What Is a Claused Bill of Lading?

Claused bill of lading refers to a specific kind of bill of lading in the shipping of goods. A claused bill of lading shows a shortfall or damage in the delivered goods. A bill of lading is a legal document that tracks a shipment from start to finish. When a bill of lading is claused, it means that the legal bill of lading shipment did not provide what was promised.

In a situation that produces a claused bill of lading, the receiver, not the shipper, declares the claused bill of lading.

How a Claused Bill of Lading Works

A claused bill of lading is used when shipped products deviate from the delivery specifications or expected quality. People also call a claused bill of lading a "dirty bill of lading" or "foul bill of lading."

If an individual receiver issues a claused bill of lading, the exporter may face future difficulty. For example, if the goods arrive and the receiver deems them damaged or determines some of the goods went missing, the exporter may experience trouble receiving payment.

When shipping goods, purchasers rely on letters of credit for payment. However, most banks refuse to accept any claused bills of lading. Thus, if a receiver files a claused bill of lading and the exporter relies on letters of credit to pay for the goods originally, they will not receive repayment for the goods, and thus will experience a loss.

Bill of Lading vs. Claused Bill of Lading

In general, a bill of lading is a legally binding document that includes both the shipper and carrier. These documents detail the type, quantity, and destination of the goods being carried. For example, if a shipping company ships any cargo, a completed bill of lading containing all the details of the cargo will accompany the shipment.

The shipping company uses the bill of lading upon delivery as well. When the company delivers the shipment to its destination, the shipping company must deliver the bill of lading at the same time, and the receiver must sign it upon completed delivery.

In the case of a claused bill of lading, the delivered goods either have not all arrived or have arrived damaged in some way. There are several kinds of bills of lading that cover various situations that may occur during shipping.

For example, a through bill of lading for a bill of lading covers the transportation of goods both domestic markets and across international borders. Governments often require a through bill of lading when a company exports goods to another country. By comparison, an inland bill of lading describes a contract for the overland transportation of goods, as opposed to overseas shipments.