Warnings to Agents by ITIC – RE: Switched Bills of Lading Here is a memo from ITIC (International Transport Intermediaries Club) regarding the dangers associated with switching bills of lading – I provide this for you so you are aware of the practice – but also to learn about the ITIC web site which is a good place to read memos like this – www.itic-insure.com ______ ITIC  has warned that ship agents face large claims for losses if they fail to follow simple rules when issuing 'switch' bills of lading. It is not unusual for ship agents to be instructed by their principals to issue a second, or 'switch', set of bills of lading. Sometimes they will be instructed by a principal to do so without collecting the first set. This is a very dangerous practice. Although agents may be offered a letter of indemnity by their principal, or the party receiving the second set, this can often prove to be worthless. "There has been a recent spate of very large claims against ship agents by banks, shippers and shipowners resulting from the issuance of a second set of bills of lading to trading companies or middlemen without cancellation of the first set, against letters of indemnity from those companies," says Julia Mavropoulos, claims director at ITIC. "The trading companies in all cases have become bankrupt after negotiating both sets of bills of lading for cash. The fact that the agents may have acted in good faith pursuant to their principals' instructions does not provide a defence to claims by third parties who have sustained losses." ITIC advises agents to only issue a second set of bills of lading once they have ensured that the first set has been surrendered for cancellation. But if the principal does instruct them to issue a second set without receiving the first set, they should seek written authority from their principal along with a letter of indemnity, countersigned by a bank if necessary. They are also advised to obtain written authority from any other party which might be adversely affected, for example the shipowner, shipper or bank. Agents should also check that the second set of bills of lading does not contain any misrepresentations as to the discharge port, condition of the cargo or date of loading, for example, which can all too easily lead to claims from parties that have suffered losses as a result.