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The UCP
tells bankers to determine compliance with the LC on the basis of
examination of the documents alone, which the LC calls for presentation. The
UCP has codified standard for examination of the documents, which the
bankers must observe to determine whether or not the documents appear on
their face to constitute a complying presentation. So the beneficiary must
examine, before presentation, whether the required documents are complying.
For this purpose, the beneficiary must understand the UCP requisites for
documents. The typical constituents of a document are name, signature, date,
address, data content, original or copy, and currency. The constituents must
be as per the UCP specifications and LC stipulations to make the document
fit as complying presentation. The prepared or arranged document must be
examined before presentation, for ensuring complying presentation. A
document must be complete, clear, consistent and complying. Let us checklist
the UCP requisites for documents. Documentation needs knowledge and
expertise. Use knowledge for document preparation. Use knowledge for
pre-presentation document examination. Rely upon good knowledge for good
documentation. Rely upon good documentation for good chances in payment.
For
correct documentation what is required
is correct understanding of UCP.
Because
what is required in a document is what is required by UCP.
The complying
structure of a document
NAME
What’s in a name? In UCP-regulated documentation
name is an important thing as it is considered for determination of
compliance. Name is a vital part of the document as new UCP says:
. A transport document must appear to indicate the name of the carrier.
. A commercial invoice must be made out in the name of the applicant.
SIGNATURE
Which document need to be signed or not? Who can sign? How to sign?
The signature part of the document if signed must meet the UCP rules. The
rules allow different methods of signature production – handwritten,
mechanical, and electronic. The rules allow various options in the matter of
who can sign – signature by document issuing company or its agent, master,
or proxy. You should know the alternative methods and options.
. A document
may be signed by handwriting, facsimile signature, perforated signature,
stamp, symbol or any other mechanical or electronic method of
authentication.
. A
requirement for a document to be legalized, visaed, certified or similar
will be satisfied by any signature, mark, stamp or label on the document
which appears to satisfy that requirement.
. A bank
shall treat an original any document bearing an apparently original
signature.
. A
transport document must appear to indicate the name of the carrier and be
signed by the carrier, or a named agent for or on behalf of the carrier, or
by the master or a named agent for or on behalf of the master.
. Any
signature by an agent must indicate whether the agent has signed for or on
behalf of the carrier or master.
. A
commercial invoice need not be signed.
. An
insurance document must appear to be issued and signed by an insurance
company, an underwriter or their agents or their proxies.
DATE
Expiry
date for presentation. Issuance date. Shipment date. UCP is very
particular about date requirement. You must be particular to fulfill the
date requirement. You must check the date. The UCP rules for date are:
.
A document may be dated prior to the issuance date
of the credit, but must not be dated later than its date of presentation.
. A credit must state an expiry date for presentation.
. An expiry date stated for honor or negotiation will be deemed to be the
expiry date for presentation.
. If
the expiry date of a credit or the last day for presentation falls on a day
when the bank to which presentation is to be made is closed for reasons
other those referred to in article 36, the expiry date or the last day for
presentation, as the case may be, will be extended to the first following
banking day. The latest date for shipment will not be, however, extended as
a result.
. A
transport document should indicate the date on which the goods have been
dispatched, taken in charge or shipped on board.
. A
presentation consisting of more than one set of transport documents
evidence shipment commencing on the same means of conveyance and for the
same journey, provided they indicate the same destination, will not be
regarded as covering a partial shipment, even if they indicate different
dates of shipment…. If the presentation consists of more than set of
transport documents, the latest date of shipment as evidenced by any of the
sets of transport documents will be regarded as the date of shipment.
. In case of transport documents other than courier receipt the date of
issuance is the date of shipment unless stated otherwise by notation. In
case of the courier receipt the date of pick up or of receipt is the date of
shipment. A post receipt or certificate of posting, however named,
evidencing receipt of goods for transport must be dated at the place from
which the credit states the goods are to be shipped.
. A presentation including one or more original transport documents subject
to articles 19, 20, 21, 22, 23, 24 or 25 must be made by or on behalf of the
beneficiary not later than 21 calendar days after the date of shipment as
described in these rules, but in any event not later than the expiry date of
the credit.
. The date of the insurance document must be no later than the date of
shipment, unless it appears from the insurance document that the cover is
effective from a date not later than the date of shipment.
ADDRESS
New UCP addresses the address problem in documentation. The usual
problem is that the address on a document may not be the same as on the LC.
The new UCP is a solution.
UCP 600 says: When the address of the beneficiary and the applicant appear
in any stipulated document, they need not be the same as those stated in the
credit or in any other stipulated document, but must be within the same
country as the respective addresses mentioned in the credit. Contact details
(telefax, telephone, email and the like) stated as part of the beneficiary’s
and the applicant’s address will be disregarded. However, when the address
and contact details of the applicant appear as part of the consignee or
notify party details on a transport document subject to articles 19, 20, 21,
22,23, 24 or 25, they must be stated as in the credit.
DATA CONTENT
The essence of UCP is regulation of data content. Data must
not
be conflicting. Prepare and examine documents before presentation to ensure
they are conflict-free. The UCP regulates data content as below:
Data in a document, when read in context with the credit, the document
itself and international standard banking practice,
need not be identical to, but must not conflict with,
data in that document, any other stipulated document or the credit.
In documents other than the commercial invoice, the description of the
goods, services or performance, if states, may be
in general terms
not conflicting
with their description in the credit.
The description of the goods, services or performance in a commercial
invoice must correspond with that appearing in the credit.
If a credit requires presentation of a document other than a transport
document, insurance document or commercial invoice, without stipulating by
whom the document is to be issued or its data content, banks will accept the
document as presented if its content appears to fulfill the function of the
required document and otherwise complies with sub-article 14 (d).
Check the data content for spelling errors to be on the safe. Though a
spelling mistake or typing error that does not affect the meaning of the
word or the sentence in which it is used, may not make the document
discrepant, as ISBP Paragraph 28 says, it does not mean we should ignore the
mistake, for rectification, if we happen to see it before presentation.
“Correct documentation” should be your attitude and policy. “Present the
documentation as it is and correct it after presentation” - this is a wrong
way of business management.
“A
stitch in time saves nine."
“Better safe than sorry”
ORIGINAL
vs.
COPY
An LC says “in duplicate”. What does it mean? Another LC says to
present “copies of documents” Where LC is not clear UCP 600 makes it clear.
The new UCP tells what “in duplicate” means UCP says
“at least one original of each document stipulated in the credit must
be presented”.
So you must know the UCP rules for original and copy.
You must
understand articles 17 of UCP 600 that speaks of original document. If you
handwrite a document it is original unless you write “copy” on it.
Similarly, if you use business letterhead for documentation the document is
original unless the document indicates otherwise – that is, you write or
stamp “copy” on it. If the LC says, for example, in duplicate, the UCP
clarifies that it means one original and the remaining number in copies. If
an LC demands presentation of copies
of documents
it means presentation of either originals or copies. Where LC is not clear
new UCP makes it clear. So you must know new UCP. You must learn it. You
must use it.
The
sub-article “c” of article 17 needs special attention. It says:
“Unless a
document indicates otherwise, a bank will also accept a document as original
if it:
. Appears to
be written, typed, perforated or stamped by the document issuer’s hand; or
. Appears to
be on the document issuer’s original stationery; or
. States
that it is original, unless the statement appears not to apply to the
document presented.
A rail
transport document marked “duplicate” will be accepted as an original. A
rail or inland waterway transport document will be accepted as an original
whether marked as an original or not.
CURRENCY
The commercial invoice must be made out in the same
currency as the credit.
. The insurance document must be in the same currency as the credit.
Conclusion
Make correct documentation. Examine the documents for accuracy. Correct
the documentation, if and where necessary, before presentation.
“A
stitch
in time
saves nine."
For correct documentation you must have correct understanding of UCP.
Because what is required in a document is what is required by UCP.
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