Straight Bill of Lading
In a straight bill of lading---non-negotiable bill of lading---the title to the goods is conferred directly to a party named in the letter of credit (the importer usually), as such the title to the goods is not transferable to another party by endorsement. In other words, the bill of lading is not negotiable.
The letter of credit calls for a straight bill of lading usually by using such words as "consigned to [the named party]" or "issued in the name of [the named party]". The named party can obtain the goods directly from the carrier at destination. Therefore, unless the cash payment has been received by the exporter or the buyer's integrity is unquestionable, the use of a straight bill of lading is risky (please see Fly-By-Night Importers for related information).
Order Bill of Lading
In an order bill of lading---negotiable bill of lading---the title to the goods is conferred to the order of shipper or to the order of a named party in the letter of credit (the issuing bank usually).
The purpose of an order bill of lading is to protect the interest of the shipper or the named party to the title to the goods.
The title to the goods is transferable to another party by endorsement, usually on the reverse (back) of the bill of lading (B/L) by the title holder of the B/L. If the endorsement of B/L is required in the letter of credit (L/C), all the originals must be endorsed.
The letter of credit may calls for an order bill of lading that is: (1) To order blank endorsed or To order of shipper and blank endorsed, (2) To order of shipper and endorsed to order of [the named party], or (3) To order of [the named party (other than the shipper)].
To order blank endorsed or
To order of shipper and blank endorsed
Unless provided otherwise, a consignment that is "to order" means to order of shipper. The "blank endorsed" means without specifying to whom the bill of lading (B/L) is transferred. In such instance, whoever bears the B/L after endorsement holds the title to the goods.
If the sample letter of credit requires a B/L that is "to order blank endorsed", as such enter the words "To Order" in the Consignee field in the bill of lading and other documents/forms.
In a "to order blank endorsed" bill of lading (B/L), technically speaking whoever bears the B/L after its issuance holds the title to the goods.
If the sample letter of credit requires a B/L that is "to order of shipper and blank endorsed", as such enter the words "To Order of UVW Exports" in the Consignee field, since the shipper in such L/C is UVW Exports.
In both the above sample cases, the B/L must bear blank endorsement of the shipper as follows:
UVW Exports
(plus the authorized signature)
And, entering the words "To Order" or "To Order of UVW Exports" in either of the above cases is correct, but to avoid rejection of documents, always follow the wordings stipulated in the letter of credit as a precaution.
To order of shipper and endorsed
to order of [the named party]
This letter of credit (L/C) requirement resembles the "to order of shipper and blank endorsed", except that the words "To Order of [the named party]" must be indicated over the shipper's endorsement.
If the sample letter of credit requires a bill of lading that is "to order of shipper and endorsed to order of The Moon Bank", as such enter the words "To Order of UVW Exports" in the Consignee field in the bill of lading and the endorsement as follows:
To Order of The Moon Bank
UVW Exports
(plus the authorized signature)
To order of [the named party (other than the shipper)]
The named party under this letter of credit (L/C) requirement most often is the issuing bank. The L/C does not call for an endorsement, thus the exporter does not have to endorse the bill of lading.
The sample letter of credit requires a bill of lading "to order of The Sun Bank, Sunlight City, Import Country", as such enter the words "To Order of The Sun Bank, Sunlight City, Import Country" in the Consignee field in the bill of lading and other documents/forms.
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