PROF. B.P.Mishra XIMB Few Definitions Banking Day : A Day on which a Bank is regularly open at the place at which an act subject to UCP rules is performed Complying Presentation : A presentation in accordance with the terms and conditions of the credit and those applicable under UCP 600 rules and ISBP Honour : Rules refer throughout to ‘Honour’ instead of repeating ‘to pay at sight………..’. The Credit should clearly state how it is available. Negotiation : Refers to advancing or agreeing to advance. Art 2 Interpretations Singular and Plural Branches of Bank in Different Countries „Prompt‟, „Immediately‟ etc. Signature -Handwriting/facsimile signature/perforated signature, stamp, symbol and any other mechanical or electronic method of authentication Terms – „First Class‟, „Qualified‟ etc „On or About‟ – 5 calender days Art 3 Interpretations „To‟, „Untill‟, „Till‟, „From‟, „Between‟ – include the date(s) mentioned – Date of Shipment „Before‟ and „After‟ exclude the date(s) mentioned – Date of Shipment „First Half‟ and „Second Half‟ „Beginning‟, „Middle‟ and „End‟ Art 3 General All Banks to determine the complying presentation only on the basis of documents Presentation to be made not later than 21 calender days after the date of shipment but within the validity of Credit will get extended to first following working day Force Majeure Certification by nominated bank Art 29 .Extension of Expiry Date or Last Day of Presentation If falls on a Declared holiday. Tolerance in Credit Amount. then 5% tolerance in quantity of goods provided the credit does not state the quantity in stipulated no. If credit is silent.Quantity and Unit prices „About‟ or „Approximately‟ in connection with the amount/quantity/unit price – interpreted tolerance is 10%. of packing units or individual items Total drawing amount does not exceed the credit amount Art 30 . nor does it assume any liability or responsibility for the description. packing. solvency. Art 34 . accuracy. quality. or for the good faith or acts or omissions. quantity. weight. the consignee or the insurer of the goods or any other person. sufficiency. condition. or for the general or particular conditions stipulated in a document or superimposed thereon. genuineness. the carrier. delivery.Disclaimer on Effectiveness of Documents A bank assumes no liability or responsibility for the form. value or existence of the goods. the forwarder. performance or standing of the consignor. services or other performance represented by any document. falsification or legal effect of any document. whether or not the nominated bank has honoured or negotiated. when such messages. Art 35 . mutilation or other errors arising in the transmission of any messages or delivery of letters or documents. or when the bank may have taken the initiative in the choice of the delivery service in the absence of such instructions in the credit. letters or documents are transmitted or sent according to the requirements stated in the credit. or between the confirming bank and the issuing bank. loss in transit.Disclaimer on Transmission and Translation A bank assumes no liability or responsibility for the consequences arising out of delay. A bank assumes no liability or responsibility for errors in translation or interpretation of technical terms and may transmit credit terms without translating them. If a nominated bank determines that a presentation is complying and forwards the documents to the issuing bank or confirming bank. or reimburse that nominated bank. even when the documents have been lost in transit between the nominated bank and the issuing bank or confirming bank. an issuing bank or confirming bank must honour or negotiate. costs or expenses (“charges”) incurred by that bank in connection with its instructions. A credit or amendment should not stipulate that the advising to a beneficiary is conditional upon the receipt by the advising bank or second advising bank of its charges. c. The applicant shall be bound by and liable to indemnify a bank against all obligations and responsibilities imposed by foreign laws and usages Art 37 . If a credit states that charges are for the account of the beneficiary and charges cannot be collected or deducted from proceeds. A bank utilizing the services of another bank for the purpose of giving effect to the instructions of the applicant does so for the account and at the risk of the applicant. fees. d. the issuing bank remains liable for payment of charges. A bank instructing another bank to perform services is liable for any commissions. b.Disclaimer for Acts of an Instructed Party a. even if it has taken the initiative in the choice of that other bank. An issuing bank or advising bank assumes no liability or responsibility should the instructions it transmits to another bank not be carried out. ISBP Para 68 to 169 UCP Article 28. ISBP Para 57 to 67 UCP Articles 19 to 27. Certificate/Policy Defined in ISBP Para 43 to 56 UCP Article 18. ISBP Para 170 to 180 Not Defined Except COO in ISBP Para 181 to 185 Transport Insurance Miscellaneous Quality Certificate/Warranty Certificate etc.Documents under Credit Broad Group Financial Commercial Type Draft Invoice Packing List Bill of Lading/Airway Bill/Road.Rail etc. . Standard for Examination of Documents Data in a Document . if stated.Data in a Document Excepting in Commercial Invoice. the Description of Goods/services.Standard for Examination of Documents . may be in general terms not conflicting with their description in the credit. . (Art 14h) . banks will deem such condition as not stated and will disregard it.Standard for Examination of Documents Documents Required. Non-documentary Conditions A document presented but not required by the credit will be disregarded and may be returned to the presenter (Art 14g) If a credit contains a condition without stipulating the document to indicate compliance with the condition. Standard for Examination of Documents Date of issuance Documents may be dated prior to the issuance date of the Credit but must not be dated later than its date of presentation Art 14 i UCP600 . but must be within the same country as the respective addresses shown in the Credit Art 14 j UCP 600 .Standard for Examination of Documents Addresses Addresses of the beneficiary and the applicant in any document need not be the same as those stated in the Credit or in any other stipulated Document. Standard for Examination of Documents Addresses When the address and contact details of the applicant appear as part of the consignee or notify party details in a transport document. they must be as stated in the Credit Art 14 j UCP 600 . either original or copies is permitted „In Duplicate‟ „in two fold‟ – atleast one original Art 17 . stamp or label of the issuer of the documents.Original Documents and Copies One Original of Each Document Any document bearing – Original Signature. unless the documents itself indicates that it is not original If credit requires presentation of copies of documents. mark. Provided the bank in Question has honoured the Documents only for the credit amount Art 18 .INVOICE Invoice must have been issued by Beneficiary Need not be signed Made out in the name of Applicant Same Currency as in Credit Banks may accept a Commerical Invoice for Excess of the Amount Permitted by the credit. Common Discrepancies in Commercial Invoice Not issued by Beneficiary Not signed Description of Goods Invoice not visaed or legalised Breakdown of charges Unit price not stipulated Shipping marks and nos differ from what is shown on Transport documents . Transport Documents.Importance Convey title to the goods Provide some measure of comfort to both the beneficiary/applicant Payments are not made against the transfer of goods but against documents (which represent goods) . negotiable ) Shipper‟s order Bill of lading Blank endorsed Negotiable Bill of lading Clean Bill of lading Claused Bill of lading Marine / Ocean /Port-to.negotiable sea-way Bill .Bill of Lading.a receipt for merchandise & contract to deliver as freight Straight Bill of lading ( Non.Port Bill of lading Multi-nodal Transport Receipt Non. Methods of Transport By at least 2 different modes of transport By Sea By Air By Road/Rail or Inland Waterway By Courier/post Multimodal. combined or through Transport Bill of Lading/Non negotiable Sea way bill/Charter party Bill of Lading Airway bill Road/Rail/Inland waterway transport documents Courier Receipt/Post Receipt or Certificate of Posting . Forwarder‟s Certificate of Receipt.Methods of Transport Some documents commonly used in relation to the transportation of goods eg. Forwarder‟s Cargo Receipt and Mate‟s Receipt do not reflect a contract of carriage and are not transport documents. No specified provision in UCP 600 under 14 (c) Documents to be presented not later than the expiry date for presentation . Delivery Order. However named .Bill of Lading -. Name & Signature .Bill of Lading -. Bill of Lading -.Shipped on board . Intended Vessel .Bill of Lading -. Port of Loading .Bill of Lading -. Originals .Bill of Lading -. Terms & Conditions .Bill of Lading -. Bill of Lading -.Charter Party . Transhipment .Bill of Lading -. However named .Air Transport Document -. Air Transport Document -.Name & Signature . Air Transport Document -.Date of Shipment . Air Transport Document -.Flight number & Date . Air Transport Document -.Airports Indicated . Air Transport Document -.Original for Shipper/Consignor . Air Transport Document -.Terms & Conditions . Transhipment .Air Transport Document -. Common Discrepancies in Transport Documents Late Shipment Late Presentation Ports of Loading/Dispatch/taking in charges not as per documentary credit Ports of discharge/final destination not as per documentary credit Transport document shows an intended vessel/intended port of loading but board notation does not additionally evidence actual port of loading/vessel . Common Discrepancies in Transport Document Transhipment made when the credit prohibits transhipment Absence of on board notation On board notation not dated Full set of transport documents not presented Claused bill of lading presented Transport documents do not identify carrier Not Signed in accordance with Credit/UCP 600 . Common Discrepancies in Transport Document Bill of Lading made out to order of shipper and not endorsed in blank Data content in conflict with that shown on other documents Unauthenticated alteration Notify party incorrect shown .