The Order bill of lading document is a form of a negotiable instrument. This bill of lading is made negotiable when it states that delivery is to be made to the further order of the consignee using words such as “delivery to A Ltd” or “to order”.
An order bill of lading document is a document that is made out to the order of the foreign importer or its bank, or the order of the export firm. Its bank, or another designated party. Under maritime law, an ocean bill of lading is a form of order bill of lading. Once a bill of lading document issued under a voyage charter is negotiated to a bona fide purchaser. It becomes the governing contract between the carrier and the holder of the bill.
1. “Order Bill of Lading” = “Negotiable Bill of Lading”
2. “Order Bill of Lading” = “Transferrable”
3. “Order Bill of Lading” = “Original Document”
4. “Order Bill of Lading” = “Letter of Credit”
To put it all together, an Order Bill of Lading document is a Document of Title used in logistics that is “Negotiable”. Therefore the owner of the shipped cargo is “Transferrable”. It is prepared as an “Original Copy” that is often used with a “Letter of Credit” to facilitate a safe transfer of both the vehicle and money between the buyer and the seller.
Order BL mostly involves bank financing (Letter of Credit)
Now let’s build on the understanding of the Order Bill of Lading is negotiable and transferrable. Also, a negotiable bill of lading allows the banks to play a role in the trade. By stepping in as a custodian to the vehicles/goods and undertaking the risk of financing the shipment. Banks use a credit document called a Letter of Credit.