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What is stale bill of lading?

A bill of lading that is not presented within 21 days after shipment is called a stale bill of lading. Learn more about it in this blog.

Documentation is an important step in the process of international shipping, which ensures smooth export of goods and seamless payments. With every shipment that is exported from India, a few export documents are required. To avoid hassles during shipment, a bill of lading is used, which acts as the ‘Evidence of Contract’ between the shipper and the carrier, as a proof that there is an agreement between the parties.

What is stale bill of lading?

When a bill of lading is submitted to the bank or delivered to a consignee after the cargo has reached the destination, it is referred to as a stale bill of lading. The bill of lading and other shipping documentation needs to be delivered to the bank not more than 21 days from the date of shipment specified in the bill of lading, as per international trade practices¹.

Importance of stale bill of lading

Here are a few reasons why stale bill of lading is important²:

Legal validity:

A stale bill of lading serves as legal proof of contract between the shipper and the carrier. It contains crucial information about goods, their condition, and terms and conditions of transportation. In case of disputes or discrepancies, stale bill of lading can be used as evidence.

Title transfer:

In international trade, a stale bill of lading allows transfer of title to the goods, serving as a document of ownership. It provides the holder with the right to claim goods at the destination port. Without a valid bill of lading, the consignee may face challenges in taking possession of the goods.

Negotiation and financing:

A stale bill of lading can be used as a negotiable instrument, allowing for transfer of rights and liabilities associated with the goods. Financial institutions often require a valid bill of lading as collateral for trade finance, such as letters of credit or bank guarantees.

Risk management:

The stale bill of lading serves as a crucial risk management tool for cargo owners and insurers. It contains important information regarding the condition of goods at the time of shipment and any visible damages or defects.

Customs clearance:

Customs authorities worldwide require a valid bill of lading for clearance of imported goods. The stale bill of lading acts as proof of the shipment's origin, contents, and compliance with import regulations.

Stale bill of lading vs. stale documents

A stale bill of lading refers to the contract document of carriage between the shipper and the carrier. It includes details about goods, their condition, and terms of transportation. When a bill of lading is considered stale, it means that it has not been presented for payment or acceptance within the prescribed time frame. On the other hand, the term ‘stale documents’ encompasses a broader category of documents related to international trade. This can include invoices, certificates of origin, insurance policies, packing lists, and other supporting documentation. Stale documents refer to any of these documents that have not been submitted or processed within the required timeframe. The importance of a stale bill of lading lies in its legal validity, title transfer, negotiability for financing, risk management, and customs clearance. It is a crucial document that ensures a smooth flow of goods and protects the rights and liabilities of all parties involved in the shipment process³.

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Frequently Asked Questions

What is a stale invoice?

A stale invoice is an overdue invoice that has not been paid within the timeframe.

Can a bill of lading be treated as a stale bill of lading?

Yes, a bill of lading can be treated as a stale bill of lading if it is not presented within the specified timeframe for payment/acceptance.

Published on June 25, 2023.

Sources:
1. https://www.letterofcredit.biz/index.php/2019/06/02/stale-bill-of-lading/#:~:text=A%20bill%20of%20lading%20that,bank%20after%20the%20presentation%20period.
2. https://howtoexportimport.com/STALE-BILL-OF-LADING-What-does-it-mean--552.aspx
3. https://iccwbo.org/publication/ucp-600-uniform-customs-and-practice-for-documentary-credits/
4. http://www.wcoomd.org/-/media/wco/public/global/pdf/topics/valuation/tools/guide-to-customs-valuation-and-transfer-pricing_english.pdf
5. https://efinancemanagement.com/international-financial-management/stale-bill-of-lading

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