Professional Documents
Culture Documents
It is an undertaking by importers bank stating that the payment will be made to the exporter if the required documents are presented to the bank within the validity of the L / C. UCP 600 by ICC Uniform Custom & Practice
d) Advising Bank : Issuing banks branch or correspondent bank in the Exporters country to which the l/c is sent for onward Transmission to the beneficiary.
e) Confirming Bank : The bank in beneficiarys country which guarantees the credit on the request of the issuing bank. f) Negotiating Bank : The bank to whom the beneficiary presents his Documents for payment under l/c.
The importer requests his bank to open a L/C either by paying the amount of credit in advance or open credit on his current bank A/C. The issuing bank issues the L/C & forward it to the corresponding bank with a request to inform the beneficiary that the L/C has been opened. The issuing bank may request the advising bank to add its confirmation to the L/C , if so required by the beneficiary. The exporter takes in his possession the L/C & check that L/C is confirmed. If needed advise importer to amend the said L/C as per requirements. He exporter supplies the goods & presents the full set of documents along with the draft to the negotiating bank. The negotiating bank then scrutinizes the documents & if they are in order makes the payment to the exporter as per agreed terms. The issuing bank will reimburse the amount (which is paid to the exporter) to the negotiating bank. The issuing bank in turn presents the documents to the importer & debits his a/c for the corresponding amount.
Incoterms 2000
DAF EXW
Beneficiary (Seller)
Applicant (Buyer)
DDU DDP
Transportation to Buyer
Dock of Importation
CPT CIP
Import Duty
Common LC Discrepancies
AIR WAYBILL Evidences unauthorized charges to be collected from consignee contrary to shipping terms (i.e. handling, documentation, cartage, insurance) Shipment made between airports other than those on the letter of credit Not signed by carrier, or his agent, does not bear the reception stamp of the carrier or his agent Does not include flight date and/or flight number INSURANCE DOCUMENT Goods are under-insured An insurance certificate was presented when credit calls for an insurance policy Does not identify with goods shipped (i.e. missing shipping marks, number of shipping units, weights, etc.) Dated after the date of shipment, and no evidence that coverage is effective at the latest date from shipment Not endorsed or countersigned Not all originals presented or accounted for Insurance risks covered not as specified on the letter of credit GENERAL Late presentation Letter of Credit expired Partial shipment effected when the letter of credit prohibits it Documents inconsistent with one another (i.e. shipping marks, weights, quantities differ) Beneficiarys name/address not per the letter of credit
Common LC Discrepancies
DRAFTS Drawn on the wrong party Tenor (sight/time) is incorrect Not properly signed and/or endorsed Amount differs from what is indicated on the invoice Amount differs in words and numbers Letter of Credit number and issuing banks name are missing Drawn on statement not per letter of credit COMMERCIAL INVOICE Description of goods not exactly as per the letter of credit L/C amount exceeded. Excess quantity shipped Partial shipment effected (when prohibited) Shipping terms not stated, or inconsistent with the letter of credit Packages listed as cartons, are described as cases on the bill of lading (inconsistency) Goods shipped not required under the letter of credit (i.e. samples at no charge) The amount of freight charges, if shown separately, differs from that shown on the transport document Includes unauthorized charges, (i.e. handling and documentation charges in addition to FOB vessel/FCA airport terms Not signed/not visaed by Chamber of Commerce or not legalized (when required). MARINE BILL OF LADING Unclean bill of lading presented (i.e. expressly declares a defective condition of the goods/ and or of the packaging No evidence of goods actually shipped or loaded on board a named vessel (i.e. notation is not dated or signed)
Upon receipt of the letter of credit, read it in its entirety and check the following: Buyer _________________________________ Purchase Order No. _____________ or Pro Forma Invoice No. ___________ dated _________________ L/C No. _________________________ Date Received __________________[ ] Preadvised by phone TERMS TO CHECK Letter of Credit is [ ] Irrevocable [ ] Revocable Letter of Credit has been [ ] Advised [ ] Confirmed Beneficiarys name and address [ ] OK [ ] NO Amount sufficient to cover costs [ ] OK [ ] NO Price, Quantity, good description [ ] OK [ ] NO Expiry Date [ ] OK [ ] NO Latest Shipment Date [ ] OK [ ] NO Terms of the Draft [ ] Sight [ ] Time (Usance/terms) U. S. bank charges [ ] Buyer [ ] Seller SHIPPING INSTRUCTIONS Export License needed [ ] YES [ ] NO Need documents legalized [ ] YES [ ] NO Partial Shipments [ ] Allowed [ ] Prohibited Transshipments [ ] Allowed [ ] Prohibited Shipment via [ ] Ocean [ ] Air Shipment terms [ ] FOB [ ] FCA [ ] FAS [ ] CFR [ ] CPT [ ] CIF [ ] CIP Shipment from __________________________ to ______________________________ Consigned to ____________________________________________________________ Shipping Marks ____________________________________________________________ Bank to present documents to _________________________________________________ Copy of Letter of Credit to be sent to:
[ ] EXW