Parties

Initiator: Bank T

Respondent: Bank K

Background and transaction

The Respondent issued an irrevocable documentary credit on 04 Sept 2002 for USD 99384.00 covering "AB2 CDE 123 PIN FCPGA BOX 606 PCS at USD 164.00 USD 99384.00" available at sight with any bank by negotiation.

The documents required were:

- Signed commercial invoice in triplicate,

- Air waybill consigned to the Respondent,

- Packing list in triplicate.

Issue

The commercial invoice and packing list show the description in terms of the credit, i.e., AB2 CDE 123 PIN FCPGA BOX. The air waybill shows the goods dispatched as AB2 CDE 123 PIN FCPA BOX.

The Respondent refused payment as the air waybill description of the goods showed FCPA BOX instead of FCPGA BOX.

The issue is whether the omission of the letter G in the description of goods on the air waybill constitutes a discrepancy.

Initiator's claim

The words "FCPA BOX" indicated on air waybill do not affect the meaning of a word or the sentence in which it occurs, and therefore such typing error does not make a document discrepant (ISBP paragraph 28), and therefore the Initiator seeks a decision through DOCDEX that the documents presented hereunder are in compliance with the terms and conditions of the credit and the Respondent is obliged to effect payment.

Respondent's reply

A copy of the request for a DOCDEX decision including all documents was sent by courier to the Respondent on SEPT 01 2003 by the Initiator, but no response was received by the ICC within the required time frame.

Nevertheless, from the exchange of telexes between the parties it would appear that the position of the Respondent is as follows: "Nature and quantity of goods on air waybill differ from L/C (FCPA BOX I/O FCPGA BOX)".

NOTE: In its telex of 18/12/02 the Respondent advises that the documents were received by it on SEP. 11. 02 and claims, therefore, that the MT734 (of 23 SEPT 02) - their refusal message - was within the seven banking day period.

Documents submitted by Initiator in support of claim

A. Copies of documents submitted:

(i) The documentary credit.

(ii) The covering letter of the Initiator enclosing documents (There is no reception/date stamp on this letter evidencing date of receipt but in a telex of 18/12/02 the respondent advises that the documents were received on 11/09/02);

(i) The presented invoice, air waybill, and packing list;

(ii) MT 734 of 23/09/02 from Respondent refusing payment on account of the discrepancy and advising that the documents are held at the disposal of the Initiator. [It is noted that this refusal is in terms of UCP 500 Article 14(d)(i) and (ii)];

(iii) Copies of 17 telexes from the Initiator to the Respondent between the dates of 30/10/02 to 25/08/03;

(iv) Copies of three telexes from the Respondent to the Initiator between the dates of 18/11/02 to 25/02/03.

B. Supplementary documents in terms of Article 4.2 of ICC DOCDEX Rules

(i) List of national holidays in Country K for 2002, evidencing that September 20th, 21st & 22nd were holidays;

(ii) Facsimile from the beneficiary dated 13/10/03 to the Initiator regarding the delivery of goods to the buyer;

(iii) Facsimile document sent on 13/10/03 purporting to be a Customs clearance document;

(iv) Facsimile of a letter dated 08 OCT 2003 sent by the Initiator to the carrier requesting information about the delivery of goods;

(v) Facsimile responses dated 15/10/02 from the carrier and applicant regarding the delivery of goods to applicant.

Other issue raised from an examination of the documentation: the possibility of the goods having been released to the applicant.

The Initiator's telex of 20/03/03 (which was included in the first lot of documents submitted with the DOCDEX Request) raises the question of whether the goods consigned to the Respondent - as evidenced by the air waybill and as required by the credit - have been released to the applicant and whether a letter of guarantee was issued by the Respondent in this respect.

In any event, this issue is one for the beneficiary and the Initiator to resolve with the buyer and with any other party as appropriate and to pursue such remedies that may be available to the Beneficiary as the unpaid seller.

It is clearly not an issue for the ICC and DOCDEX as:

- UCP Article 4 clearly indicates that "all parties deal with documents, and not with goods, services and or other performances to which the documents may relate."

- Further, UCP Article 14(b) indicates that compliance or otherwise of the documents must be determined on the basis of documents alone.

Conclusion

The single issue raised by the Initiator in the Request for a DOCDEX Decision is as shown in the section "Issue" above, and is whether the omission of the letter G in the description of goods on the air waybill constitutes a valid discrepancy enabling the Respondent to refuse payment.

In many of the 17 telexes sent by the Initiator to the Respondent in support of the claim that the discrepancy is not valid on the basis that "a typing error can never be regarded as a discrepancy", the Initiator refers to ICC document 470/951 rev 4 of 11 SEPT 2002, which is the final version of the draft ISBP rules for approval by the ICC Banking Commission.

As the printed version of the rules has been published as ICC publication no. 645, it is better to refer to this published version instead of the document referred to in the telexes.

Indeed, the Initiator's formal claim refers to Article 28 of the published version (Paragraph 2 in section 1V of the Initiator's Request).

Article 28 under the sub heading "Misspellings or typing errors" states as follows: "Misspellings or typing errors that do not affect the meaning of a word or sentence in which it occurs, do not make a document discrepant. For example, a description of merchandise as 'mashine' instead of 'machine', 'fountan pen' instead of 'fountain pen' or 'modle' instead of 'model' would not make the document discrepant. However, a description as "'model 123' instead of 'model 321' would constitute a discrepancy."

It is difficult to interpret the above Article as saying or implying that "that a typing error cannot be regarded as a discrepancy".

In our view, the Article neither says nor implies the interpretation of the Article given to it by the Initiator that a typing error is not a discrepancy.

Reference is now made to ICC Banking Commission Opinion R209, which clearly shows why some typographical errors can be allowed and why some cannot. Therefore, it is not possible to accept the position that either ISBP or actual banking practice (as evidenced in the Opinion) gives a blanket authority for saying that typing errors are not discrepancies.

The letter G that was omitted may, in our view, have been a means of further defining or identifying the type of box required by the credit and the type shown on the invoice and packing list. Indeed, the omission is not similar to "mashine" v "machine" or "fountan pen" v "fountain pen", but it is similar to the effect of a description as "model 123" instead of "model 321" of Article 28 of ISBP.

In this case, the error is more in the nature of an omission than a typing error, and the omission may give cause to doubt that the goods actually dispatched are the same as the goods described by the invoice and as required in the documentary credit.

The main points that guide us are as follows:

(i) In documentary credits there are two central and primary documents, and these are (a) the invoice and (b) the transport document.

(ii) The transport document shows the goods that have been actually dispatched and it is those goods (and NOT any other) the seller has sent; it is those goods the buyer will receive; and it is those goods for which payment has to be made.

(iii) The identification of the goods is equally as important in the transport document as it is in the invoice.

(iv) The central point is that the air waybill showed the goods as FCPA BOX and this is not the same as FCPGA BOX. The goods could, on the face of the two documents, be different.

In the view of the Experts and in line with the analysis shown above, the documents presented were not in compliance with the terms and conditions of the credit in that the air waybill was discrepant. Accordingly, the Respondent is not obliged to effect payment under the credit.