill of lading establishes the rights and responsibilities of the shipper, carrier, and consignee. It is a crucial tool for resolving disputes, determining liability, and facilitating claims in case of loss or damage to the cargo during transit.

Key concepts of charter party bill of lading

A charter party bill of lading (CPBL) is a specialised form of the bill of lading issued under a charter party agreement in which a shipowner leases the entire vessel or a portion of it to a charterer for transporting goods.

Purpose: Unlike a standard bill of lading issued by a carrier to a shipper, the charterer issues a charter party bill of lading to the shipper or consignee, reflecting the terms and conditions agreed upon in the charter party agreement.

Characteristics: A charter party bill of lading incorporates the specific terms of the charter party, including details of the vessel, the duration of the charter, freight rates, loading and discharge ports, and other contractual arrangements between the parties involved.

Global impact and applications

Understanding the differences between a bill of lading and a charter party bill of lading is crucial for stakeholders involved in international trade, particularly maritime transportation. 

For example, when a charterer leases a vessel to transport goods under a charter party agreement, issuing a charter party bill of lading reflects the unique contractual arrangements governing the shipment. This document serves as a key instrument for documenting the terms of the charter party, clarifying the rights and obligations of the parties involved, and ensuring compliance with contractual agreements.

Influence on trade documentation practices

The distinction between a bill of lading and a charter party bill of lading underscores the complexity of trade documentation practices in maritime transportation. 

While both documents serve as evidence of the carriage of goods by sea, their issuance and implications vary significantly depending on the contractual relationships between the parties involved. 

The use of a charter party bill of lading reflects the specialised nature of charter party agreements, where parties lease vessels for specific voyages or periods, necessitating tailored documentation to reflect the terms and conditions of the charter party.

Challenges and considerations

Despite their distinct roles and functions, using the bill of lading and charter party bill of lading may present challenges and considerations for stakeholders in international trade. 

For example, discrepancies between the terms of the charter party agreement and the contents of the charter party bill of lading could lead to disputes or conflicts between the parties involved. Additionally, ensuring compliance with regulatory requirements and contractual obligations poses logistical and administrative challenges, requiring meticulous attention to detail and effective communication between all parties.

FAQs

When is it appropriate to use a charter party bill of lading?

A charter party bill of lading is appropriate when goods are transported under a charter party agreement, where a vessel is leased to a charterer for a specific voyage or period. It serves as a contractual document reflecting the terms and conditions of the charter party, providing evidence of the carriage of goods by sea under the agreed-upon arrangements.

How does issuing a charter party bill of lading impact cargo liability and insurance coverage?

Issuing a charter party bill of lading may affect cargo liability and insurance coverage, as it reflects the terms and conditions of the charter party agreement. Depending on the provisions of the charter party, responsibility for cargo loss, damage, or delay may be allocated between the shipowner and the charterer. 

Likewise, insurance coverage for the cargo may be influenced by the terms outlined in the charter party bill of lading, emphasising the need for clear communication and understanding of contractual obligations between all parties involved.

What are the procedural differences between a bill of lading and a charter party bill of lading in cargo claims and disputes?

In cargo claims and disputes, the procedural differences between a bill of lading and a charter party bill of lading stem from their respective roles and functions. A standard bill of lading issued by the carrier serves as a receipt for the goods and a contract of carriage between the carrier and shipper, typically subject to international conventions and maritime laws governing cargo claims.

In contrast, a charter party bill of lading reflects the terms of a charter party agreement. He may involve additional parties, such as the shipowner, charterer, and sub-charterer, complicating the resolution of disputes and claims. 


The distinctions between a bill of lading and a charter party bill of lading are essential for navigating the complexities of international trade, particularly in maritime transportation. Understanding these documents’ roles, functions, and implications is crucial for stakeholders involved in cargo shipments by sea. 

By grasping the nuances of each document and adhering to contractual agreements, businesses can mitigate risks, streamline documentation processes, and ensure the seamless movement of goods in the global marketplace.

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About the Author

Lord is responsible for the TFG Weekly Trade Briefings at Trade Finance Global (TFG).

He is curious about the world of payments and macro-economics, with a specific focus on supply chains in Asia.

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