Stale Bill of Lading – Meaning, Example, Importance, and More

A Stale Bill of Lading is a unique type of bill of lading. Stale as the name suggests means expired, time period, or date is over. Therefore, a normal Bill of Lading converts into a Stale Bill of Lading if a beneficiary presents it to the nominated bank after the expiry of the presentation period. The nominated bank could either be a Supplier’s Bank, Discounting Bank, Negotiating Bank, or Buyer’s Bank.

Stale Bill of Lading – More Details

As per the letter of credit (LoC) rules, a party must present the transport documents to a specific bank within 21 days from the date of shipment. Though the maximum time allowed is before the expiry date of LoC, the presentation time is usually 21 days. Even if the beneficiary presents the transport documents after the expiry date of LOC, then also the BOL will be called Stale BOL.

A Bill of Lading is part of the transport documents that covers the transport of goods by sea. So, the beneficiary needs to present it to the nominated bank within 21 days of the shipment date. If the beneficiary fails to do so, it results in a late presentation discrepancy. And, the Bill of Lading becomes the Stale Bill of Lading.

The presentation period usually is 21 days. Though the presentation period is usually 21 days, an importer may specify any other number of days. If an importer specifies the presentation days, then the exporter will have to comply with it. If not, the BOL will get Stale, and the bank may not accept it and the payment is at stake.

Example of Stale Bill of Lading

Let us understand the concept of Stale BOL with the help of a simple example.

Suppose a Chinese exporter enters into a contract with a U.S. importer for the sale of mobile chips. And the importer issues a LOC (Letter of Credit) in favour of the exporter towards the payment of those mobile chips.

The LoC includes the following details:

Latest Date of Shipment: 10th July 2020. (An exporter needs to ensure that goods or shipped on or before the Latest Date of Shipment)

Expiry Date: 31st July, 2020

Presentation Period: 21 days after shipment but within LoC expiry date

The Chinese exporter ships the goods on 1st July 2020, and the same date is there on the Bill of Lading. However, the exporter presents the transport documents to the bank on 25th July, 2020.

Since the exporter presents the document after 21 days of shipment, it results in a Stale Bill of Lading. This leads to late presentation discrepancy.

Stale BOL

Importance of Stale Bill of Lading

Now we know what a Stale BOL is, but what’s the importance of stale BOL, or why the bank won’t accept BOL after a set time period.

As we know that a Stale BOL is one that reaches the bank late. It means, the BOL reaches the bank so late that it gets impossible for the presenting bank to send the BOL to the importer’s place, on or before the shipment reaches the final destination. Naturally, if the bank gets the BOL late, it would get even late by the time it reaches the importer’s destination.  

So, a bank can reject the BOL in such a case.  

Final Words

A Stale BOL is not something that comes from the carrier, rather a normal BOL that converts into Stale due to the negligence of the exporter. Thus, it is important that the exporter is careful about the presentation date. And, the exporter must present the BOL before the expiry date so as to get the payment timely. And avoid BOL becoming stale.

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Sanjay Borad

Sanjay Bulaki Borad

Sanjay Borad is the founder & CEO of eFinanceManagement. He is passionate about keeping and making things simple and easy. Running this blog since 2009 and trying to explain "Financial Management Concepts in Layman's Terms".

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