Bill of Lading: Acceptance Implies Agreement, Even Without a Signature

TLDR: This case clarifies that accepting a bill of lading, even without signing it, implies agreement to its terms. Consignees are responsible for demurrage charges if they delay in receiving shipments, and disputes with the shipper are separate from the carrier’s rights.

G.R. No. 116863, February 12, 1998

Imagine a shipment of goods arriving at a port, and the intended recipient refuses to take delivery, leading to mounting storage fees. Who is responsible for these fees? This scenario highlights the importance of understanding the legal implications of a bill of lading, a document that governs the relationship between shippers, carriers, and consignees.

The Supreme Court case of Keng Hua Paper Products Co. Inc. vs. Court of Appeals tackles this very issue, emphasizing that accepting a bill of lading, even without a signature, binds the consignee to its terms and conditions. This includes the responsibility for demurrage charges arising from delays in unloading the shipment.

Legal Context: The Bill of Lading as a Contract

A bill of lading is more than just a receipt; it’s a contract. It serves a dual purpose, as the Supreme Court emphasizes: “First, it is a receipt for the goods shipped. Second, it is a contract by which three parties, namely, the shipper, the carrier, and the consignee undertake specific responsibilities and assume stipulated obligations.”

This contract outlines the responsibilities of each party involved in the shipping process. The shipper is responsible for providing accurate information about the goods, the carrier is responsible for transporting the goods safely, and the consignee is responsible for accepting delivery of the goods and paying any associated charges.

The Civil Code of the Philippines also plays a crucial role in understanding contractual obligations. Article 1159 states, “Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith.” This principle underscores the binding nature of the bill of lading once it is accepted by the parties involved.

Even without a signature, acceptance of a bill of lading implies consent to its terms. As the Court noted, “(a)cceptance of a paper containing the terms of a proposed contract generally constitutes an acceptance of the contract and of all of its terms and conditions of which the acceptor has actual or constructive notice.”

Case Breakdown: Keng Hua Paper Products vs. Sea-Land Service

Keng Hua Paper Products Co. (Keng Hua) purchased waste paper from a shipper in Hong Kong, Ho Kee Waste Paper. Sea-Land Service, Inc. (Sea-Land), a shipping company, transported the goods to Manila. Upon arrival, Keng Hua refused to accept the shipment, claiming overshipment and potential violations of Central Bank rules.

The container sat at the port for 481 days, accruing demurrage charges of ₱67,340. Sea-Land sued Keng Hua to recover these charges. Keng Hua argued that it never explicitly accepted the bill of lading and that the overshipment justified its refusal to receive the goods.

Here’s a breakdown of the case’s procedural journey:

• Regional Trial Court (RTC): Ruled in favor of Sea-Land, ordering Keng Hua to pay the demurrage charges, plus interest and attorney’s fees.
• Court of Appeals (CA): Affirmed the RTC’s decision in toto, holding that Keng Hua’s acceptance of the bill of lading, without timely objection, bound it to its terms.
• Supreme Court (SC): Affirmed Keng Hua’s liability for demurrage but modified the interest rate and deleted the award of attorney’s fees.

The Supreme Court emphasized that Keng Hua’s prolonged inaction after receiving the bill of lading implied acceptance of its terms. The Court quoted the Court of Appeals: “After accepting the bill of lading, receiving notices of arrival of the shipment, failing to object thereto, (herein petitioner) cannot now deny that it is bound by the terms in the bill of lading.”

Furthermore, the Court stated, “Mere apprehension of violating said laws, without a clear demonstration that taking delivery of the shipment has become legally impossible, cannot defeat the petitioner’s contractual obligation and liability under the bill of lading.”

Practical Implications: What This Means for Businesses

This case provides valuable lessons for businesses involved in international trade. It underscores the importance of carefully reviewing and understanding the terms of a bill of lading before accepting it. Failure to do so can result in unexpected liabilities, such as demurrage charges.

Disputes regarding the quantity or quality of goods should be resolved directly with the shipper, separate from the carrier’s contractual rights under the bill of lading. Consignees cannot simply refuse to accept shipments based on alleged discrepancies without facing potential financial consequences.

Key Lessons:

• Acceptance Implies Agreement: Even without a signature, accepting a bill of lading implies agreement to its terms.
• Timely Objection is Crucial: Object to any unfavorable terms in the bill of lading immediately upon receipt.
• Separate Disputes: Resolve disputes with the shipper separately from your obligations to the carrier under the bill of lading.
• Legal Impossibility: Only a clear demonstration of legal impossibility can excuse you from your obligations under the bill of lading.

Frequently Asked Questions (FAQs)

Q: What is a bill of lading?

A: A bill of lading is a document that serves as a receipt for goods shipped, a contract of carriage, and a document of title.

Q: Am I bound by a bill of lading if I didn’t sign it?

A: Yes, acceptance of a bill of lading, even without signing it, implies agreement to its terms.

Q: What are demurrage charges?

A: Demurrage charges are fees assessed for delays in unloading a shipment from a carrier’s container or vessel beyond the allowed free time.

Q: What if there’s a discrepancy between the goods I ordered and the goods described in the bill of lading?

A: You should address this discrepancy with the shipper. Your obligation to the carrier under the bill of lading remains separate.

Q: Can I refuse to accept a shipment if I suspect it violates customs laws?

A: Only if you can demonstrate that accepting the shipment would result in a clear violation of customs laws.

Q: What should I do if I receive a bill of lading with unfavorable terms?

A: Object to the terms immediately in writing and attempt to negotiate a modification with the carrier.

Q: How does a letter of credit affect my obligations under a bill of lading?

A: A letter of credit is a separate transaction between the buyer and the issuing bank. It does not affect your obligations to the carrier under the bill of lading.

Q: What is “Shipper’s Load and Count”?

A: Under this arrangement, the shipper is responsible for loading the container and providing an accurate count of the goods. The carrier is not responsible for verifying the contents.

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