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BIFAlink


Policy & Compliance


www.bifa.org


The perils of switch bills of lading


It is important to be cautious when requested to issue a switch bill of lading and to be fully aware of the many potential liabilities


The practice known as ‘switching’ bills of lading refers to the circumstance where a request is made to the issuer/carrier (or the carrier’s agent) to issue a second set of bills of lading in substitution for the original documents issued at the time of shipment. This often occurs at a port other than the load port and subsequent to initial loading. Whilst there are many reasons to do so,


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switching bills of lading is usually requested by traders who wish to conceal the identity of the supplier and the end-user from each other. The reasons are normally quite legitimate, but issuers must be on their guard when dealing with such requests. The main feature of switching is that it is done without the cargo being handed over at the same time; generally it occurs well away from the route the cargo is taking. The immediate


issue is whether the party requesting switch bills has the right to do so. In terms of ‘negotiable’ bills (those issued ‘to


order’ or ‘to order or assign’ of either the shipper or the consignee), the shipper in general retains the right to re-direct the shipment before endorsement of the document or delivery of the cargo to the lawful holder of the bill. Therefore, if you have issued a negotiable bill of lading and the shipper requests you to amend the name of the consignee and/or the place of delivery, they must return all the original documents to you, free of endorsement, before you agree to make any change.


Importance of originals It is of utmost importance that all the originals of the first bill of lading are collected and cancelled before the replacement set is produced and issued. That is the carrier’s only guarantee that the party making the request is truly the owner of the cargo and has rights to its further disposal. The bill of lading issuer must ensure that only one set for the same consignment is in


February 2019


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