Unclean Bill of Lading Discrepancy

Clean on Board Notation on Bills of Lading

Ozgur Eker (CDCS) Bill of Lading, How to Work With a Letter of Credit, Letter of Credit Basics, Letter of Credit Documents , , , , ,
clean on board

What is clean on board?

A clean transport document or a “clean on board” clause relates to the condition of the goods and/or packaging.

If, on receipt of the goods, the carrier finds that the packaging or the goods are defective, he will make a notation on the transport document to this effect to avoid being subsequently held responsible for such defect.

Hence, the document is no longer clean, and any objections or claims for damages will have to be directed to the consignor. (1)

If the word “clean” appears on a bill of lading and subsequently it has been deleted, the bill of lading will not be deemed to be claused or unclean unless it specifically bears a clause or notation declaring that the goods or packaging are defective.

Clauses or notations on the bills of lading, which expressly declare a defective condition of the goods or packaging are not acceptable by the letter of credit rules.

Clauses or notations which do not expressly declare a defective condition of the goods or packaging (e.g., “packaging may not be sufficient for the sea journey”) do not constitute a discrepancy.

However, a statement on the transport document declaring that the packaging “is not sufficient for the sea journey” would not be acceptable.

One of my reader is asking below question from Belgium. She is director of a shipping company. She would like to know more about clean on board notations on bills of lading.

We have a persistent shipper who insists to have the word ‘clean’ added before shipped on board in their B/Ls. Have tried to explain that a B/L without clauses/remarks is a clean B/L. Can you refer to a certain part on your website where I can find official explication to convince them ?

Thanks in advance.

director of XYZ Shipping Company

Dear Director,

I can suggest you to inform below UCP 600 article to your shipper.

UCP 600 – Article 27

Clean Transport Document

A bank will only accept a clean transport document. A clean transport document is one bearing no clause or notation expressly declaring a defective condition of the goods or their packaging. The word “clean” need not appear on a transport document, even if a credit has a requirement for that transport document to be “clean on board”.

UCP 600 defines below documents as transport documents :

  • Transport Document Covering at Least Two Different Modes of Transport
  • Bill of Lading
  • Non-Negotiable Sea Waybill
  • Charter Party Bill of Lading
  • Air Transport Document
  • Road, Rail or Inland Waterway Transport Documents
  • Courier Receipt, Post Receipt or Certificate of Posting

References:

  1. Documentary credits in practice, Reinhard Längerich, Second edition – 2009, Published by: Nordea, Page: 146
  2. Shipping and Incoterms, Practice Guide, UNDP Practice Series, Page:12

Unclean Multimodal Bill of Lading Presented Discrepancy

Ozgur Eker (CDCS) Letter of Credit Discrepancies, Multimodal Bill of Lading Discrepancies , , , ,
Unclean Multimodal Bill of Lading Presented Discrepancy

Banks accept only clean transport documents.

Banks do not accept any unclean transport document such as unclean bill of lading, unclean multimodal bill of lading, unclean charter party bil of lading, unclean road transport document, unclean air transport document, unclean sea waybill etc.

Letter of credit rules define clean transport document as follows: “A clean transport document is one bearing no clause or notation expressly declaring a defective condition of the goods or their packaging.”

There are two important points about the clean transport documents subject that everyone must know.

The first important point is that the word “clean” need not appear on a transport document, even if a credit has a requirement for that transport document to be “clean on board”.

The second important point is that only express clauses or notations on the transport documents would make them unclean.

If transport document is not to include a clause that expressly declare a defective condition of the goods or their packaging, then it is accepted as a clean transport document.

Sample Clauses That Make a Transport Document Unclean:

• Packaging is not sufficient for the sea journey
• Goods which improperly stored at the port of loading have been shipped on board partially wet and not in good condition.

Let us try to understand the subject with an example as below:

Letter of Credit Discrepancy Example: Unclean Multimodal Transport Document Presented Discrepancy

A letter of credit has been issued in SWIFT format, subject to UCP latest version, with the following details:

Letter of Credit Conditions

Field 45A: Description of Goods and or Services: Furniture and Equipment

Field 46A: Documents Required: Full set of clean on board multimodal transport document marked freight collect made out to order of Commercial Bank of Ethiopia marked notify applicant indicating that the goods have been dispatched, taken in charge or loaded on board.

The beneficiary presented a multimodal transport bill of lading with the following clause:

Container is not properly closed and sealed, overloaded and packaging is not sufficient for the sea journey.

Multimodal Bill of Lading

Unclean multimodal bill of lading

Discrepancy: Unclean multimodal bill of lading presented.

Reason for Discrepancy: A bank will only accept a clean transport document. A clean transport document is one bearing no clause or notation expressly declaring a defective condition of the goods or their packaging.

Unclean Bill of Lading Discrepancy

Ozgur Eker (CDCS) Bill of Lading Discrepancies, Letter of Credit Discrepancies , , , , , ,
unclean bill of lading discrepancy

A clean bill of lading is a type of transport document, which bears no clause or notation, which expressly declares a defective condition of the goods and/or the packaging.

Banks can accept only clean transport documents under letters of credit transactions.

Banks do not accept any unclean transport document.

As a result, presentation of an unclean bill of lading would create a discrepancy, in the eyes of the banks.

What makes a bill of lading clean or unclean?

  • An express clause declares a defective condition of the goods makes the bill of lading unclean.
  • An express clause declares a defective condition of the packages of the goods makes the bill of lading unclean.

Please kindly keep in mind that below points do not make a bill of lading unclean.

  • Absence of the word “clean” does not make a bill of lading unclean.
  • Deletion of the word “clean” does not make a bill of lading unclean.

Sample Clauses Which Make a Transport Document Unclean:

  • Packaging is not sufficient for port to port ocean transportation.
  • Goods which improperly stored at the port of loading have been shipped on board partially wet and not in good condition.

Example of an Unclean Bill of Lading Discrepancy:

A letter of credit has been issued in SWIFT format, subject to UCP latest version, with the following details:

Letter of Credit Conditions

Field 45A: Description of Goods and or Services: Fruits

Field 46A: Documents Required: Full set of clean on board bill of lading marked freight payable at destination made out to order of Bankinter, SA notify Applicant Company with full address and contact details as indicated in the credit.

Bill of Lading

The beneficiary presented a bill of lading with the following clause: Packaging is not sufficient for the sea journey.

Discrepancy: Unclean bill of lading presented.

Reason for Discrepancy: A bank will only accept a clean transport document. A clean transport document is one bearing no clause or notation expressly declaring a defective condition of the goods or their packaging.

How to Prevent an Unclean Bill of Lading Discrepancy:

  • Do not focus on “Clean” word, that might be stated on the credit. A clean bill of lading need not to indicate “clean on board” notation. “Shipped on board” notation is enough.
  • Make sure that, the shipment is effected in a sound way. The goods are packed well, secured inside the container and there is no leakage out of the container.
  • If you are going to make a bulk shipment, make sure that the goods will not be affected from bad weather.
  • Speak with your logistics provider, in advance of the shipment, and learn all necessary precautions that you need to take, in order to prevent an unclean bill of lading issuance.