Does a Struck-Out Endorsement on a Bill of Lading Require Authentication?

A bill of lading issued “to order” is commonly endorsed by the shipper after issuance to transfer title to the goods. But what happens if an endorsement is mistakenly made by the wrong party, then crossed out and replaced by the correct endorsement?

Does such a change constitute a correction to the bill of lading requiring authentication under ISBP 821 paragraph E24, or is it simply a matter of the rightful holder making the proper endorsement?

The following question examines this practical issue, which has generated differing views among documentary credit practitioners.

Question

Dear Mr. Old Man,

I have the following question regarding the endorsement of a bill of lading.

• Shipper: ABC Co.
• Consignee: To order
• The bill of lading was initially blank endorsed by PQR LLC.
• Subsequently, the endorsement by PQR LLC was struck out, and a separate blank endorsement by ABC Co. was made on the terms and conditions page.

Should the deletion of PQR LLC’s endorsement be authenticated by the shipping company (or its agent), or is such authentication unnecessary because the correct party has now provided the blank endorsement?

I believe the deletion should be authenticated, but there are differing views on this issue.

Kind regards,

RM

______

Answer

Dear RM,

Thank you for your interesting question.

ISBP 821 paragraph E24 provides that any correction of data on a bill of lading is to be authenticated. Such authentication must appear to have been made by the carrier, the master (captain), or one of their named agents, who may be different from the agent that issued or signed the bill of lading, provided the agent is identified as acting for the carrier or the master.

In my opinion, however, paragraph E24 does not apply to the situation you have described.

The purpose of paragraph E24 is to govern corrections to the contents of a bill of lading made by or on behalf of the carrier, such as amendments to shipment data, vessel details, ports, dates, quantities or other information contained in the transport document.

In contrast, a shipper’s endorsement is not part of the data completed by the carrier when the bill of lading is issued. When a “to order” bill of lading is issued, the carrier normally delivers the original bills of lading to the shipper without any endorsement. It is then for the shipper, as the lawful holder, to endorse the bill of lading in blank or to the order of another party, as required by the letter of credit.

In your example, the initial endorsement by PQR LLC was apparently made by the wrong party. ABC Co., as the shipper, struck out that erroneous endorsement and subsequently made its own blank endorsement. Since this does not constitute a correction of carrier-generated data on the bill of lading, I do not consider it to be a correction falling within ISBP 821 paragraph E24.

Accordingly, in my view, authentication by the carrier or its agent is not required. The effectiveness of the endorsement depends on whether it has been made by the party entitled to endorse the bill of lading, rather than on authentication by the carrier.

As you rightly noted, there are differing views on this issue. My opinion is that authentication is not necessary in the circumstances described.

Best regards,

Mr. Old Man