Date01 December 1995
Published date01 December 1995

This article discusses the circumstances in which a bill of lading confers rights of possession and rights of suit on its holder.


It is well-known that a bill of lading serves three main functions under English as well as Singapore law: as a receipt for goods handed to the carrier, as evidence of the contract of carriage and as a document of title.

Save for an interesting point which has come up with the English Carriage of Goods by Sea Act 1992 (the Singapore Bills of Lading Act, Cap. 384) which will be addressed towards the end of this article, the role of a bill of lading as a receipt no longer raises difficult issues of law. Suffice it to say very generally here that as a receipt, it is evidence (prima facie or conclusive depending on the circumstances) of the quantity and condition of the goods when shipped on board (or received for shipment as the case may be).

The main object of this article is to examine in what circumstances:

  1. (1) A person in possession of the bill of lading becomes entitled to possession of the goods as against the carrier; and

  2. (2) A person becomes a holder of the bill of lading so as to have rights of suit under it.


It is often said that a holder of the bill of lading is entitled to demand possession of the goods from the carrier, because the bill of lading is the symbolic “key to the warehouse”. If “holder” is given its restricted meaning (i.e. consignee, indorsee or bearer of a bearer bill), there is nothing objectionable in the phrase. Unfortunately, the legal import of the word “holder” is often forgotten when the proposition is cited, leading to a common fallacy that anyone who “holds” (in a popular sense) the bill of lading can demand possession of the goods from the carrier.

Leaving bearer bills aside, a bill of lading is an undertaking by the carrier to deliver to either the consignee or his order. It is first of all the consignee who can demand possession. The consignee can, of course, “order” otherwise, and does so by indorsing the bill of lading to somebody else. This indorsee then becomes entitled to possession on the face of the bill. If this indorsee is so minded, he can tell the carrier that he is transferring such right to yet another person. This is done by further indorsing the bill.

If the bill of lading is made out to A or A’s order, and B comes into possession of the bill, it does not mean that B can demand possession from the carrier. Likewise, if A has indorsed it to X, Y cannot by mere possession

of the bill claim a right of possession to the goods. The explanation for this is not merely that B or Y may not be “lawful” holders, or holders in good faith, but that they are not “holders” within the concept at all. They are in possession of the bill, yes, but they are not on the face of the bill, persons whom the carrier has undertaken to deliver the goods to.

As against this, the argument is made that a bank who is the pledgee of a bill is entitled to possession of the goods. The answer to this is that a good pledge should come with an indorsement so that proprietary rights, albeit of the “special” kind, can be transferred.1 One ought to be aware that in the celebrated case of Sewell v Burdick, the pledgee was also the indorsee of the bill.2

It may have happened in practice that occasionally the bill, if it is not a bearer bill, is not indorsed to the bank. While the bank has possession of the bill, and may even have a lien on it, this per se does not translate into possessory rights in the goods. In order to have such rights, the bill must be indorsed to the bank, or as commonly practised, indorsed by the consignee or previous indorsee, in blank. The latter (in effect creating a bearer bill) renders anyone coming into possession a holder, as no specific indorsee is specified.3

It may be said that the carrier would not know for sure anyway whether the person identifying himself as the consignee or indorsee is actually such a person. It is possible that the carrier has discharged his duty if he honestly believes that the person making a demand is the consignee or indorsee.4 This is, however, very different from saying that the person presenting the bill need not even say that he is the consignee or indorsee. Whatever the standard of care required of the carrier in ascertaining the identity of the consignee or indorsee, it is altogether a different premise from the suggestion that any person in possession of the bill can tell the carrier that he is not the indorsee or consignee, and at the same time demand possession.

If anybody in possession of the bill of lading can demand possession of the goods, there is no purpose in an indorsement. For the same reason, a proper indorsement cannot be by a stranger to the bill. A stranger whose name appears on the bill as indorser confers no rights on the purported indorsee. The stranger’s signature is a mere defacement of the bill. This is true even if a stranger forges the signature of the current holder.

A forged indorsement is no indorsement.5 A purported indorsee claiming under a forged indorsement has no right to possession of the goods from the carrier. Again, this does not mean that the carrier has a duty to verify signatures. The discharge of his duty is not conditional upon delivery of the goods to a bona fide indorsee.6

As an end-note, it must be stated that not every consignee or indorsee with possession of the bill of lading is entitled to claim possession of the goods. The transfer of the bill of lading, even if done with the proper indorsement, does not by itself transfer a right of possession to the goods. Together with the transfer of the bill of lading, there must be an intention as well as an ability to transfer property in the goods.

In The Future Express, Lloyd L.J., delivering the judgment of the Court of Appeal, held that a bank which is named consignee and is transferred possession of the bill of lading is nonetheless not a pledgee of the goods unless: firstly, the transferor intended to pass a special property in the form of a pledge7 and secondly, the transferor is capable of passing such property in the sense that he has general or special property in the goods.8 A bill of lading being only a document transferable by delivery, and not a true negotiable instrument, the transferee obtains no better interest than the transferor is capable of transferring.9

While the decision of the Court of Appeal is in line with general principles, it will cause some consternation to banks issuing or confirming letters of credit because such banks will not necessarily obtain a valid pledge in respect of the goods even if the bills of lading are consigned or indorsed to them. They will have to be certain that the transferors, the sellers or buyers as the case may be, have property in the goods. This is an extra burden to banks in letter of credit transactions.10

The shipper’s position merits closer attention. It is widely believed that a shipper who holds the bill of lading can do two things: first, indorse the bill; and secondly, demand possession of the goods. This is, however, an over-simplification.

Where the shipper is neither consignee nor indorsee, he nevertheless retains certain rights in respect of a bill of lading as long as it has not left his hands since its issue.11 He has a right to have the bill of lading amended by the carrier, provided the amendment does not amount to a misrepresentation of facts. It flows from this that he retains the power to decide who should be consignee of the goods. As a natural extension of this, he can demand possession of the goods since he can always amend the bill to name himself consignee. If the shipper does not exercise his right to do so, he does not have a right to claim possession of the goods under the bill of lading.12

However, where the bill of lading has left his possession and “gone through the circuit” of consignee/indorsees, he should no longer have the right to have the bill of lading amended. If it comes back into his possession, he must be an indorsee to acquire any right to demand possession of the goods or to further indorse it on.13 Even if the bill of lading never left his possession, the shipper has no right to possession of the goods if ownership in the goods has already passed.14


Where rights of suit are concerned, the obvious place to start is the English Carriage of Goods by Sea Act 1992 (“COGSA 92”), which replaced the problematic Bills of Lading Act 1855. COGSA 92 was accepted as part of Singapore law via The Application of English Law Act 1993 and is...

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