Bill of lading

Definition

A bill of lading is a legal document issued by a carrier to acknowledge receipt of cargo for shipment. It serves as a shipment receipt, a document of title, and a contract between the shipper and the carrier.

5 Must Know Facts For Your Next Test

1. A bill of lading provides proof that the carrier has received the goods from the shipper.
2. It acts as evidence of the contract of carriage between the shipper and the carrier.
3. The bill of lading can be negotiable or non-negotiable, affecting how ownership of the goods can be transferred.
4. It includes key details such as description, quantity, and destination of the goods.
5. This document is crucial in international trade and finance since it helps facilitate trade credit operations.

Review Questions

• What are the three main functions of a bill of lading?
• How does a negotiable bill of lading differ from a non-negotiable one?
• Why is a bill of lading important in trade credit?

Related terms

Trade Credit: An arrangement where suppliers allow buyers to purchase goods or services on account, paying for them at a later date.

Working Capital: The difference between current assets and current liabilities, indicating short-term financial health.

Letter of Credit: A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount.