Apparent good order and condition

Apparent good order and condition. Under the Hague-Visby Rules the corner is required, after receiving the goods into his charge, to issue to the shipper a bill of lading showing, among other things, the “order and condition of the goods”. The buyer of goods usually requires those goods in an undamaged state. The receipt given by the carrier is the only initial evidence that the goods are indeed undamaged, when received.

While the carrier, master or agent of the carrier is not required to state the quantity and weight that he has good reason to suspect are inaccurate or which he has no reasonable means of checking, this limitation of his responsibility is not extended to the condition of the goods. If any damage is visible or “apparent” the bill of lading must contain a statement of the damage. This would make the bill of lading a “claused” document and a clause stating that the condition of the goods or its packaging is defective makes the bill of lading an “Unclean Bill of Lading”. The buyer does not require defective goods and the bank, which is to pay the seller on behalf of the buyer, will not wish to pay for defective goods. This is the reason that the shipper attempts to insist that the corner issues a “Clean Bill of Lading”, that is without such a clause.

The words “received in apparent good order and condition”, or similar words, by the carrier are a confirmation of the condition of the cargo at the time it was received, the condition having being stated by the shipper when he prepares the bill of lading. The word “apparent” indicates that the master or agent of the carrier is verifying that the goods are in good order and condition as far as he can determine by reasonable examination. For example, if cans of foodstuff are shipped under a bill of lading and it is evident on reasonable examination that some cans are gashed and damaged, allowing the contents to leak away or be spoiled by exposure to the air, this is obviously not cargo which is in “good order and condition ” and the bill of lading should be claused appropriately. If, however, the cans of foodstuff only have tiny pinholes, which are not apparent on reasonable, visible examination, and the contents are damaged during carriage, the carrier or master cannot be liable because the condition of the cargo was “apparently” sound on receipt. Pinholes cannot easily be detected, especially not by the master of a vessel not trained to carry out such inspections.

The statement in the bill of lading as to the order and condition of the goods is important because of the characteristic of the bill of lading as a negotiable document not only because the buyer of the goods wishes to receive goods that are undamaged but also because in the system of Documentary Credits and payment for goods through banks, banks require to be presented with a clean bill of lading before releasing money to the shipper/seller.

The “Uniform Customs and Practice on Bankers’ Commercial Credits” (UCP 1983) defines a “clean transport document” (which includes a marine bill of lading) as being β€œ . . . one which bears no superimposed clause or notation which expressly declares a defective condition of the goods and/or the packaging” (Article 34 of the “UCP 1983”). This can be considered to be a “banker’s clean bill of lading”. The important issue is that banks “… will refuse transport documents bearing such clauses or notations unless the credit expressly stipulates the clauses or notations which may be accepted”.

This provision does not specify the time for which the clause or notation is valid. In The Galatia, 1979, it was said that

“The bill of lading and any notations speak at the date of issue but they may speak about a state of affair which then exists or about an earlier state of affair or both.”

and also:

“Clean” bill of lading is one in which there is nothing to qualify the admission that the goods were in apparent good order and condition . . . Some clearly regard the relevant time as being that of shipment. Some are silent as to what is the relevant time. None refers expressly to any time subsequent to shipment.

As between the shipowner and the shipper . . . the crucial time is shipment. The owner’s prime obligation is to deliver the goods at the contractual destination in the like good order and condition as when shipped.”

Because the bill of lading is so crucial, presently, to the system of documentary credits especially when this operates subject to the UCP 1983, a statement in the bill of lading that the goods are “shipped in apparent good order and condition” (or received for shipment) can be expected to be valid for the time of shipment. If the payment for the goods is to be cash against documents, the buyer (or his bank) will have to pay even though the document may bear a clause stating that damage occurred after shipment.

If a bill of lading contains a statement that the goods are “shipped (or `received’) in apparent good order and condition” and also a clause “weight, measure, quantity, condition; contents and value unknown”, the shipper or other holder of the bill may argue that this is objectionable because the bill is unclear, having two apparently conflicting statements. With regard to “condition”, in particular, “condition unknown” does not qualify the apparent condition when the goods were shipped (or received). Therefore such an-argument-would be likely to fail, especially if general β€œ . . . unknown” clauses are accepted in a particular trade or are present in a printed form in a bill of lading.


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APS (Arrival Pilot Station)