Documents used in international trade

Documents of title, Definition of mate's receipt

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This page was last updated on 05 May 96.

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Documents of title

Summary

A document of title (at common law) transfers constructive possession to the goods, and also may transfer property. Parties to international sales of goods, and banks advancing money under a commercial credit, ideally need a document of title for maximum security, but there are often good commercial reasons against this. Even documents of title cannot always be guaranteed to provide security (see The Future Express, which would however be decided differently today), but to accept a document which is not a document of title can be very unwise: e.g., Nippon Yusen Kaisha v. Ramjiban Serowgee - sellers took mate's receipt).

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What are recognised as documents of title

The only document that is recognised as a document of title at common law without proof of custom is probably the shipped bill of lading (see, e.g., Lickbarrow v. Mason). There is some authority that other documents can be, for example received for shipment bills of lading, but these authorities are not conclusive, and there is authority the other way. A mate's receipt is not a document of title without proof of custom (Nippon Yusen Kaisha v. Ramjiban Serowgee), but can become a document of title on proof of custom (Kum v. Wah Tat Bank).

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What a document of title must do

1. The holder of the document must be able to demand possession from the carrier; the carrier must be under an obligation to deliver to the holder, and must not deliver to anybody else.

2. Nobody else, apart from the holder of a document of title, must be able to demand possession; the carrier should be entitled to refuse to deliver to anybody else.

3. The carrier must be protected from suit if he delivers against production of a document of title, even if the person to whom he delivers does not have title to the goods.

The problem in the first case is the cause of action (reason for failure in The Future Express). The cause of action will be either conversion or breach of contract: see, e.g., Sze Hai Tong Ltd. v. Rambler Cycle Co. [1959] A.C. 576; Sucre Export S.A. v. Northern River Shipping Ltd., The Sormovskiy 3068 [1994] 2 Lloyd's Rep. 266. Contrast the situation where there is no document of title, as in Nippon Yusen Kaisha v. Ramjiban Serowgee [1938] A.C. 429, where the holder of a mate’s receipt had neither property nor possession, and hence no cause of action against a carrier who delivered to someone else.

In the second case, the carrier needs to find a defence to a conversion action, should the true owner not be the lawful holder of the document of title. Possibilities include contractual or volenti defences (which will not necessarily apply if the shipper wrongfully obtained property before bills of lading were issued), or a general defence that he has not dealt wrongfully with the goods, as a conversion action would require.

The situation in The Houda [1994] 2 Lloyd's Rep. 541 was different, where charterers (unsuccessfully) claimed the right to demand that shipowners deliver without production of a bill of lading - the issue was determined on a construction of the charterparty.

The third case is also about defences, and there is not much problem where delivery is against an original bill of lading (see Glyn Mills Currie & Co. v. East and West India Dock Co. (1882) 7 App. Cas. 591). It may be difficult, though, to extend Glyn Mills reasoning to other forms of documentation.

To what extent can a carrier who has no realistic commercial choice but to deliver without production protect himself, e.g., by indemnity from the person giving the instruction or the person to whom delivery is made. In Sze Hai Tong Ltd. v. Rambler Cycle Co. [1959] A.C. 576, it was conceded (but never decided) that the indemnity was enforceable, but you should consider whether (or rather when) the principles in Brown Jenkinson v. Percy Dalton [1957] 2 Q.B. 621 might apply. An indemnity was also enforced in The Sagona [1984] 1 Lloyd's Rep. 194, but it is also clear from that case that it will not always be.

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This page was last updated on 05 May 96.

Mail Paul Todd

SLAPNT@cf.ac.uk

Definition of mate's receipt:

The mate's receipt is an acknowledgement that the shipowner has received the goods in the condition stated therein, but usually has no further legal relevance. It is usually a preliminary document only, which is later given up in return for the bill of lading, but occasionally is the only document used, in which case it may operate as if a document of title, as long as it is not marked "Non-negotiable": Kum v. Wah Tat Bank.

Possession of the mate's receipt is evidence of title but it is not conclusive, so the shipowner is not bound in all cases to deliver the bill of lading to the person who delivers up the mate's receipt. See, e.g., Nippon Yusen Kaisha v. Ramjiban Serowgee; Cowas-Jee v. Thompson.

It was suggested in Pyrene v. Scindia that in some circumstances an f.o.b. seller may be required to obtain a mate's receipt and to hand it to the forwarding agent to enable him to obtain the bill of lading.

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This page was last updated on 05 May 96.

Mail Paul Todd : SLAPNT@cf.ac.uk