#29 A bill is born
from Case by Case Hosted by Floyd Zadkovich
In this episode, Joe Gosden, FZ partner, joins Luke to discuss a fascinating topic in shipping law. A bill of lading in the hands of a charterer is a mere receipt of goods. It is not yet a contract of carriage between bill holder and carrier. When that bill is endorsed, it becomes a contract of carriage in the hands of the non-charterer endorsee. But what happens if the shipper/charterer holding the bill as a receipt novates away the charterparty. Is the bill operable in the hands of that shipper (and no longer the charterer)? We study the status of the bill - is it only "suspended" when in the hands of the charterer, or does it "spring to life" on endorsement? A birth, so to speak. There is also an interesting causation argument on whether the bank would have insisted upon presentation of original bills in any event. If not, then did the failure to present OBLs cause any loss? Joe and Luke also discuss some of the complications for trade finance banks/companies in protecting their position with adequate security and a few war stories they've experienced along the way.
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