Theme 6 Commercial Documents Adopted by International Organisations (UN, ECE etc.

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Study Units Production, Purchase and Sales Documents Financial/Banking, Insurance and Transport Documents Aims: Locating the use and importance of different categories of international commercial documents Identification of different categories of international documents according to the different types of activities in connection to international trade. Developing the essential skills and knowledge compulsory in the field of international trade and in working with international commercial documents References:
Nicolae, M. (coordonator), Commercial Correspondence, Editura Universitar, Bucureti, 2005 Ashley, A., Handbook of Commercial Correspondence, Oxford University Press, 2006 Victor, A., David, International Business Communication, Oxford University Press, 2003 Tnasie A, Business English Communication and Commercial Correspondence (Comunicare de afaceri i coresponden comercial), Ed. Universitaria, Craiova, 2007, (2009, ediie revizuit)

Allocated Time: 4 hours Documents and descriptions adopted by: WCO - World Customs Organization (1952 - Customs Co-operation Council) ICC - International Chamber of Commerce (and Banking Commission) UNCTAD FIATA - International Federation of Freight Forwarders Associations IATA International Air Transport Association UPU - Universal Postal Union Documents are grouped according to their usage domain, the place and moment of their issuing.

6.1. Production, Purchase and Sales Documents Production documents a. The purchase order (PO) Definition PO= a commercial document issued by a buyer to a seller, indicating the type, quantities and agreed prices for products or services the seller will provide to the buyer. Sending a PO to a supplier constitutes a legal offer to buy products or services. Acceptance of a PO by a seller usually forms a once-off contract between the buyer and seller so no contract exists until the PO is accepted. POs usually specify terms of payment, INCOTERMS for liability and freight responsibility, and required delivery date. Structure A purchase order usually contains: PO number, shipping date, billing address, shipping address, terms of payment (usually in the form of NET 30) NET 30 - a form of trade credit which specifies payment is expected to be received in full 30 days after the goods are delivered.

Net 30 terms are often coupled with a credit for early payment; e.g. the notation "2% 10, net 30" indicates that a 2% discount is provided if payment is received within 10 days of the delivery of goods, and that full payment is expected within 30 days. For example, if "$1000 2/10 net 30" is written on a bill, the buyer can take a 2% discount ($1000 x .02 = $20) and make a payment of $980 within 10 days) NET 45 and NET 60 depending on requirements set by the seller), and a list of services/products, often including specifications and reference or part numbers of the items to be purchased, with quantities and prices. When accepted by the seller, it forms an agreement between the buyer and seller.

There are several reasons why companies use POs. They allow buyers to clearly and explicitly communicate their intentions to sellers, and to protect the seller in the event of a buyer's refusal to pay for goods or services. For example, say Alice works for Company A and orders some parts from Company B. There could be a problem if Alice wasn't actually authorized to issue this purchase order - perhaps due to a miscommunication, she mistakenly thought that she had the boss's permission to place the order. Once this error is discovered the order is cancelled. Depending on the type of product being ordered, and at what stage the PO was cancelled, Company B may incur manufacturing costs (labour, raw material, etc.) as well as shipping and packing costs. They might also lose the product entirely (for example, if it is perishable). In order to prevent such problems, sellers often request purchase orders from buyers. This document represents the buyers intent to purchase specific quantities of product at specified prices.

 In the event of non-payment, the seller can use the PO as a legal document in a court of law to demonstrate the buyers intent and to facilitate collection efforts. Companies usually request POs when doing business with other companies for orders of significant size, as the PO reduces the risks involved. In the course of the accounts payable process, purchase orders are matched with invoices and packing slips before the invoices are paid. 2. Manufacturing instructions Document issued by a production firm (supplier) in order to start the production process for goods to be sold or supplied to foreign clients. 3. Stores requision Document issued by a supplier aiming to order release of merchandise ordered by a foreign client. 4. Invoicing data sheet Document issued by a firm containing relative data concerning merchandise and destined to represent basis for the commercial invoice. 5. Packing instructions Document issued by a firm containing information concerning the established manner in which merchandise is to be packed. 6. Packing list Document indicating merchandise distribution and placement into different packing parcels.

Purchase documents 1. Enquiry Document issues by a potential buyer (importer) to a potential supplier in search of an offer, where he describes the products he wishes to by and certain necessary conditions concerning the delivery 2. Order Document engaging a buyer (importer) with a seller (exporter) in a transaction involving the delivery of specific products according to stated conditions mentioned in an offer, or known to the buyer (UN/ECE/FAL). 3. Delivery instructions Document issued by the buyer (importer) concerning the delivery details of the ordered products. (UN/ECE/FAL). The document contains Directions to an inland carrier by a shipper about the delivery of a shipment to a particular carrier or pier for export. Not to be confused with delivery order document which pertains to the release of a shipment to a specified party. 4. Delivery (order) release D/O is the abbreviation for the term Delivery Order. A delivery Order is a document from a consignee, a shipper, or an owner of freight which orders the release of the transportation of cargo to another party. Usually the written order permits the direct delivery of goods to a warehouseman, carrier or other person who in the course of their ordinary business issues warehouse receipts or bills of lading. According to the Uniform Commercial Code (UCC) a delivery order refers to an "order given by an owner of goods to a person in possession of them (the carrier or warehouseman) directing that person to deliver the goods to a person named in the order. A Delivery Order which is used for the import of cargo should not to be confused with delivery instructions.

 Delivery Instructions provides "specific information to the inland carrier concerning the arrangement made by the forwarder to deliver the merchandise to the particular pier or steamship line. A delivery order was not regarded as a document of title at common law with the result that the transfer of the delivery order did not effect transfer of constructive possession of the goods. Attornment on the part of the bailee was required (i.e., an acknowledgement that the bailee held the goods on behalf of the transferee). The Uniform Documents of Title Act permits the use of negotiable delivery orders (if the order directs delivery to a named person or order). However, it is still necessary to single out delivery orders for special treatment. Until the delivery order is accepted by the bailee, there is no basis for imposing obligations on the bailee. Sales documents 1. Offer/quotation Document stating the conditions under which the merchandise is offered to a potential client in respect of a future contract. (UN/ECE/FAL). 2. International sales contract Document certifying the existence of an agreement between the seller (exporter) and the buyer (importer) for supplying certain products; it has the commercial and legal effects of an order followed by an acknowledgement. (UN/ECE/FAL). 3. Pro-forma invoice In foreign trade, a pro forma invoice is a document that states a commitment from the seller to provide specified goods to the buyer at specific prices. It is often used to declare value for customs. It is not a true invoice, because the seller does not record a pro forma invoice as an accounts receivable and the buyer does not record a pro forma invoice as an accounts payable. A pro forma invoice is not issued by the seller until the seller and buyer have agreed to the terms of the order.

 pro forma invoice is issued for obtaining advance payments from buyer, either for start of production or for security of the goods produced. The term pro forma (Latin "as a matter of form") is a term applied to practices that are perfunctory, or seek to satisfy the minimum requirements or to conform to a convention or doctrine. It has different meanings in different fields. 4. The commercial external invoice An invoice or bill is a commercial document issued by a seller to the buyer, indicating the products, quantities, and agreed prices for products or services the seller has provided the buyer. An invoice indicates the buyer must pay the seller, according to the payment terms. From the point of view of a seller, an invoice is a sales invoice. From the point of view of a buyer, an invoice is a purchase invoice. The document indicates the buyer and seller, but the term invoice indicates money is owed or owing. In English, the context of the term invoice is usually used to clarify its meaning, such as "We sent them an invoice" (they owe us money) or "We received an invoice from them" (we owe them money). Credit memo - If the buyer returns the product, the seller usually issues a credit memo for the same or lower amount than the invoice, and then refunds the money to the buyer, or the buyer can apply that credit memo to another invoice. Commercial invoice - a customs declaration form used in international trade that describes the parties involved in the shipping transaction, the goods being transported, and the value of the goods. It is the primary document used by customs, and must meet specific customs requirements, such as the Harmonized System number and the country of manufacture. It is used to calculate tariffs. Debit memo - When a company fails to pay or short-pays an invoice, it is common practice to issue a debit memo for the balance and any late fees owed. In function debit memos are identical to invoices.

Self-billing invoice - A self billing invoice is when the buyer issues the invoice to himself (e.g. according to the consumption levels he is taking out of a vendor-managed inventory stock). Evaluated receipt settlement (ERS) - ERS is a process of paying for goods and services from a packing slip rather than from a separate invoice document. The payee uses data in the packing slip to apply the payments. In an ERS transaction, the supplier ships goods based upon an Advance Shipping Notice (ASN), and the purchaser, upon receipt, confirms the existence of a corresponding purchase order or contract, verifies the identity and quantity of the goods, and then pays the supplier. Timesheet - Invoices for hourly services such as by lawyers and consultants often pull data from a timesheet. Invoicing - The term invoicing is also used to refer to the act of delivering baggage to a flight company in an airport before taking a flight. Statement - A periodic customer statement includes opening balance, invoices, payments, credit memos, debit memos, and ending balance for the customer's account during a specified period. A monthly statement can be used as a summary invoice to request a single payment for accrued monthly charges.

Progress billing used to obtain partial payment on extended contracts, particularly in the construction industry.

Collective Invoicing is also known as monthly invoicing in Japan. Japanese businesses tend to have many orders with small amounts because of the outsourcing system, or of demands for less inventory control. To save the administration work, invoicing is normally processed on monthly basis.

Bills from utility companies are based on measured (metered) use of electricity, natural gas or other utilities at a residence or business. When an individual or business applies for service from the utility (opens an account), he signs an agreement (contract) to pay for his metered use of the utility.

Some invoices are no longer paper-based, but rather transmitted electronically over the Internet. It is still common for electronic remittance or invoicing to be printed in order to maintain paper records. Standards for electronic invoicing varies widely from country to country. Electronic Data Interchange (EDI) standards such as the United Nation's EDIFACT standard include message encoding guidelines for electronic invoices. But the most common continues to be PDF over email. The United Nations standard for electronic invoices ("INVOIC") includes standard codes for transmitting header information (common to the entire invoice) and codes for transmitting details for each of the line items (products or services). The "INVOIC" standard can also be used to transmit credit and debit memos. The "IFTMCS" standard is used to transmit freight invoices. Use of the XML message format for electronic invoices has begun in recent years. There are two standards currently being developed. One is the cross industry invoice under development by the United Nations standards body UNCEFACT and the other is UBL (Universal Business Language) which is issued by [Oasis]http://www.oasis-open.org. Implementations of invoices based on UBL are common, most importantly in the public sector in Denmark. Further implementations are under way in the Scandinavian countries as result of the NES (North European Subset) project http://www.nesubl.eu. Implementations are also underway in , Italy, Spain, Holland and with the European Commission itself.

The NES work has been transferred to [CEN]http://www.cen.eu, (the standards body of the European Union) workshop CEN/BII, for public procurement in Europe. The result of that work is a pre-condition for PEPPOL, pan European pilots for public procurement, financed by the European commission. There UBL procurement documents will be implemented in cross border pilots between European countries. Agreement has been made between UBL and UN/CEFACT for convergence of the two XML messages standards with the objective of merging the two standards into one before end of 2009 including the provision of an upgrade path for implementations started in either standard. 5. Booking request (Cerere pentru rezervare (spaiu de transport) = Dispoziie de transport i vmuire, cod 12-3-6/Cerere de tonaj export, cod 12-3-7 (CEE/ONU)) Document in which, according to the delivery conditions, the supplier demands to a transporter, carrier or broker, the booking of the transport space for a certain products expedition, indicating: the means of transport, the time, etc. (UN/ECE/FAL). 6. Shipping instructions Document describing in detail the products and the requirements imposed by the exporter for the transport. 7. Shippers letter of instructions (air) Document issued by the exporter containing the details concerning certain products delivery, that allows the airway company or the specialised carrier to establish and issue an airway bill. AWB (UN/ECE/FAL). Shippers Letter of Instructions is a document, which provides shipping instructions to the shippers freight forwarder to ensure accurate and correct movement of their products across borders. Often this document will include billing terms regarding the freight and other charges as well as documentation preparation instructions in cases where the shipper is not

providing those documents. In some cases product distribution instructions are also included. Required Information - The following items below are required to be filled out. Any required information that is left out may result in a delay in processing the form. Enter the exporters Internal Revenue Service Employer Identification Number (EIN). FREIGHT CHARGES (IN CHECK APPLICABLE BOX AREA) Select either Prepaid or Collect. 1. PARTIES TO TRANSACTION Indicate if this is a RELATED or NON-RELATED party transaction is a transaction between a USPPI and a foreign consignee, (e.g., parent company or sister company), where there is at least 10 percent ownership of each by the same U.S. or foreign person or business enterprise. 2. DATE OF EXPORTATION Enter the date the merchandise is scheduled to leave the country for all methods of transportation. If the actual date is not known, report the best estimate of departure. The date format should be indicated by MM/DD/YYYY. 3. TRANSPORTATION REFERENCE NO. Report the booking number for ocean shipments. The booking number is the reservation number assigned by the carrier to hold space on the vessel for the cargo being shipped. For air shipments the airway bill number must be reported. For other methods of transportation leave blank. 4a. ULTIMATE CONSIGNEE Enter the name and address of the foreign party actually receiving the merchandise for the designated end-use or the party so designated on the export license. 4b. INTERMEDIATE CONSIGNEE Enter the name and address of the party in a foreign country who makes delivery of the merchandise to the ultimate consignee or the party so named on the export license.

5a. FORWARDING AGENT Enter the name and address of the forwarding or other agent authorized by a principal party in interest. 5b. FORWARDING AGENTS EIN (IRS) NO. Enter the Forwarding Agent's (EIN) or Social Security Number (SSN). Report the 9-digit numerical code. 6. POINT OF ORIGIN OR FTZ NO. If from a FTZ enter the FTZ number for exports leaving the FTZ, otherwise enter the Postal Service abbreviation of the state in which the merchandise actually starts its journey to the port of export, or State of the commodity of the greatest value, or State of Consolidation. 7. COUNTRY OF ULTIMATE DESTINATION Enter the country in which the merchandise is to be consumed, further processed, or manufactured; the final country of destination as known to the exporter at the time of shipment; or the country of ultimate destination as shown on the export license. Two-digit (alpha character) International Standards Organization (ISO) codes may also be used. 8. LOADING PIER (Vessel only) (For vessel shipments only) Enter the number or name of the pier at which the merchandise is laden aboard the exporting vessel. 9. METHOD OF TRANSPORTATION Enter the method of transportation by which the merchandise is exported (or exits the border ). Specify the method of transportation by name such as: vessel, air, rail, truck, etc. Specify own power if applicable. 10. EXPORTING CARRIER Enter the name of the carrier transporting the merchandise out of the country. For vessel shipments, give the name of the vessel. 11. PORT OF EXPORT (a) For Overland Shipments: Enter the name of the Customs port at which the surface carrier (truck or railcar) crosses the border. (b) For Vessel and Air Shipments: Enter the name of the Customs port where the merchandise is loaded on the carrier (airplane or ocean vessel) that is taking the merchandise out of the country. (c) For Postal (mail) Shipments: Enter the Post Office from which the merchandise is mailed.

12. PORT OF UNLOADING For vessel shipments between the United States and foreign countries, enter the foreign port and country at which the merchandise will be unloaded from the exporting carrier. 13. CONTAINERIZED (For vessel shipments only) Check the YES box for cargo originally booked as containerized cargo and for cargo that has been placed in containers at the vessel operators option. 14. CARRIER IDENTIFICATION CODE Enter the 4-character Standard Carrier Alpha Code (SCAC) of the carrier for vessel, rail and truck shipments, or the 2- or 3character International Air Transport Association (IATA) Code of the carrier for air shipments. In a consolidated shipment, if the ultimate carrier is unknown, the consolidators carrier ID code may be reported. The National Motor Freight Traffic Association (703) 838-1831 or www.nmfta.org issues the SCACs for ocean carriers, trucking companies and consolidators. The International Air Transportation Association (IATA) issues the air carrier codes. 15. SHIPMENT REFERENCE NO. Enter the unique reference number assigned by the filer of the SED for identification purposes. This shipment reference number must be unique for five years. For example, report an invoice number, bill of lading or airway bill number, internal file number or so forth. 16. ENTRY NUMBER Enter the Import Entry Number when the export transaction is used as proof of export for import transactions, such as In-Bond, Temporary Import Bond or Drawbacks and so forth. 17. HAZARDOUS MATERIALS Check the appropriate Yes or No indicator that identifies the shipment as hazardous as defined by the Department of Transportation. 18. IN BOND NUMBER Report one of the 2- character In-Bond codes listed in Part IV of Appendix C of the FTSR (15 CFR Part 30) to include the type of In-Bond or not InBond shipment.

19. ROUTED EXPORT TRANSACTION Check the appropriate Yes or No indicator that identifies the transaction as a routed export transaction. A routed export transaction is where the foreign principal party in interest authorizes a forwarding or other agent to export the merchandise out of the country. 20. SCHEDULE B DESCRIPTION OF COMMODITIES Use columns 22 - 24 to enter the commercial description of the commodity being exported, its schedule B number, the quantity in schedule B units, and the shipping weight in kilograms. Enter a sufficient description of the commodity as to permit verification of the Schedule B Commodity Number or the commodity description as shown on the validated export license. Include marks, numbers, or other identification shown on the packages and the numbers and kinds of packages (boxes, barrels, baskets, etc.). 21. D/F OR M DOMESTIC EXPORTS (D): merchandise that is grown, produced, or manufactured in the country (including imported merchandise which has been enhanced in value or changed from the form in which imported by further manufacture or processing in the United States). FOREIGN EXPORTS (F): merchandise that has entered the country and is being re-exported in the same condition as when imported. FOREIGN MILITARY SALES (M): exports of merchandise that are sold under the foreign military sales program. 22. QUANTITY (SCHEDULE B UNITS) Report whole unit(s) as specified in the Schedule B commodity classification code. Report also the unit specified on the export license if the units differ. 23. SHIPPING WEIGHT (kilograms) (For vessel and air shipment only) Enter the gross shipping weight in kilograms or each Schedule B number, including the weight of containers but excluding carrier equipment. To determine kilograms use pounds (lbs) Multiplied by 0.4536 = kilograms (report whole units). 24. VIN/PRODUCT NUMBER/ VEHICLE NUMBER (For used self-propelled vehicles only). Report the following items of information for used self-propelled vehicles as

defined in Customs Regulations 19 CFR 192:1 (1) Report the unique Vehicle Identification Number (VIN) in the proper format; (2) Report the Product Identification Number (PIN) for those used self propelled vehicles for which there are no VINs; and (3) the Vehicle Title Number. 25. VALUE Enter the selling price or cost if not sold, including freight, insurance, and other charges to port of export, but excluding unconditional discounts and commissions (nearest whole monetary unit, omit divisions). The value to be reported is the exporters price or cost if not sold, to the foreign principal party in interest. 26. LICENSE NO./LICENCE EXCEPTION SYMBOL/AUTHORIZATION Whenever a Shippers Export Declaration (SED) or Automated Export System (AES) record is required 27. EXPORT CONTROL CLASSIFICATION NUMBER (ECCN) You must enter the correct Export Control Classification Number (ECCN) on record for all exports authorized under a license or License Exception, and items being exported under the No License Required (NLR). 28. DULY AUTHORIZED OFFICER OR EMPLOYEE Provide the signature of the exporter authorizing the named forwarding or agent to effect the export when such agent does not have a formal power of attorney or written authorization. 29. SIGNATURE/CERTIFICATION Provide the signature of the exporter (U.S. principal party in interest) or authorized forwarding or other agent certifying the truth and accuracy of the information on the Shippers Export Declaration (SED) the title of exporter (U.S. principal party in interest) or authorized agent, the date of signature, the telephone number of the exporter (U.S. principal party in interest) or authorized agent preparing the SED and who can best answer questions for resolving problems on the SED, and the email address of the exporter (U.S. principal party in interest) or authorized agent. 30. AUTHENTIFICATION For Customs Use Only.

8. Ready for dispatch advice Document issued by the supplier (exporter) informing the buyer (importer) that the demanded products or representing the object of the contract are ready for expedition. (UN/ECE/FAL). 9. Despatch order Document issued by the supplier (exporter) that initiates the products expedition process to the destination indicated by their buyer (importer). (UN/ECE/FAL). 10. Despatch advice A message specifying details for goods despatched or ready for despatch under agreed conditions. o The message enables a hierarchical description of the shipment, starting with the highest level (shipment) and ending with the lowest level (items). o One can for example describe a container comprising 5 pallets, a pallet being composed of several large despatch units which themselves contain smaller despatch units. o The traded units (any level of packaging agreed by the trading partners) are then specified. o It is however not mandatory to describe the hierarchical structure of the shipment. o A simple and probably most frequent use of the message consists in specifying the items to be despatched and the relevant information per item (quantity, additional identification ...).

SHIPMENT

PALLET SNP1

PALLET SNP2

2 PN1 SN1-SN2 3 PN2 SN3-SN5

3 PN3 SN6-SN8

3 PN1 SN9-SN11

4 PN3 SN12-SN15

The following example is used to illustrate the different descriptive options of the Despatch Advice message. Options 1 through 4 are presented in an ascending order of complexity or completeness. A shipment consists of 2 pallets. The first pallet, identified by the serial number SNP1, contains 8 cartons. 2 cartons of product number PN1, 3 cartons of PN2 and 3 cartons of PN3. The cartons are individually identified by serial numbers ranging from SN1 through SN8. The second pallet identified by the serial number SNP2, contains 3 cartons of product number PN1 and 4 cartons of product number PN3. The cartons are individually identified by serial numbers ranging from SN9 through SN15. The shipment can be represented like this: NOTE! Please note that for easy reading, the product numbers (PN's) and the serial numbers (SNP's, SN's) have been shortened. In real transactions, standard EAN product numbers and the Serial Shipping Container Code should be used. The message structure has been simplified with only the functional segments of the detail section presented. Option 1: Only product numbers and total shipment quantities are provided, no carton specific serial numbers are provided and no description of the shipment structure is given.

This option allows for the description of the shipment composition only in terms of products and total quantities per product. In this case the shipment is described as being composed of 5 units of PN1, 3 units of PN2 and 7 units of PN3. Using this option, the message will provide no information regarding individual despatch carton serial numbers or the way they are organised hierarchically in the shipment, i.e. the shipment consists of two pallets, the first containing..., the second pallet containing...,.

Option 1 Detail Section of the Despatch Advice Message: CPS+1' LIN+1++PN1:EN' QTY+12:5' LIN+2++PN2:EN' QTY+12:3' LIN+3++PN3:EN' QTY+12:7' "Dummy" CPS segment First line item; PN1 Quantity Despatched 5 Second line item; PN2 Quantity Despatched 3 Third line item; PN3 Quantity Despatched 7

Option 2:

Product numbers and total quantities of the shipment are provided. Additionally, each carton is uniquely identified by a serial number. description of the structure of the shipment is given. No

This option allows for the description of the shipment composition but ignores any hierarchical structure of the shipment. In this case the shipment is described as being composed of 5 units of PN1, 3 units of PN2 and 7 units of PN3. Additionally, each carton is uniquely identified by a serial number so as to distinguish cartons with the same product number, so that for example cartons PN1 will be identified with the serial numbers SN1, SN2, SN9, SN10 and SN11. This option does not provide information on how the groups of cartons are organised in the shipment, (i.e. in terms of pallets). Option 2 Detail Section of the Despatch Advice Message: CPS+1' LIN+1++PN1:EN' QTY+12:5' PCI+33E' GIN+BJ+SN1:SN2+SN9:SN11' LIN+2++PN2:EN' "Dummy" CPS segment First line item; PN1 Quantity Despatched 5 Marked packaging with SSCC Serial numbers of 5 cartons PN1 Second line item; PN2

QTY+12:3' PCI+33E' GIN+BJ+SN3:SN5' LIN+3++PN3:EN' QTY+12:7' PCI+33E' GIN+BJ+SN6:SN8+SN12:SN15'

Quantity Despatched 3 Marked packaging with SSCC Serial numbers of 3 cartons PN2 Third line item; PN3 Quantity Despatched 7 Marked packaging with SSCC Serial numbers of 7 cartons PN3

Option 3:

Description of the shipment hierarchical structure in terms of pallet content, with pallets uniquely identified.

This option allows to describe the composition of the shipment in terms of the pallets it contains, each pallet uniquely identified by a serial shipping container code (SNP1 and SNP2). The message describes the composition of each pallet in terms of the cartons contained and in what quantity, per pallet. Option 3 Detail Section of the Despatch Advice Message: CPS+1' PAC+2++201' CPS+2+1' PAC+1++201' PCI+33E' GIN+BJ+SNP1' PAC+8++CT' LIN+1++PN1:EN' QTY+12:2' LIN+2++PN2:EN' QTY+12:3' 1st CPS; no parent Number of packages = 2 pallets type ISO 1 2nd CPS; first pallet; parent = shipment Outer packaging level, pallet type ISO 1 Marked packaging with SSCC Serial number of 1st pallet Pallet contains 8 cartons First line item; PN1 Quantity Despatched 2 Second line item; PN2 Quantity Despatched 3

LIN+3++PN3:EN' QTY+12:3' CPS+3+1' PAC+1++201' PCI+33E' GIN+BJ+SNP2' PAC+7++CT' LIN+4++PN1:EN' QTY+12:3' LIN+5++PN3:EN' QTY+12:4'

Third line item; PN3 Quantity Despatched 3 3rd CPS; second pallet; parent = shipment Outer packaging level, pallet type ISO 1 Marked packaging with SSCC Serial number of 2nd pallet Pallet contains 7 cartons Fourth line item; PN1 Quantity Despatched 3 Fifth line item; PN3 Quantity Despatched 4

Option 4:

Description of the shipment hierarchical structure in terms of the pallets and their content. Both pallets and cartons contained are uniquely identified by serial numbers.

This option allows to describe the composition of the shipment in a hierarchical nature. The shipment is identified as being composed of two pallets each identified by a serial shipping container code (SNP1 and SNP2). The message describes the composition of each pallet in terms of the units contained and their serial shipping container codes. Following the same hierarchical logic the message could go on to describe the composition of each carton in terms of its traded or consumer units.

Option 4 Detail Section of the Despatch Advice Message: CPS+1' PAC+2++201' CPS+2+1' PAC+1++201' 1st CPS; no parent Number of packages = 2 pallets type ISO 1 2nd CPS; first pallet; parent = shipment Outer packaging level, pallet type ISO 1

PCI+33E' GIN+BJ+SNP1' PAC+8++CT' LIN+1++PN1:EN' QTY+12:2' PCI+33E' GIN+BJ+SN1:SN2' LIN+2++PN2:EN' QTY+12:3' PCI+33E' GIN+BJ+SN3:SN5' LIN+3++PN3:EN' QTY+12:3' PCI+33E' GIN+BJ+SN6:SN8' CPS+3+1' PAC+1++201' PCI+33E' GIN+BJ+SNP2' PAC+7++CT' LIN+4++PN1:EN' QTY+12:3' PCI+33E' GIN+BJ+SN9:SN11' LIN+5++PN3:EN' QTY+12:4' PCI+33E' GIN+BJ+SN12:SN15'

Marked packaging with SSCC Serial number of 1st pallet Pallet contains 8 cartons First line item; PN1 Quantity Despatched 2 Marked packaging with SSCC Serial numbers of 2 cartons PN1 Second line item; PN2 Quantity Despatched 3 Marked packaging with SSCC Serial numbers of 3 cartons PN2 Third line item; PN3 Quantity Despatched 3 Marked packaging with SSCC Serial numbers of 3 cartons PN3 3rd CPS; second pallet; parent = shipment Outer packaging level, pallet type ISO 1 Marked packaging with SSCC Serial number of 2nd pallet Pallet contains 7 cartons 4th line item; PN1 Quantity Despatched 3 Marked packaging with SSCC Serial numbers of 3 cartons PN1 5th line item; PN3 Quantity Despatched 3 Marked packaging with SSCC Serial numbers of 4 cartons PN3

11. Advice for distribution of documents

Document in which, the side required to issue a set of international

commercial documents states the different consignees of the originals and

copies of certain commercial documents, also indication the number of copies to be transmitted to each of them. (UN/ECE/FAL). 12. Commission note Document issued by the seller (exporter) stating the value of the commission, the percentage of the invoice value or any other basis for calculating the commission owed to a commercial representative. (UN/ECE/FAL).
TEST

Answer:

1. What is the purchase order?

PO= a commercial document issued by a buyer to a seller, indicating the type, quantities and agreed prices for products or services the seller will provide to the buyer. 2. What is the NET 30 value? Answer:

Exercises Solved example: 1. Which of the following are purchase documents? a. The delivery order b. The order c. The invoice d. The purchase order e. None of the above
Key To solve:

OOO

2. The Commission note is: a. Document issued by the seller (exporter) stating the value of the commission, the percentage of the invoice value or any other basis for calculating the commission owed to a commercial representative b. Document in which, the side required to issue a set of international commercial documents states the different consignees of the originals and copies of certain commercial documents c. Document issued by the supplier (exporter) informing the buyer (importer) that the demanded products or representing the object of the contract are ready for expedition

d. Document issued by the supplier (exporter) that initiates the products expedition process to the destination indicated by their buyer (importer). e. None of the above. OOOOO 6.2. Financial/Banking, Insurance and Transport Documents

Financial And Banking Documents 1. Instructions for bank transfer Document used by a client in order to give his bank instructions for a certain payment of an amount, in a certain currency, to a certain person or firm from a foreign country using a specified method or using a method chosen by the bank. (UN/ECE/FAL). 2. Application for bankers draft Form used by a client towards his bank requiring the issuing of a draft and indicating the value and the issuing currency for the draft, the beneficiarys name, the place and country of the payment. (UN/ECE/FAL). 3. Collection payment advice Document issued by a bank and informing its client about the results of covering or remitting a letter of credit. (UN/ECE/FAL). 4. Documentary credit payment advice Document issued by a bank and notifying one of its clients concerning a payment using a letter of credit. (UN/ECE/FAL). 5. Documentary credit acceptance advice Document issued by a bank and notifying one of its clients concerning the acceptance of a letter of credit. (UN/ECE/FAL). 6. Documentary credit negotiation advice Document issued by a bank towards its clients notifying them concerning the negotiation of a letter of credit. (UN/ECE/FAL). 7. Application for bankers guarantee Document containing a clients application to his bank for the issuing of a guarantee in favour of a person or a firm from a foreign country, stating the

amount, the currency and the special conditions of a guarantee. (UN/ECE/FAL).

8. Bankers guarantee Document committing a bank for the payment of a certain amount to a firm or a person, under special conditions (others than the ones indicated in Uniformous rules and usages) (UN/ECE/FAL). 9. Documentary credit letter of indemnity Document issued by the beneficiary of a letter of credit, in which he accepts the responsibility of the un-execution of clauses or conditions of the letter of credit and commits to pay the amount received as credit, and also additional taxes or interest rates. (UN/ECE/FAL). 10. Documentary credit application Document in which a bank is requested to issue a letter of credit according to certain conditions. (UN/ECE/FAL). 11. Documentary credit Document issued by a bank declaring to have issued such a document based on which, the beneficiary can get payment, acceptance or denial under certain conditions and after presenting the stated documents and eventually of the indicated drafts. The documentary credit can be confirmed or not by an another bank. (UN/ECE/FAL). Letter Of Credit - is a document issued mostly by a financial institution, used primarily in trade finance, which usually provides an irrevocable payment undertaking (it can also be revocable, confirmed, unconfirmed, transferable or others e.g. back to back: revolving but is most commonly irrevocable/confirmed) to a beneficiary against complying documents as stated in the Letter of Credit.

- is abbreviated as an LC or L/C, and often is referred to as a documentary credit, abbreviated as DC or D/C, documentary letter of credit, or simply as credit (as in the UCP 500 and UCP 600). Once the beneficiary or a presenting bank acting on its behalf, presents to the issuing bank or confirming bank, if any, on or before the expiry date of the LC, documents complying with the terms and conditions of the LC, the applicable UCP and international standard banking practice, the issuing bank or confirming bank, if any, is obliged to honour irrespective of any instructions from the applicant to the contrary. In other words, the obligation to honour (usually payment) is shifted from the applicant to the issuing bank or confirming bank, if any. Non-banks can also issue letters of credit, however beneficiaries must balance the potential risk of payment default. - can also be the source of payment for a transaction, meaning that redeeming the letter of credit will pay an exporter. Letters of credit are used primarily in international trade transactions of significant value, for deals between a supplier in one country and a customer in another. They are also used in the land development process to ensure that approved public facilities (streets, sidewalks, stormwater ponds, etc.) will be built. The parties to a letter of credit are usually a beneficiary who is to receive the money, the issuing bank of whom the applicant is a client, and the advising bank of whom the beneficiary is a client. Almost all letters of credit are irrevocable, i.e., cannot be amended or cancelled without prior agreement of the beneficiary, the issuing bank and the confirming bank, if any.

- incorporate functions common to giros and Traveler's cheques. Typically, the documents a beneficiary has to present in order to receive payment include a commercial invoice, bill of lading, and documents proving the shipment was insured against loss or damage in transit. However, the list and form of documents is open to imagination and negotiation and might contain requirements to present documents issued by a neutral third party evidencing the quality of the goods shipped, or their place of origin. NOTE! The English name letter of credit derives from the French word accreditation, a power to do something, which in turn is derivative of the Latin word accreditivus, meaning trust. The Application of the Letter of Credit Form of Payment in International Business Transactions (2001) 10 Intl Trade L.J. p. 37. In effect, this reflects the modern understanding of the instrument. When a seller agrees to be paid by means of a letter of credit, the creditor/seller is looking at a reliable bank that has an obligation to pay the amount stipulated in the credit notwithstanding any defence relating to the underlying contract of sale. This is as long as the seller performs their duties to an extent that meets the requirements contained in the LC. 1. One of the primary peculiarities of the documentary credit is that the payment obligation is abstract and independent from the underlying contract of sale or any other contract in the transaction. Thus the banks obligation is defined by the terms of the credit alone, and the sale contract is irrelevant. The defences of the buyer arising out of the sale contract do not concern the bank and in no way affect its liability. Article 3(a) UCP states this principle clearly. Article 4 the UCP further states that banks deal with documents only, they are not concerned with the goods (facts). Accordingly, if the documents

tendered by the beneficiary, or his or her agent, appear to be in order, then in general the bank is obliged to pay without further qualifications. 2. The policies behind adopting the abstraction principle are purely commercial and reflect a partys expectations: a. firstly, if the responsibility for the validity of documents was thrown onto banks, they would be burdened with investigating the underlying facts of each transaction and would thus be less inclined to issue documentary credits as the transaction would involve great risk and inconvenience. b. Secondly, documents required under the credit could in certain circumstances be different from those required under the sale transaction; banks would then be placed in a dilemma in deciding which terms to follow if required to look behind the credit agreement. c. Thirdly, the fact that the basic function of the credit is to provide the seller with the certainty of receiving payment, as long as he performs his documentary duties, suggests that banks should honour their obligation notwithstanding allegations of misfeasance by the buyer. d. Finally, courts have emphasised that buyers always have a remedy for an action upon the contract of sale, and that it would be a calamity for the business world if, for every breach of contract between the seller and buyer, a bank were required to investigate said breach. NOTE! The principle of strict compliance also aims to make the banks duty of effecting payment against documents easy, efficient and quick. Hence, if the documents tendered under the credit deviate from the language of the credit the bank is entitled to withhold payment even if the deviation is purely terminological. The general legal maxim de minimis non curat lex has no place in the field of documentary credits. All the charges for issuance of Letter of Credit, negotiation of documents, reimbursements and other charges like courier are to the account of applicant or as per the terms and conditions of the Letter of credit.

If the LC is silent on charges, then they are to the account of the Applicant. The description of charges and who would be bearing them would be indicated in the field 71B in the Letter of Credit. Although documentary credits are enforceable once communicated to the beneficiary, it is difficult to show any consideration given by the beneficiary to the banker prior to the tender of documents. In such transactions the undertaking by the beneficiary to deliver the goods to the applicant is not sufficient consideration for the banks promise because the contract of sale is made before the issuance of the credit, thus consideration in these circumstances is past. In addition, the performance of an existing duty under a contract cannot be a valid consideration for a new promise made by the bank: the delivery of the goods is consideration for enforcing the underlying contract of sale and cannot be used, as it were, a second time to establish the enforceability of the bank-beneficiary relation.

Legal writers have analyzed every possible theory from every legal angle and failed to satisfactorily reconcile the banks undertaking with any contractual analysis. The theories include: the implied promise, assignment theory, the novation theory, reliance theory, agency theories, estoppels and trust theories, anticipatory theory, the guarantee theory. NOTE! Davis, Treitel, Goode, Finkelstein and Ellinger have all accepted the view that documentary credits should be analyzed outside the legal framework of contractual principles, which

require the presence of consideration. Accordingly, whether the documentary credit is referred to as a promise, an undertaking, a chose in action, an engagement or a contract, it is acceptable in English jurisprudence to treat it as contractual in nature, despite the fact that it possesses distinctive features, which make it sui generis. Even though a couple of countries and US states (see eg Article 5 of the Uniform Commercial Code) have tried to create statutes to establish the rights of the parties involved in letter of credit transactions, most parties subject themselves to the Uniform Customs and Practices (UCP) issued by the International Chamber of Commerce (ICC) in Paris. The ICC has no legislative authority, rather, representatives of various industry and trade groups from various countries get together to discuss how to revise the UCP and adapt them to new technologies. The UCP are quoted according to the publication number the ICC gives them. The UCP 600 are ICC publication No. 600 effective July 1, 2007. The previous revision was called UCP 500 and became effective 1993. Since the UCP are not laws, parties have to include them into their arrangements as normal contractual provisions. It is interesting to see that in the area of international trade the parties do not rely on governmental regulations, but rather prefer the speed and ease of auto-regulation. Documents that may be required for the documentary credit are: commercial documents of quantitative, qualitative and value identification of the merchandise external invoice, pro-forma invoice etc. transport documents: bill of leading, airway bill, expedition document etc. insurance documents: insurance certificate or policy documents proving quality, quantity and origin of the goods: quality certificate, warranty, certificate of origin etc.

Denial of payment can be explained and motivated by presenting incomplete or incorrect documents, documentary credit expiral, delayed document presentation to the bank or delays in goods expedition.

Documentary credit types: 1. according to the banking engagement: revocable it is a simple promises of payment, not committing the issuing bank. It can be modified or cancelled by the issuing bank at any time and without the obligation of a previous notification. The reason of such a payment is the importers wish to eventually reconsider his decisions in case there is reason for that. The issuing bank will act accordingly to the instructions given by the issuer. The essential condition is that the revocation should be executed before the goods expedition to the exporter. irrevocable the documentary credit involves the ferm commitment from the issuing bank to make the payment for the beneficiary, conditioned by the fact that the presented documents are strictly conform to the terms and conditions in the documentary credit. The irrevocable documentary credit has a widely spread use due to the low risk for the parties that cannot modify it unilaterally and cannot cancel it. This type of documentary credit can be confirmed or unconfirmed. 2. according to the confirmation, an irrevocable documentary credit can be: confirmed the firm commitment of the issuing bank is doubled by the commitment of a third bank confirming bank. In case of the letter of credit modification, the confirming bank may or not accept the extension of the confirmation to the new modified documentary credit. un-confirmed the issuing bank is the only one firmly committed to payment, the other banks intervene as mandataries in the name of the issuing bank without engaging to any ferm payment.

3.

according to the moment of the payment: - immediate payment the payment is performed at the moment of the documents presentation to the bank. Banks do not pay documents that do not comply to terms and conditions in the letter of credit. - term payment - delayed payment it is performed at a future date mentioned precisely in the documentary credit document. Usually, it takes 30 to 60 days from the moment of the documents presentation. - negotiating envisaging to avoid certain disadvantages for the exporter, the issuing bank based on the instructions of the issuer, may authorize an other bank to negotiate the documents. in this respect, the negotiating bank is paid a commission, usually by the beneficiary of the documentary credit. - accepting used for credit exports. At the same time with the documents, the exporter presents to the bank a draft or a set of drafts on a bank indicated in the letter of credit with certain deadlines. The bank accepts the drafts becoming principal debtor, returns them to the exporter and sends the documents to the importer. At deadline, the exporter presents the drafts to the bank and the bank pays them.

4. according to the location: - the country of the exporter - the country of the importer - a third country. NOTE! The location of the documentary credit, meaning the establishment of the paying bank is important due to the promptness, the commission and other taxes. Normally, the documentary credit must be located in the exporters country. The commission and other taxes of a documentary credit located in a foreign country are due to the beneficiary, excepting the notification and confirmation commission supported by the importer.

5. according to its clauses: - transferable the documentary credit may give the beneficiary the right to require the bank to make the document payable completely or partially for one or more beneficiaries. Such a documentary credit is used in intermediation where the beneficiary of the documentary credit is an intermediary and the second beneficiary is the real exporter. - red clause the paying bank is authorized to make the payment in favor of the beneficiary before this one presents the documents proving the goods expedition. Payment may be in advanced or may be equal to the documentary credit amount. The amount thus obtained can be used by the exporter to buy the goods or certain components. At the deadline stated in the documentary credit, the beneficiary delivers the goods and presents the documents to the bank being paid the difference. - revolving the value of the documentary credit revolves automatically as the payments are performed according to a certain level according to each delivery. It is used for large value contracts, with scheduled deliveries. The value of the documentary credit is given by a certain delivery and consequently, the banking taxes are lower. 6. according to combined usage: - back-to-back two types of letters of credit: an export one and an import one correlated in value and in time by an intermediary. There are to types of back-to-back letters of credit: - accordant when the issuing of a subsidiary documentary credit requires the same documents as the original one. - unaccordant when the original documentary credit, after the change of the invoice or the draft, can not be used with the necessary documents for the subsidiary one. - of compensation containing a clause that does allows the use of the exporting documentary credit only in correlation to the import one. The combination of the to letters of credit containing such clauses, partners involved in compensation operations make sure that if one of them will not

deliver the goods in compensation, the other one will receive from the bank the difference in an amount of money. - leased the beneficiary of a documentary credit is entitled that a part or to the whole value to be leased to a third the lease beneficiary, most often the real exporter.

From the exporter point of view, the best documentary credit lowest in risk is: - irrevocable not to be modified or cancelled; - confirmed beneficiates of a another banks guarantee; - located in the exporters country; - paid immediately. 12. Documentary credit notification (Notificarea acreditivului) Document issued by a bank as notification of receipt, transmission of the documentary credit to a beneficiary or bank that gives notification of receipt. (UN/ECE/FAL). 13. Documentary credit transfer advice (Aviz de transferabilitate al acreditivului) Document issued by a bank and notifying the parties of a contract that a documentary credit (or part of it) will or has been transferred in favor of a a second beneficiary. (UN/ECE/FAL). 14. Documentary credit amendment advice (Aviz de modificare a acreditivului) Document issued by a bank and notifying that certain clauses or documentary credit conditions have been changed. (UN/ECE/FAL). 15. Bankers draft (Trata) A banker's draft (also called a bank cheque) is a cheque (or check) where the funds are taken directly from the financial institution rather than the individual drawer's account. NOTE! A normal cheque represents an instruction to transfer a sum of money from the drawer's account to the payee's account.

When the payee deposits the cheque into their account, the cheque is verified as genuine (or 'cleared', a process typically taking several days) and the transfer is performed (usually via a clearing house or similar system). Any individual or company operating a current account (or checking account) has authority to draw cheques against the funds stored in that account. it is impossible to predict when the cheque will be deposited after it is drawn. Because the funds represented by a cheque are not transferred until the cheque is deposited and cleared, it is possible the drawer's account may not have sufficient funds to honour the cheque when the transfer finally occurs. This dishonoured or 'bounced' cheque is now worthless and the payee receives no money, which is why cheques are less secure than cash.

NOTE! By contrast, when an individual requests a banker's draft they must immediately transfer the amount of the draft (plus any applicable fees and charges) from their own account to the bank's account. An individual without an account at the issuing bank may request a banker's draft and pay for it in cash, subject to applicable anti-money laundering law and the bank's issuing policies, Because the funds of a banker's draft have already been transferred they are proven to be available; unless the draft is a forgery or the bank issuing, the draft goes out of business before the draft is deposited and cleared, the draft will be honoured. a draft must still be cleared and so it will take several days for the funds to become available in the payee's account. (UN/ECE/FAL). 16. Bill of exchange (Cambie) NOTE! A bill of exchange or "Draft" is a written order by the drawer to the drawee to pay money to the payee.

 The most common type of bill of exchange is the cheque, which is defined as a bill of exchange drawn on a banker and payable on demand. Bills of exchange are used primarily in international trade, and are written orders by one person to his bank to pay the bearer a specific sum on a specific date sometime in the future. Prior to the advent of paper currency, bills of exchange were a more significant part of trade. They are a rather ancient form of instrument (UN/ECE/FAL). 17. Promissory note (Bilet la ordin) NOTE! A promissory note is a written promise by the maker to pay money to the payee. The most common type of promissory note is a bank note, which is defined as a promissory note made by a bank and payable to bearer on demand. Through promissory note a person i.e. maker (drawer) promise to pay the payee (beneficiary) a specific amount on a specified date without any condition. the important points in a promissory note are: 1) it is unconditional order 2) a specific amount 3) payable to the order of a person or on demand 4) payable on a specified date. Insurance Documents 1. Insurance certificate (Certificat de asigurare) Document issued by an insurance firm (agent) confirming the agreement unpon an insurance and the issuing of an insurance policy. This is especially applicable to special cargos and when the cargo is insured using a floating or opened policy; at the request of the insured firm, this can be exchanged against a policy. (UN/ECE/FAL). 2. Insurance policy (Polia de asigurare) Document issued by an insurance agent as proof of the acceptance to insure. It contains the agreement through which the insurance firm commits to compensate

with a determined amount the other parties for the loss derived from risks and accidents mentioned in the insurance contract. (UN/ECE/FAL). 3. Insurance declaration sheet. (Borderou sau foaie de declarare pentru asigurare) Document used by an insurance agent in ordert o communicate the insurance firm the detailed description of different shippings (deliveries) that are covered by the insurance contract or a floating policy between the parties. (UN/ECE/FAL). 4. Insurers invoice (Factura asiguratorului) Document issued by the insurer in order to indicate the price of the contracted insurance and soliciting the payment of the insurance (UN/ECE/FAL). 5. Cover note (Not de acoperire) Document issued by an insurer (broker, insurance agent) in order to notify the insured that his instructions for the execution of the insurance have been executed (UN/ECE/FAL). Transport documents 1. Universal (multipurpose) transport document (Document de transport universal (polivalent)) Transport document consisting in a contract for goods transport using a certain transport mode, on the territory of one or more countries based on international conventions or national legislation applicable according to the transport conditions of the carrier or transport operator. (UN/ECE/FAL). 2. Goods receipt, carriage (Confirmare de primire a mrfurilor (pentru transport) = Procesverbal de predare-primire) 12-10-5 Document issued by a carrier or by the carriers agent in order to confirm the reception of the goods, in order to be transported in the conditions mentioned in the document, and that allow the carrier to issue a transport document. (UN/ECE/FAL). 3. Sea way bill (Liner way bill, Ocean way bill) (Scrisoare de transport maritim (nave de linie, transport oceanic)) Negociable document consisting in a seaway transport contract for goods and that states the reception of the goods by the carrier, document engaging the carrier to deliver them to the specified recipient (UN/ECE/FAL). NOTE!

Sinonimous the direct sea way bill or negociable used under certain circumstances (eg: Canada and the USA). 4. Bill of lading (Conosament 12-3-11 (CEE/ONU)) NOTE! Document consisting in a contract for sea transport of goods and confirming the reception and the loading of the goods by the carrier. Through this document, the carrier commits to deliver the goods to the destination against document remission.

The specification in the document of a clause stating that goods must be delivered at the demand of a certain person or of the carrier also represents an engagement (Conference of the United Nations for Seaway Transport). The Bill of leading is decisively important in the payment of the goods this document represent. It makes certain proof of the loading of goods on-board of the vessel and symbolically represents the cargo, the possessions of the bill of leading is equivalent to the possession of this cargo. The Bill of leading is usually issued in several originals (minimum 2) and several negotiable copies. Indifferent of the number of originals of a bill of leading, only one of them can produce the legal effects of the cargo release the one first presented to the captain of the vessel in the off-loading port. From that moment on, all the originals become null. From the point of view of the transfer of the property right, bill of leading can be nominal, at carrier or at order. 5. Mates receipt (Chitana cpitanului (pentru primirea mrfurilor la bord) = Chitana cpitanului) (CEE/ONU) Document issued by the captain of a vessel and certifying that a certain quantity of a cargo has been loaded and describing the apparent state of the goods. This allows the carrier to issue the bill of leading (UN/ECE/FAL). 6. Rail consignement note (generic term) (Scrisoare de trsur feroviar (termen generic)) Transport document constituting an un-signed contract between the shipper and the carrier (railway agent) for the transport of goods.

NOTE! In international railway traffic, this document must be in accordance to the model in international conventions for railway transport of goods: CIM Convention and SMGS (GTI) convention. 7. Road list SMGS (Lista de nsoire SMGS) Accounting document accompanying the cargo throughout the transport (one copy for every railway consignment note). (UN/ECE/FAL).
TEST

Answer:

1. What is the documentary letter of credit?

The documentary letter of credit is a document issued mostly by a financial institution, used primarily in trade finance, which usually provides an irrevocable payment undertaking (it can also be revocable, confirmed, unconfirmed, transferable or others e.g. back to back: revolving but is most commonly irrevocable/confirmed) to a beneficiary against complying documents as stated in the Letter of Credit. 2. Describe the essential Documentary credit types according to the banking engagement

Answer:

Exercises Solved example: 1. Legal writers have analyzed every possible theory from every legal angle and failed to satisfactorily reconcile the banks undertaking with any contractual analysis. The theories include: a. the implied promise, b. assignment theory, c. the innovation theory, d. legal theory, e. none of the above
Key

OOO

To solve: 2. The Bill of lading is:

a. Document consisting in a contract for sea transport of goods and confirming the reception and the loading of the goods by the carrier. b. Negociable document consisting in a seaway transport contract for goods and that states the reception of the goods by the carrier c. Transport document consisting in a contract for goods transport using a certain transport mode, on the territory of one or more countries based on international conventions or national legislation applicable according to the transport conditions of the carrier or transport operator d. Document issued by a carrier or by the carriers agent in order to confirm the reception of the goods, in order to be transported in the conditions mentioned in the document, and that allow the carrier to issue a transport document e. None of the above OOOOO Theme abstract An international shipment requires many different types of documents. Each of these documents must be filled in a very specific fashion, often depending of the country of destination of the goods, the type of goods, the method of transportation, the method of payment chosen by the exporter and importer, the bank(s) involved, and so on. Each of these documents must also contain very detailed information and specific statements, and must be often be filed in a certain time frame with a specific administration. It is common to have to issue more than one original for some of these documents, as well as a multitude of copies. International commercial documents and descriptions are adopted by: WCO - World Customs Organization (1952 - Customs Co-operation Council) ICC - International Chamber of Commerce (and Banking Comission) UNCTAD FIATA - International Federation of Freight Forwarders Associations IATA International Air Transport Association UPU - Universal Postal Union Documents are grouped according to their usage domain, the place and moment of their issuing: production documents, purchase documents, sales documents, financial and banking documents, insurance documents, transport documents.