Meaning of consignee in shipping industry
Who is consignee?
‘Consignee’ is a shipping terminology which is used widely under the contract of carriage. A ‘consignee’ is a person to whom the shipping line will deliver the cargo at the port of destination.
People often think a consignee to be the buyer of the cargo; which is true in a limited sense but not always necessary. ‘Buyer’ is a commercial term and represents a person who has purchased goods under the contract of sale.
Consignee in bills of lading:
The consignee is mentioned in bills of lading either expressly or by endorsement. Both instances are discussed below.
(a) Express mention -
At the time of issuing B/L, if the shipper gives instructions to the shipping line for mentioning a particular name under the field of ‘consignee’ as to clearly identify him to be ‘the consignee’ under that B/L, it is called express mention of Consignee.
In this instance, the cargo would be delivered at the destination to such consignee only since he is clearly identified from the face of the B/L. Such bills of lading are known as ‘Consigned B/L’ or ‘Straight B/L’.
For simple understanding, we can relate it with an ‘account payee cheque’ which is always deposited in the account of the person whose name is mentioned as ‘payee’.
(b) Endorsement –
It is very common practice in International trade that the cargo might get re-sold during the transit. In such a case, the physical transfer of the cargo is not possible but the document of title needs to be altered in favour of the new buyer. This alteration could be done by the way of endorsement in favour of the new buyer by the existing consignee of the B/L.
A bill of lading is treated to be a document of title and hence it is possible to negotiate/transfer it by endorsement.
FAQ – Consignee
Yes, consignee and notify parties can be the same. However, it is not necessary that they have to be the same. They could be different parties and could be mentioned separately under the head of “Consignee” and “Notify” in a bill of lading (B/L).
No, there can not be more than one (01) consignee in single B/L. Mentioning more than one consignee will lead to confusion as to whose order the shipping line should deliver the cargo at destination. There is an exception of part bills of lading but it is an altogether a different sort of transaction.
Yes, a consignee can nominate any other person to receive cargo either –
(a) as an agent acting on behalf of the consignee to facilitate him (like a forwarder or a clearing agent), or
(b) as an owner of that cargo (in cases where the cargo has been sold by the original consignee to another buyer during transit).
In both cases, the consignee will have to put his endorsement in favour of such person at the back side of the bill of lading.
It depends upon the commercial transaction between the buyer and seller. ‘Consignee’ is a shipping term and ‘Buyer’ is a commercial term. Consignee, in most cases, is a buyer of the cargo but not necessary in all the cases. He could also be –
(a) a clearing agent of the buyer, or
(b) his banker or any other financial institution who has funded the buyer for the cargo.
Yes, Consignee is liable to custom clear the cargo and to receive delivery at destination. In cases where the consignee refuses to take delivery, the shipping line shall either –
(a) bring back the cargo at origin to the shipper, or
(b) deliver it to any other person at the destination under shipper’s instruction, or
(c) divert the cargo to other ports as instructed by the shipper, or
(d) take the custody of the cargo for recovering dues. This is the last option resorted to by the shipping line.
As per rules and regulations of several countries, the shipping line must secure consignee’s NOC (no objection certificate) to otherwise dispose-off the cargo. The matter gets truly complicated in aforesaid circumstances.
Note of Thanks
We are grateful for the time and support of Mr. Vashishth Joshi (attorney at law), whose legal acumen and experience of handling international trade disputes have been of immense help in developing and structuring our blog