Clean vs Claused Bill of Lading: What Remarks on Your B/L Mean for Bangladeshi Importers

A bill of lading does three jobs at once: it is a receipt for the goods, evidence of the contract of carriage, and — for an order bill — a document of title. The receipt function is the one this article is about. When a carrier or its agent signs a bill of lading, it is stating the apparent condition of the goods and packaging as it received them. If it saw nothing wrong, it issues a clean bill. If it saw damage or deficiency and wrote that onto the bill, the bill is claused, sometimes called foul or dirty.

For a Bangladeshi importer paying by letter of credit, the difference matters a great deal, because banks working under UCP 600 accept only clean transport documents. For an importer paying by TT, it matters in a different way: a claused bill is early warning that something went wrong in China, and a clean bill that should have been claused can hide a problem until the container is opened in Chattogram.

What UCP 600 says about clean documents

Article 27 of UCP 600 says that a bank will accept only a clean transport document, defined as one bearing no clause or notation that expressly declares a defective condition of the goods or their packaging. It also says that the word “clean” does not need to appear on the document, even if the credit asks for a “clean on board” bill of lading. In other words, the test is the absence of an adverse remark, not the presence of the word.

That is why examples of clausing are specific statements about condition: “cartons wet and stained”, “several bags torn, contents spilling”, “drums dented and leaking”, or “packaging insufficient for sea carriage”. If such a notation appears, the bill is a discrepant document under an LC, and your bank can refuse it. See our guide to LC discrepancies under UCP 600 for what happens next.

What is not clausing

Several standard phrases look like warnings but do not make a bill foul, because they describe the limits of what the carrier could check rather than a defect it found:

• Shipper’s load, stow and count and said to contain — the carrier did not see inside a sealed FCL container. Explained in our guide to SLAC and STC wording.
• Weight and quantity unknown — similar logic for declared figures.
• Remarks about the container itself on equipment documents, as opposed to the cargo — though anything carried onto the bill should be read carefully.

Under UCP 600, these qualifiers are acceptable unless your credit specifically prohibits them. The distinction is between “we could not check” and “we checked and found a problem”.

Where the remarks come from: the chain of receipts

Clausing rarely starts on the bill of lading itself. It is carried forward from earlier receipts. For FCL cargo, the container is received at the terminal and the equipment interchange receipt records its condition — see our guide to the equipment interchange receipt. For LCL cargo, the consolidator’s CFS receives cartons one by one, and the warehouse receipt records any damage, wetting or short count. For break bulk, a mate’s receipt signed on board traditionally records the condition of goods loaded, and remarks on it are transferred onto the bill.

This chain is why LCL shippers see claused documents more often than FCL shippers: in LCL, the receiving warehouse physically handles each carton and has every reason to record visible damage to protect itself. A crushed carton noted at a Shenzhen CFS can become a remark on your house bill of lading.

The letter of indemnity trap

When a supplier learns that remarks will be put on the bill and that its LC payment is at risk, a common response is to offer the carrier a letter of indemnity: the shipper promises to compensate the carrier for any claim if it issues a clean bill despite the defect. From the importer’s side, this means you receive a document that says the goods were in good order when they were not.

Shipping lawyers and P&I clubs have long warned carriers against this practice, because issuing a clean bill against an indemnity for goods known to be damaged can amount to misrepresentation to the buyer and the bank, and such indemnities may not be enforceable. As an importer, you cannot see these side arrangements, which is why independent checks before loading matter more than the wording of the bill.

A worked scenario

A Dhaka importer buys packaged food ingredients on a sight LC, shipped LCL from Guangzhou. At the CFS, the receiving clerk notes that a number of cartons arrived from the factory with water stains after rain during trucking. The consolidator tells the supplier the house bill will carry a remark. The supplier now has three choices: repack the damaged cartons and redeliver them clean, ask the buyer to accept the claused bill and amend the LC or waive the discrepancy, or pressure the forwarder to issue a clean bill.

The first is usually best for everyone. The second is legitimate if the buyer understands what it is accepting. The third pushes the problem to Chattogram, where the importer finds wet cartons, may face questions from BSTI or customs about product condition, and has a weaker cargo claim because the transport document says the goods were received in good order. Our guide to cargo damage claims explains why the condition recorded at loading becomes so important later.

If a claused bill has already been issued

Sometimes you only learn about the remark when the documents reach your bank. At that point the practical options depend on how you are paying. Under an LC, your bank will notify you of the discrepancy and ask whether you wish to waive it. Before you agree, find out exactly what the remark describes: ask the supplier and the forwarder for the CFS receiving report or tally sheet and any photos taken at receipt. A note that a handful of outer cartons were scuffed is very different from one saying contents were wet.

If you decide to accept the documents, you are accepting goods that the carrier has said were received in a damaged condition, and the carrier will rely on that remark if you later claim against it. Your claim for that damage then lies mainly with the supplier, so agree in writing how the supplier will compensate you — replacement in the next shipment, a credit note or a price reduction — before you waive the discrepancy. If you are paying by TT and the balance is still unpaid, the same evidence gives you a basis to hold back part of the balance until the goods are inspected on arrival. Keep the claused bill, the receiving report and the photos together; they are the core of any later claim, including one against your cargo insurance.

How importers can protect themselves

• Ask your supplier to report any remark before the bill is issued, as a contract term. That gives you time to decide on repacking.
• Inspect before loading. A pre-shipment inspection that includes packaging condition, and for FCL, container loading supervision, gives you independent evidence of condition.
• Specify export-grade packaging in the purchase contract, with carton strength and moisture protection appropriate to sea transit.
• Read the LC wording. Your bank can explain what “clean on board” requires; avoid adding conditions the supplier cannot meet.
• Read the draft bill before it is finalised — most forwarders will share a draft for checking. See bill of lading types and on board notation for other fields to check.

Common mistakes

• Treating SLAC wording as clausing and asking for an LC amendment that was never needed.
• Pressuring the forwarder for a clean bill to keep payment on schedule, then struggling with a damage claim later.
• Ignoring remarks on CFS receipts because the bill eventually came out clean.
• Weak packaging specifications that make wet or crushed cartons likely in the first place.

DE International handles sea freight from Chinese ports to Chattogram for Bangladeshi importers, including draft bill checks, LCL consolidation with condition reporting, and inspection before loading. Ask us for a quote built around your cargo and payment terms. See our services, the China sourcing agent service, the shop, or contact us. Related: letter of credit for China imports and sea freight documentation checklist.