Letter of Credit Forum

Just to add a few points to Bob's comments, all of which I agree with.

The concept of sea waybills originated from the general structure of  a "waybill" document covering rail, road and air transport, and essentially to serve the purpose of  handover of the consignment, where the goods often arrive before the documents, and for the goods to be handed over on proper identification of the consignee, rather than on production of the waybill itself.

Two areas of risks arise:

For the buyer- The seller may redivert the goods to another consignee, without the original consignee's prior knowledge. This risk can be mitigated by the buyer requiring that the waybill contains a "NODISP" (non-disposal) clause, thereby preventing the consignor taking the above course of action. A problem would arise however, if the consignee were to reject the consignment, and thus the consignor would be unable to quickly reconsign the goods. Specific remedies do exist to counteract this.     

For the seller -  Risk of buyer taking fraudulent delivery. This may be mitigated by the consignor changing the delivery instructions to the carrier, requiring presentation of the waybill, or an intermediary bank (LC issuing bank) being named as consignee. The latter would enable the bank to assign its rights as consignee, once the buyer's obligations are complete.

In the most basic terms, a B/L has three main characteristics:

1. receipt from the carrier to the shipper for taking charge of the goods

2. evidence of the contract of affreightment

3. document of title, requiring one signed original to be presented to claim the goods.

A Sea Waybill has only the first two characteristics but not the third. In this regard it is similar to an Air Waybill.

As far as L/Cs go, the vast majority require presentation of a full set of the B/L to ensure that the buyer/applicant cannot take delivery of the goods without having in their possession the B/L received from the issuing bank.

An L/C requiring just a Sea Waybill, or a copy of the Sea Waybill, misses out on this essential point, and the buyer/applicant can take delivery of the goods at their end regardless of whether the shipper/beneficiary has been paid under the L/C or not.

I would always, repeat, always advise my export clients that it is most unwise to agree to presentation of a Sea Waybill, or even indeeed presentation of 2/3 neg B/Ls with the third going direct to the buyer/applicant.

I hope this helps.

Regards,

Bob