When is a bill of lading ‘spent’?

 

In The Yue You 9023 [2019] SGHC 106 the High Court of Singapore has considered the issue of title to sue when spent bills of lading are involved under section 2(2)(a) of the Bills of Lading Act (equivalent to UK COGSA 1992). The bank held bills of lading as security for a loan to the buyer and sued the shipowner for misdelivery in delivering the cargo to a party nominated by the seller before the loan was made without production of a bill of lading. The court held that delivery of cargo to a party that was not entitled to delivery did not cause a bill of lading to be spent (a point noted obiter by the Court of Appeal in The Erin Schulte).

If, however, the bill had been spent the bank would have obtained title to sue under s.2(2)(a) as the loan facility agreement made several years earlier between the bank and the buyer was the contractual arrangement in pursuance of which the transaction had been effected for the purpose of section 2(2)(a). Further the bank had become the holder of the bills in good faith as required by s.5(2) of the Bills of Lading Act and its decision to grant the loan to the buyer against security over the bills, even on the assumption that it knew that the cargo had been discharged, could not be said to have been dishonest; nor could the bank be said to have consented to delivery of the cargo without production of the bills of lading.

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Professor Simon Baughen

Professor Simon Baughen was appointed as Professor of Shipping Law in September 2013 (previously Reader at the University of Bristol Law School). Simon Baughen studied law at Oxford and practised in maritime law for several years before joining academia. His research interests lie mainly in the field of shipping law, but also include the law of trusts and the environmental law implications of the activities of multinational corporations in the developing world. Simon's book on Shipping Law, has run to five editions and is already well-known to academics and students alike as by far the most learned and approachable work on the subject. Furthermore, he is now the author of the very well-established practitioner's work Summerskill on Laytime. He has an extensive list of publications to his name, including International Trade and the Protection of the Environment. He has also written and taught extensively on commercial law, trusts and environmental law. Simon will be a member of the Institute of International Shipping and Trade Law, a University Research Centre within the School of Law, and he will teach on both the LLM (Carriage of Goods by Sea, Land and Air and Oil and Gas Law) and LLB programmes at Swansea.

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