Consignee in the Bill of Lading — How Far Can “On Behalf Of” Go?

Intro:

When it comes to the consignee field on a Bill of Lading under an export LC, wording matters — sometimes down to a single phrase like “on behalf of” or “for the account of.”

A small variation can change how banks interpret the document and who needs to endorse it.

This week’s question from Xona Woo looks at two common scenarios that often puzzle exporters.

QUESTION

Dear Mr. Old Man,

Good day.

1. If an export LC under “Documents Required” specifies that the Bill of Lading must be consigned to the order of the beneficiary on behalf of (or for the account of) the applicant, is this acceptable?
2. If the LC is silent on the consignee, can the Bill of Lading be consigned to the order of the beneficiary on behalf of the shipper, a third-party shipper, or the applicant?

Thank you for your guidance.

Best regards,

Xona Woo

_________

ANSWER

Dear Xona,

Thank you for your interesting question. Here’s how I see it.

1) When the LC requires “to the order of the beneficiary on behalf of (or for the account of) the applicant”

Yes, that’s acceptable. Although not often seen, if the LC expressly requires such consignee wording, the Bill of Lading must follow it exactly.

In this case, the consignee remains the beneficiary, and the phrase “for account of the applicant” is merely descriptive — it doesn’t transfer title.

Therefore, the beneficiary must endorse the Bill of Lading — either in blank or to the order of the applicant — so the applicant can take delivery of the goods.

2) When the LC is silent on the consignee

If the LC doesn’t specify how the consignee should appear, the Bill of Lading may show any consignee form, such as:

• to order, blank endorsed; or
• to the order of the shipper (beneficiary), blank endorsed.

Under ISBP 821 paragraph E13(a), the endorsement may also be made by another named entity, provided it is done for or on behalf of the shipper.

It’s also possible to make the BL out to the order of the applicant — but this is risky for the exporter, because the applicant could claim the goods without paying, especially if one original BL is sent directly to them.

That’s why experienced exporters prefer the BL to be consigned to the order of the issuing bank — ensuring that once the bank releases the documents to the applicant, the bank itself must pay.

I hope this clears up the issue.

Best regards,

Mr. Old Man