Year: 2019

Is It Possible to Submit 2 Sets Bills of Lading Under One Letter of Credit Presentation?

Ozgur Eker (CDCS) How to Work With a Letter of Credit, Letter of Credit Basics
Is it possible to submit 2 bills of lading under one letter of credit presentation?

Amer from Ajman (United Arab Emirates (UAE)) asks this question. I would like to thank him once again for this great question.

Question: I have an L/C as follows:

  • 43P: Partial Shipment: Allowed
  • 43T: Transshipment: is not Allowed.

I shipped the goods in 5 container as below. Which means that I had submit 2 B/L s for the same L/C. Please keep in mind that all other details will be the same.

Can I know is it allowed to submit 2 B/L for my L/C.

Thanking you.

  • 2 container in one vessel on 11/02/2014
  • 3 container in another trip on 18.02/2014

Answer: First of all, we need to determine that the shipment, which is effected as indicated above, could be accepted as a partial shipment or not.

UCP 600 article 31 states that a presentation consisting of one or more sets of transport documents evidencing shipment on more than one means of conveyance within the same mode of transport will be regarded as covering a partial shipment, even if the means of conveyance leave on the same day for the same destination.

partial shipment letter of credit

As indicated in UCP 600 if more than one means of conveyance has been affected under one letter of credit presentation this will be regarded as a partial shipment.

We understand from Amer’s explanations that he has been used two means of conveyance on his shipments. He has loaded two containers to vessel A on 11.February.2014 and remaining 3 containers to Vessel B on 18.February.2014.

After determining that partial shipment has been effected on this presentation, we need to look at the letter of credit text in order to understand, whether partial shipment was allowed or not.

Again, we can see from Amer’s information that partial shipment is allowed under respected documentary credit.

Conclusion: Partial shipment has been effected on these shipments and letter of credit allows partial shipments. As a result, beneficiary can submit two sets of bills of lading under the same presentation without any problem.

What is the Meaning of by Payment?

Ozgur Eker (CDCS) At Sight, Payment Types of Letter of Credit , , ,
What is the meaning of by payment?

At sight payment is a payment due on demand.

At sight letter of credit can be defined as a letter of credit that is payable as soon as the complying documents have been presented to the issuing bank or the confirming bank.

Some credit do not mention at sight term, instead issued available by payment.

Is “by payment” the same as “at sight payment” in a letter of credit transaction?

What happens if the letter of credit does not mention at sight but states only by payment?

When should the issuing bank pay to the exporter if credit available by payment?

How long should an exporter wait for the payment when credit states that the payment terms is by payment only?

Let me try to answer all of these questions via case study.

Case Study: What is the Meaning of by Payment?

Dear Sir,

I find your website very useful. I think you have published more than 300 articles and they are very helpful to me. I am working as an export manager in an international steel manufacturing firm in India.

I would like to ask you a question regarding letter of credit payment terms.

A while ago I have received an irrevocable letter of credit, but in the letter of credit there is no specific payment date and also the credit does not mention a sight draft. In the letter of credit issuing bank only put below statement in “Field 41D : Available with… by..” section.

” :41D/AVAILABLE WITH … BY … : ANY BANK IN INDIA
BY PAYMENT “

What I would like to learn is that if the meaning of “BY PAYMENT” and “AT SIGHT” is the same or not?

Some of my friends here suggested that we should amend the “by payment” statement with “at sight”. Is he correct?

Regards
Durai Raj

Answer:

Dear Duraj thanks for your question. Actually “by payment” and “at sight” have the same meaning in letters of credit. Swift rule book states that “When code contains BY PAYMENT, this should be understood to mean payment at sight.”

Issuing banks have 5 banking days to check your documents after day have received your presentation. If they find your presentation complying, then they have to pay the letter of credit amount to you without losing time under at sight letters of credit.

If I were you I would not count too much on confirming banks when a letter of credit is available with at sight payment. In most cases confirming banks do not pay your money until they have been reimbursed by the issuing banks.

What Happens if Due Date of a Letter of Credit Falls on a Bank Holiday?

Ozgur Eker (CDCS) How to Work With a Letter of Credit, Letter of Credit Basics , ,
What happens if due date of a letter of credit falls on a bank holiday?

Letter of credit is a conditional payment method. It is only payable if the issuing or confirming bank determines that the presentation is complying.

Once, either the issuing bank or the confirming bank determines that the presentation is complying, the letter of credit amount must be paid to the beneficiary on due date.

But what happens if the due date of an L/C is a non-banking day or bank holiday? On this post I will answer this question.

However, first of all I must define the bank holiday term according to the international letter of credit rules. What is a banking day as per ICC? How a banking day is defined under the International Standard Banking Practices?

UCP 600 defines banking day as follows:

“Banking day means a day on which a bank is regularly open at the place at which an act subject to these rules is to be performed.”

We should understand from the definition of the ICC is that if an issuing bank or confirming bank is open on a day to conduct letter of credit transactions, then that day will be defined as a banking day.

If an issuing bank or confirming bank is not open to conduct letter of credit transactions, then it will be understood as a non-banking day or bank holiday.

According to ISBP 745:

“Payment must be available in immediately available funds on the due date at the place where the draft or documents are payable, provided such due date is a banking day in that place. If the due date is a non-banking day, payment will be due on the first banking day following the due date.”

We understand from ISBP’s definition that if the due date of a letter of credit falls on a bank holiday, then the payment will be made the on the first banking day following the due date.

Case Study : Does a Saturday count as a “banking day”?

If an issuing bank, confirming bank or nominated bank is open on a Saturday to operate, among its other duties, documentary letter of credit transactions, then that half or full day will be classified as one of the “five banking days following the date of receipt of the documents”. As per UCP 600 there is no difference between a full working day or half working day when determining a banking day. If a bank’s letter of credit department is open on Saturday, then it will be deemed to be a banking day.

What are the Differences Between MT 700 and MT 760?

Ozgur Eker (CDCS) Bank Guarantees, Commercial Letter of Credit, Letter of Credit Types, MT 700 Issue of a Documentary Credit, MT 760 Guarantee/Standby Letter of Credit, Standby Letter of Credit, Swift Messages , , ,
What are the Differences Between MT 700 and MT 760?

MT700 and MT760 swift message types that banks use when issuing documentary credits and guarantees, respectively.

  • Banks use MT700 when issuing a commercial letter of credit or a standby letter of credit.
  • Banks use MT760 when issuing a demand guarantee or a standby letter of credit.

MT700 is used to indicate the terms and conditions of a commercial documentary credit or a standby letter of credit which has been originated by the Sender (issuing bank). This message is sent by the issuing bank to the advising bank.

MT760 is is sent between banks involved in the issuance of a demand guarantee or a standby letter of credit. It is used to issue a guarantee or to request the Receiver to issue a guarantee.

Comparison Between MT700 and MT760

comparison between mt700 and mt760

How to Determine Date of Shipment on a Road Transport Document?

Ozgur Eker (CDCS) How to Work With a Letter of Credit, Letter of Credit Basics, Letter of Credit Documents, Road Transport Document ,
How to determine date of shipment on a Road Transport Document?

Date of shipment is one of the key definitions in a letter of credit transaction. It is used to determine

  • whether shipment made on time or not (in other words a late shipment has been effected or not)
  • whether documents presented within the presentation period or not (in other words a late presentation has been effected or not)
  • maturity date of the time draft
  • maturity date of a deferred payment letter of credit.

Date of shipment can be determined in two ways on a Road Transport Document.

  • In the first scenario we will face a situation where road transport document does not contain any date of receipt or a date of shipment notation.
  • In the second scenario we will be having a road transport document which contains a date of receipt or a date of shipment notation.

Option 1 => There is no notation of a date of receipt or a date of shipment on the Road Transport Document:

  • The date of issuance of the road transport document will be deemed to be the date of shipment.

Option 2=> Road transport document indicates, by notation, a date of receipt or a date of shipment:

  • Date of receipt notation/stamp => this date will be deemed to be the date of shipment.
  • Date of shipment notation/stamp => this date will be deemed to be the date of shipment.

How to Determine Date of Shipment on a Charter Party Bill of Lading?

Ozgur Eker (CDCS) Charter Party Bill of Lading, How to Work With a Letter of Credit, Letter of Credit Basics, Letter of Credit Documents ,
How to determine date of shipment on a Charter Party Bill of Lading?

Date of shipment is one of the key definitions in a letter of credit transaction. It is used to determine

  • whether shipment made on time or not (in other words a late shipment has been effected or not)
  • whether documents presented within the presentation period or not (in other words a late presentation has been effected or not)
  • maturity date of the time draft
  • maturity date of a deferred payment letter of credit.

Date of shipment can be determined in two ways on a Charter Party Bill of Lading.

  • In the first scenario we will face a situation where Charter Party Bill of Lading does not contain any date of shipped on board notation.
  • In the second scenario we will be having a Charter Party Bill of Lading which contains a dated shipped on board notation.

Option 1 => There is no shipped on board notation exists on the Charter Party Bill of Lading:

  • The date of issuance of the Charter Party Bill of Lading will be deemed to be the date of shipment.

Option 2=> Charter Party Bill of Lading indicates, by stamp or notation, a date of shipped on board: Notation date will be deemed to be the date of shipment as specified below:

  • Date of shipped on board notation/stamp => this date will be deemed to be the date of shipment

Example: On the below figure you can see a shipped on board notation which is located on the bottom of a Charter Party Bill of Lading.

As there is a dated on board notation exist on the Charter Party Bill of Lading, date of shipment will be deemed to be this shipped on board notation date which is 30.December.2012.

charter party bill of lading date of shipment

How to Determine Date of Shipment on a Sea Waybill?

Ozgur Eker (CDCS) How to Work With a Letter of Credit, Letter of Credit Basics, Letter of Credit Documents, Sea Waybill ,
How to determine date of shipment on a Non-Negotiable Sea Waybill?

Date of shipment is one of the key definitions in a letter of credit transaction. It is used to determine

  • whether shipment made on time or not (in other words a late shipment has been effected or not)
  • whether documents presented within the presentation period or not (in other words a late presentation has been effected or not)
  • maturity date of the time draft
  • maturity date of a deferred payment letter of credit.

Date of shipment can be determined in two ways on a Non-Negotiable Sea Waybill.

  • In the first scenario we will face a situation where Non-Negotiable Sea Waybill does not contain any date of shipped on board notation.
  • In the second scenario we will be having a Non-Negotiable Sea Waybill which contains a dated shipped on board notation.

Option 1 => No shipped on board notation exists on the Non-Negotiable Sea Waybill:

  • The date of issuance of the Non-Negotiable Sea Waybill will be deemed to be the date of shipment.

Option 2=> Non-Negotiable Sea Waybill indicates, by stamp or notation, a date of shipped on board:

  • Date of shipped on board notation/stamp => this date will be deemed to be the date of shipment

Example: On the below figure you can see a shipped on board notation which is located on the bottom of a Non-Negotiable Sea Waybill.

As there is a dated on board notation exists on the Non-Negotiable Sea Waybill, date of shipment will be deemed to be this shipped on board notation date which is 30.December.2012.

date of shipment on sea waybill

How to Determine Date of Shipment on a Multimodal Bill of Lading?

Ozgur Eker (CDCS) Bill of Lading, How to Work With a Letter of Credit, Letter of Credit Basics, Letter of Credit Documents ,
How to determine date of shipment on a Multimodal Bill of Lading?

Date of shipment is one of the key definitions in a letter of credit transaction. It is used to determine

  • whether shipment made on time or not (in other words a late shipment has been effected or not)
  • whether documents presented within the presentation period or not (in other words a late presentation has been effected or not)
  • maturity date of the time draft
  • maturity date of a deferred payment letter of credit.

Date of shipment can be determined in two ways on a multimodal bill of lading according to the letter of credit rules.

  • In the first scenario we will face a situation where multimodal bill of lading does not contain any date of dispatch, taking in charge or shipped on board notation.
  • In the second scenario we will be having a multimodal bill of lading which contains a date of dispatch, taking in charge or shipped on board notation.

Option 1 => There is no shipped on board or taking in charge notation exists on the multimodal bill of lading:

  • The date of issuance of the multimodal bill of lading will be deemed to be the date of shipment.

Option 2=> Multimodal bill of lading indicates, by stamp or notation, a date of dispatch, taking in charge or shipped on board: Notation date will be deemed to be the date of shipment as specified below:

  • Date of dispatched notation/stamp => this date will be deemed to be the date of shipment
  • Date of taken in charge notation/stamp => this date will be deemed to be the date of shipment
  • Date of shipped on board notation/stamp => this date will be deemed to be the date of shipment

Important Note: Only applies when the notation is in respect of dispatch, taking in charge or shipped on board at the place or port named in the credit for the commencement of the carriage.

To Order and Blank Endorsed Bill of Lading

Ozgur Eker (CDCS) Bill of Lading, How to Work With a Letter of Credit, Letter of Credit Basics, Letter of Credit Documents ,
To Order and Blank Endorsed Bill of Lading

Bill of lading, which is a transport document used in international trade, is an authentic receipt delivered by a carrier, confirming that the goods therein specified (markings, types of goods, number of packages, etc.) have been loaded or taken in charge for loading on a designated vessel for carriage to a specified port.

On this article you can find the definitions of “to order” and “blank endorsed” terms as used on bills of lading.

To order and blank endorse term is related to the consignee field of a bill of lading and determines if a letter of credit issued in a negotiable or straight form.

If you need more information regarding negotiable bills of lading and straight bills of lading, please read my article “What Does “Made Out to the Order of” Mean in a Bill of Lading?”.

To order bill of lading is the one that consignee part of the bill of lading have been completed by writing “to order” only as can be seen on the below example.

To Order Bill of Lading Example

  • “To order” means that the bill of lading has been consigned to order of the shipper. The shipper indicated on the bill of lading determines who should collect the goods at the port of discharge by surrendering at least one original copy to the carrier.

The shipper makes this determination with the help of the endorsement.

  • “Blank endorsement” means that the holder of the original bills of lading can claim the goods from the carrier at the port of discharge by surrendering at least one original copy of a bill of lading.

To order bill of ladings can be blank endorsed by putting Shipper Company’s stamp and signature on the reverse side of the bill of lading.

According to ICC experts a bill of lading issued to the order of a party can only be endorsed by the party stated in the “consignee” field of the bill of lading.

Only when the B/L is made out to order of the shipper is the shipper able to endorse in blank before presentation under the credit.

As a result,

  • Consignee: to order ==> shipper can endorse in blank
  • Consignee: to order of the shipper ==> shipper can endorse in blank
  • Consignee: to order of the issuing bank ==> issuing bank can endorse

Importance of Bill of Lading Title: Ocean or Marine Bill of Lading

Ozgur Eker (CDCS) Bill of Lading, How to Work With a Letter of Credit, Letter of Credit Basics, Letter of Credit Documents , , , ,
bill of lading title. ocean or marine bill of lading

Issuing banks often require an ocean bill of lading or a marine bill of lading under letters of credit as a transport document.

The question is whether the title of the bill of lading is important or not when checking the documents?

Letter of Credit Examples:

Ocean Bill of Lading Example

  • Full set of clean shipped on board ocean bills of lading drawn or endorsed to the order of issuing bank ltd, Sana’a Yemen showing freight prepaid and marked notify
    a.applicant (giving full name and address).
    b.issuing bank ltd Sana’a Republic of Yemen.

Marine Bill of Lading Example

  • Full set of clean on board marine bill(s) of lading issued or endorsed to the order of Issuing Bank PLC, notify applicant showing freight prepaid and showing full name and address of the shipping company agent or his representative in Bahrain.

Each shipping line has a pre-printed form of bills of lading.

Some shipping lines are using ocean bills of lading and others are using marine bill(s) of lading.

It is highly likely to be working with a shipping company who has a marine bill(s) of lading pre-printed form where credit calls for an ocean bill of lading or vice versa.

According to latest letter of credit rules

“A bill of lading need not be titled “marine bill of lading”, “ocean bill of lading”, “port‐to‐port bill of lading” or words of similar effect even when the credit so names the required document.”

As a result title of the bill of lading is not important when checking the documents under the letter of credit transactions.