Who Must Endorse the Bill of Lading?

When a bill of lading shows one party as shipper “on behalf of” another, a simple but important question arises: who is entitled to endorse the document?

This issue becomes critical under a letter of credit, where a mismatch between the named shipper and the endorser can lead to refusal—even when the underlying trade arrangement is perfectly normal.

Question

Dear Mr. Old Man,

Sorry to trouble you with another query. I would appreciate your advice.

An LC requires the bill of lading to be endorsed to the order of the issuing bank.

The beneficiary of the LC is Company DEF.

The bill of lading presented shows the following:

• Shipper: Company ABC on behalf of Company DEF
• The B/L was endorsed by DEF in favour of the issuing bank

The issuing bank has raised a discrepancy on the ground that the B/L has not been endorsed by the shipper.

As is common in practice, the LC beneficiary is not always the actual shipper, and a third party may act as shipper on its behalf.

Is the discrepancy raised by the issuing bank valid?

Best regards,

Arun Ambar

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Answer

Dear Arun,

Thank you for your question.

Endorsement depends on how the shipper is shown on the B/L. The right to endorse follows the party identified as shipper on the face of the bill of lading.

ISBP 821 E13(a) provides that when a bill of lading is issued “to order” or “to order of the shipper”, it must be endorsed by the shipper. An endorsement may be made by another party, provided it is clearly made for or on behalf of the shipper.

In this case, the B/L shows “ABC on behalf of DEF”. A strict reading would identify ABC as the named shipper, in which case endorsement should be made by ABC.

However, ICC Opinion TA.944jjjjjjjjjrev indicates that where a party is shown as acting “for and on behalf of” another, the principal (DEF) may also validly endorse the bill of lading.

Conclusion:

While the issuing bank’s discrepancy can be justified on a strict reading, there is ICC support for accepting endorsement by DEF. The acceptability may therefore depend on how the agency relationship is interpreted.

Best regards,
Mr. Old Man