Does the Copy Bill of Lading require a Signature? By Chang-Soon Thomas Song

Does a copy bill of lading require a signature? I am a banker. The question was placed with me by a colleague in a different part of the bank while I work in the Trade and Service Department which advises，negotiates and handles disputes in letters of credit where both the original bills of lading and copy bills of lading are handled each day in hundreds of transactions. The answer is easy. And it is ¡°no¡±. A copy of a bill of lading does not require a signature.

Both the original and copy bills of lading are issued by carriers or forwarders acting as agent for the carriers. Usually the bills of lading are issued in three originals and a number of copies are also issued for use by bankers and traders for their files.

The original bills of lading are issued in the original，duplicate and triplicate. Effectively，they are all originals and any one of them can be presented to the carrier to claim the goods represented by the bill of lading. And there are copies which are called non-negotiable copies of bills of lading printed on top of the copy bills of lading which are obviously not signed. If a copy is signed，then someone who does not read the title of the document ¡°non-negotiable copy bill of lading¡± might mistake the copy of bill of lading as an original bill of lading due to the signature.

Statutory interpretation

Most laws enacted by Parliament are interpreted by the judges presiding over the courts and applied to the facts presented in the case at bar. There is something called statutory interpretation which is a compilation of ways in which laws had been interpreted by the judges over time and which are not decisive but provides certain guide to the judges who are confronted by cases when the words of a statute have to be interpreted in order to apply it to the facts of the case.

Lord Mansfield of the UK is regarded as the father of English commercial law. He incorporated the law merchant into the common law of England. The law merchant does not refer to laws made by merchants. Obviously，merchants are not members of Parliament and they do not have law-making powers. The law merchant simply refers to the practice of merchants developed in medieval fairs and carried over the centuries in international trade. You can consider the Article 5 of the U.S. Uniform Commercial Code as incorporation of the law merchant into statutory law in the United States.

The point here is that unlike most laws which are enacted by Parliament and interpreted and applied by the judges to the facts of the case，commercial law starts not from Parliament or the common law but from the law merchant，the practice of merchants.

Recent US Court of Appeals Decision

In Mago International v LHB AG，the Court ruled that the Bill of Lading copy presented could only ¡°evidence¡± shipment only if it was a photocopy of a Bill of Lading signed by the carrier.

Usually when a copy bill of lading is required under a letter of credit，for instance，three originals and two copies，then the three original bills of lading and two non-negotiable copies bill of lading issued by the carrier are presented to the bank by the exporter.

When a copy of a bill of lading is required，one could of course copy one of the signed original bills of lading but that is usually not done as the carrier already provides several copies of the non-negotiable copy bills of lading.

Under a standby letter of credit or in open account transactions，where the original bills of lading had already been sent to the importer，copies of the bills of lading are presented to the bank under the standby or the open account transactions to claim payment from the issuing bank or the importer’s bank.

In such cases，the non-negotiable copies of a bill of lading issued by the carrier are used. Exporters do not copy signed original bills of lading as they have already been sent to the importers directly.

Strict Compliance in Letters of Credit

The words strict compliance and substantial compliance are often used in general contract laws under different circumstances. There are instances where a rather rigid application of a rule is called for and other instances where a more flexible standard should be applied. It depends on all the circumstances of the case.

The words ¡°strict compliance¡± in letters of credit law originates from Equitable Trust v Dawson Partners. Lord Sumner explained strict compliance in the decision and when we read the decision and how the rule was applied to the facts，it is not a rigid application of a rule but a reasonable expectations standard which had been applied.

Under US law，strict compliance is the rule and it is applied under standard practice of banks which can be proved with expert opinions. Expert opinions generally explain the context of the standard practice so that the judges can apply the letter of credit rules under context to the facts of the case. I am afraid that the expert opinion relied on by the judge in the case was not an accurate one. It is up to the judge to ponder on the explanations given by the expert.

There is a tendency on the part of judges to strictly interpret the words of a statute to the facts of a case so that they will not be criticized as ¡°making law¡± and not simply ¡°interpreting the law¡±. But there is no difference between making law and interpreting the law. Laws are general principles which are meaningless by themselves. They only come alive when a judge presented with the facts of a case，interprets the general principles and applies them to the facts of the case to provide a just and fair decision. As the circumstances of each case differ from one another，each case has to be judged on the merits under the circumstances of each case.

Strict Compliance，Substantial Compliance

Whether a strict compliance or a substantial compliance is applied depends on the circumstance of each case. Sometimes a rigid application of a rule may be called for because such was the intention of the parties and the transaction requires such a rigid application. And then there are circumstances where a substantial compliance is the just and the fair application of the rules.

When a judge is unsure of the purpose of a rule which is applicable to the case at hand，he should be very careful when applying the said rule to the case to make sure that the result is fair and just.

The consequences of applying either a strict compliance or a substantial compliance rule to the facts of a case should also be considered when making the final decision as to which rule to apply.

Applying Law to the Facts

Laws and rule of law are all general principles which are fine by themselves. But alone they are useless in the resolution of any dispute between the parties. When the facts of a case are presented to the court，the judge looks at the rules to apply and then the facts to which the rules should be applied and ponders on the proper interpretation of the rules to the facts of the case.

Law is for the judge and the facts are for the jury. Such is the formula but it is the interpretation of the rules to the facts of the case which is crucial and this is undertaken by either the judge or the jury. Here the context and the circumstances of the individual case are paramount. There is never a simple application of the rules to the facts of a case.

Facts of the Case

In 2011，Mago，a company based in New York entered into a contract to sell chicken，beef and other meat products to Genita，a company based in Kosovo. Mago received a standby letter of credit issued by a Kosovo Bank and confirmed by LHB Bank in Germany.

If payment was not made by the importer Genita，the exporter Mago would draw on the standby letter of