Chapter 5

Bill of Lading

“ A written account of goods shipped by any person signed by

the agent of the owner of the vessel, or by its master,

acknowledging receipt of the goods, and promising to deliver them safe at the port directed, damages of the sea excepted.”

Description and History

DescriptionThe Bill of Lading is issued by a carrier, which details a shipment of merchandise, gives title, and requires a carrier to deliver the merchandise to the appropriate party.HistoryThe Bill of Lading evolved with the growth of shipping in the medieval world. Merchants needed a way of knowing what had been loaded onto ships, and began to issue signed receipts to certify the loading of goods, and the condition of those goods at the time of loading. With the growth of mercantilism these receipts began to be used as the title to the goods.

http://en.wikipedia.org/wiki/Bill_of_lading

Three Purposes:

1. It conveys title to the merchandise;

2. It is the receipt of acknowledgement of the goods signed by the carrier;

3. It serves as a contract of transportation between the shipper and the carrier.

Uses of the Bill of Lading

The principal use of the Bill of Lading is as a receipt issued by the carrier once the goods have been loaded onto the vessel. This receipt is used as proof of shipment for customs and insurance purposes, and also as commercial proof of completing a contractual obligation.

http://en.wikipedia.org/wiki/Bill_of_lading

Bill of Lading as Receipt

Bill of Lading as Title

The Bill of Lading confers title to the goods to the consignee noted on the Bill of Lading. The Bill of Lading may also be made out "To Order", which confers title to the goods to the holder of the Bill of Lading.

http://en.wikipedia.org/wiki/Bill_of_lading

Bill of Lading as Negotiable Instrument

Because the Bill of Lading represents title to the goods detailed upon it, the BoL can be traded in much the same way as the goods may be, and even borrowed upon if desired.

http://en.wikipedia.org/wiki/Bill_of_lading

Sample Bill of Ladingform

Mortgage“A conditional conveyance of property as

security for the payment of the debt or the performance of some other obligation.”

A mortgage loan is a loan secured by real property through the use of a mortgage note which

evidences the existence of the loan and the encumbrance of that realty through the granting of

a mortgage which secures the loan. However, the word mortgage alone, in everyday usage, is most often

used to mean mortgage loan.http://en.wikipedia.org/wiki/Mortgage_loan

History From the Latin “mortus” meaning dead, and “vas” signifying a pledge. And the Old French mortgage, literally a deathgage or pledge is a conveyance of property as security for a debt, which is lost or becomes dead to the debtor if the money or

the interest due thereupon is not paid on a certain day.

The word mortgage is a French Law term meaning "death contract", meaning that the pledge ends

(dies) when either the obligation is fulfilled or the property is taken through foreclosure.

http://en.wikipedia.org/wiki/Mortgage_loan

Objects which may be Mortgage

a. Immovablesb.Alienable real rights in

accordance with the laws imposed upon immovables. Nevertheless, movables may be the object of chattel mortgage.

Two Kinds of Mortgage:CHATTEL MORTGAGE AND MORTGAGE ON

REAL PROPERTY

By Chattel Mortgage:

Personal property is recorded in the Chattel Mortgage Register as the security for the performance of an obligation.

Example:An automobile which is pledged as a security of a loan obtained by a mortgagor. If the movable instead of being recorded, is delivered to the creditor or third person, the contract is pledged and not a chattel mortgage.

By Mortgage on personal or real property

It may be on land and building, factories, machinery, and the like. Torrens title on real estate may be pledged to secure loans. To secure

loans bonds and stocks may also be pledged.

Other Types of MortgageClose-end Mortgage and Open-end Mortgage

Close-end mortgageIt is used to refer to mortgage by a

corporation used as collateral security for a loan of a fixed amount.

Open-end mortgageIt permits the sale of additional bonds at a

later date under original mortgage.

Limited Open-end Mortgage

Devised purposely to eliminate the shortcomings that are

present in both the close-end mortgage and open-end

mortgage

Pledge

•(Pledge or pawn) in law, is “bailment of goods” by a debtor to his creditor to be kept till the debt is discharged.

•It is also used to denote the property which constitutes the security.

•It is the pignus of Roman Law from which most of the modern law on the subject is derived.

Objects of Pledge

“all movables which are within the commerce of man may be

pledge, provided they are susceptible of possession.”

Requisites to Pledge and Mortgage

1. That they be constituted to secure the fulfillment of a principal obligation;

2. That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged;

3. That the persons constituting the pledge or mortgage have the free disposal of their property, and in the absence thereof, that they may be legally authorized for the purpose.

Warehouse Receipts

A warehouse receipt is a document that provides proof of ownership of commodities (e.g., bars of copper) that are stored in a warehouse, vault, or depository for safekeeping.

Warehouse receipts may be negotiable or non-negotiable. Negotiable warehouse receipts allow transfer of ownership of that commodity without having to deliver the physical commodity.

Most warehouse receipts are issued in negotiable form, making them eligible as collateral for loans. Non-negotiable receipts must be endorsed upon transfer. Warehouse receipts are regulated by the Uniform Warehouse Receipts Act.

Warehouse Receipts

Warehouse receipts also guarantee existence and availability of a commodity of a particular quantity, type, and quality in a named storage facility. It may also show transfer of ownership for immediate delivery or for delivery at a future date. Rather than delivering the actual commodity, negotiable warehouse receipts are used to settle expiring futures contracts.

Warehouse receipts may also indicate ownership of inventory goods and/or unfinished goods stored in a warehouse by a manufacturer or distributor.

Sample Ware -house Receipt

Trust Receipts

A trust receiptneed not be in any form but it must substantiallycontain the following:1. A description of the goods, documents or instruments subject of the trust receipt

2. The total invoice value of the goods and the amount of the draft to be paid by theentrustee 

3. An undertaking or a commitment of the entrustee:a. to hold in trust for the entruster the goods, documents or instruments therein describedb. to dispose of them in the manner provided for in the trust receipt; andc. to turn over the proceeds of the sale of the goods, documents or instruments to the entruster to the extent of the amount owing to the entruster or as appears in the trust receipt or to return the goods, documents or instruments in the event of their non-sale within the period specified therein.

Trust Receipts

4. The trust receipt may contain other terms and conditions agreed upon by the parties inaddition to those hereinabove enumerated provided that such terms and conditions shallnot be contrary to the provisions of this Decree, any existing laws, public policy or morals, public order or good customs.

5. Trust receipts are denominated in Philippine currency or acceptable and eligible foreigncurrency.

Trust Receipts

Sample Trust Receipt