You purchased a shipping container full of superhero-themed underwear, which is currently en route from China. You spent $2 million for the undies, which you plan to sell to retail stores. While the boat with the underwear on it drifts somewhere in the Pacific, you get a call from a competitor. They are willing to pay you $2.5 million for the incoming shipment. You could book a $500,000 profit without having to do any sales. You say, "sure."
Luckily, you have a negotiable bill of lading. It's the official document for the shipment, detailing all the pertinent information about the cargo, including who is supposed to receive it once it arrives in the U.S.
The "negotiable" part means that whoever holds the official bill of lading can receive the shipment. It isn't a specified person or entity. Whoever has the document gets the undies. So you can sell your bill of lading to your competitor and just let them receive it when it comes. You don't have to receive the shipment yourself and then somehow transport the product to the purchaser. It's just a matter of selling them the bill of lading.
The negotiable bill of lading stands in contrast to a non-negotiable bill of lading. That kind of document lists specifically who can receive a shipment. The shipper cannot give the cargo over to anyone other than the party listed in the bill of lading.
Related or Semi-related Video
Finance: What is Fair Market Value?3 Views
Finance a la shmoop what is fair market value? double bubble toil and trouble [Man casting a curse]
what is the fair price of this pile of rubble so this term revolves around the
notion of fair like what is fair and by the way who told you the world was fair
anyway all right but financially fair or at least fair market means what the
market will fairly and legally pay for an asset that's fair and so that means [Man discussing financial fair]
fair as in not cash from a Somalian warlords leather briefcase but rather
fair as in the legitimate selling price of this excellent two-bedroom three-bath
shoebox in Palo Alto selling for 3 million dollars today for something to
be "of fair market" the buyer has to be knowledgeable and
unpressured i.e the somalian warlord does not in fact have a gun aimed
at the buyers head or any other body part and generally speaking [Gun aims at buyers body parts]
the market itself has to be a legitimate market like real estate or jewelry or
stocks or bonds or whatever if it's an illegitimate market well it's a probably
wondering why it was born out of wedlock so you can't do that
when you assess fair market value things have to be legal and liquid and well
fair whatever the market will pay for it that's the fair value [Hand dealing out cash]
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