In a liner bill of lading all the terms of the carriage of goods will be expressly set out in the document. However, when a bill of lading is issued under a charter-party the bill of lading may not spell out all the terms but merely contain a reference to the charter-party. In such a situation many difficult problems arise.

It must be remembered that the negotiation of a charter-party may take a long time and it would not be advisable for the parties to discuss the terms either of a bill which eventually would be issued or the terms of the charter-party which would be relevant to such a bill. Therefore, it is not customary or practicable to prepare a tramp bill of lading in advance and indeed the reference clause can only be drafted when the exact contents of the charter-party are known. In other words, by using the reference clause the parties avoid the possibility of prejudicing their position by deciding beforehand which of the charter-party terms should be incorporated in the bill of lading.

Thus, a reference clause in a bill of lading would serve to avoid repeating verbatim the clauses of the charter-party and therefore would avoid reproducing these clauses in the bill of lading in unreadable small print. This obviously makes the bill of lading a more simple and shorter document compared with the usual liner bill of lading.

Originally, the purpose of the reference clause was to ensure that the goods should be delivered only on the payment of the freight and the meeting of “all other conditions as per charter-party”. The word “conditions” was held1 to refer to the conditions to be performed by the consignee, including the undertakings upon the carrier which were relevant to such conditions. Another purpose of the reference clause was to make the holder of the bill of lading liable for demurrage incurred at the port of discharge in accordance with the charter-party, even though the cause of delay be attributable to another consignee2. In Porteus v. Watney 3, the clause provided that “freight and other conditions as per charter-party” and the Court held that