Sub-article 14(f) - Whether the data content fulfils the fun

GSham · Post by **GSham** » Fri Sep 16, 2011 1:00 am

LC requires a certificate of vessel's tank cleanliness. Beneficiary presents a document with exactly the same title, showing content as follow:
Quote
Method of Cleaning : No tanks cleaning was carried out.
Unquote
Is this document complying? Noting sub-article 14(f), the question is whether its content appears to fulfil the function of the required document. Can I have your view please?

Regards, Gabriel

HOANGTHIANHTHU_invalid · Post by **HOANGTHIANHTHU_invalid** » Fri Sep 16, 2011 1:00 am

Hi,

This reminds me of the case where the L/C called for a certificate of quality and the presented certificate of quality presented stated that the goods were of poor quality. As the L/C did not provide any detail as to the wording and or specific content that the certificate should give, the presented certificate was acceptable under sub-article 14(f) notwithstanding such a statement.

Yours is the same as the above case. There is no discrepancy.

Best regards,
N.H.Duc

GSham · Post by **GSham** » Fri Sep 16, 2011 1:00 am

Thanks, N.H. Duc.

In the case you highlighted, the L/C calls for a certificate of quality and the presented certificate contains content pertaining to the quality of the goods. Thus the content fulfils the function of the required document.

In this case the document required is a certificate of cleanliness of the tanks while the presented certificate does not contain content pertaining to the cleanliness of the tanks. Instead it talks about a job (cleaning of the tanks) not having been carried out.

Hence it would be a challenge to defend against a discrepancy being raised for the reason that it does not comply with sub-article 14(f), as its content does not fulfil the function of the required document.

Regards, Gabriel

[edited 9/16/2011 8:33:44 AM]

SergeyK · Post by **SergeyK** » Fri Sep 16, 2011 1:00 am

Dear Gabriel,

I share N.H. Duc's opinion. And my additional arguments are:
1) LC calls for Cert.of cleanliness. Presented document has the same title
2) Doc. also states: "Method of Cleaning : No tanks cleaning was carried out. " - but reason for not taking such actions are not analysed by LC dept. It may be the case that new tank is used - no cleaning is needed at all. No one requires you to analyse why this phrase appears on the document.
3) Document (I assume, if this assumption is wrong - document is definitely discrepant) does not contain any mark/statement/notation etc. that tank is NOT clean (dirty etc.)

With kindest regards,
Sergey

GSham · Post by **GSham** » Fri Sep 16, 2011 1:00 am

Dear Sergey,
1) It is the content rather than the title of the document that matters.
2) Banks are not required to analyse what is behind the statement in a document.
3) There is no indication in the document as to whether the tanks are clean or dirty.

Regards, Gabriel

NigelHolt · Post by **NigelHolt** » Fri Sep 16, 2011 1:00 am

Firstly, for what it is worth, I strongly disagree that UCP600 requires a document to appear to fulfil its function, precisely because of the sort of conundrum illustrated here that it can create.

Secondly, I am not 100% certain as to if the document concerned is compliant or not. I certainly agree with you Gabriel that NHD’s certificate of quality comparison is not an exact one for the reasons you give. Overall, I currently incline to what I infer is your view, Gabriel, namely that the document is non-compliant by reason of not dealing in any seeming way with the ‘cleanliness’ of the vessel’s tank(s).

GlennRansier_olsABN · Post by **GlennRansier_olsABN** » Fri Sep 16, 2011 1:00 am

In line with 14 f. the document complys. It has the title of the document required by the LC so the function of the document is known and fulfilled. The LC did not call for any document statements. Finally, not having to had clean a tank does not mean that a tank was not fit to accept the intended cargo. It may alread be clean. Examiners must not look past the documents.

GSham · Post by **GSham** » Sat Sep 17, 2011 1:00 am

So far we have been discussing it as an academic issue. What if, as a confirming bank, we are faced with a $30 million presentation that is otherwise compliant? Would it change your mind if the market price of the commodity is much lower than the invoice price?

I agree with Jeremy that UCP600 should not require a document to appear to fulfil its function. This is exactly my concern when analysing this issue - an issuing bank might reject the document by reason of the document not appearing to fulfil its function.

Regards, Gabriel

NigelHolt · Post by **NigelHolt** » Mon Sep 19, 2011 1:00 am

Glenn,

You seem to be saying the title alone is sufficient for the purpose of compliance. If so, I would say that is not my reading of para 41, which to me makes clear that irrespective of whether a documents is titled as called for in the credit, bears a similar title, or is untitled, the content of a document must appear to fulfil the function of the required document as well.

Regards, Jeremy

GlennRansier_olsABN · Post by **GlennRansier_olsABN** » Mon Sep 19, 2011 1:00 am

From the text of this inquiry it would seem that there was no LC requirement for the certificate to contain any reference to a method of cleaning. A document was presented with the title required by the LC. Sub-article 14 (f) is quite clear in stating that absent any required data content, the document will be accepted as presented provided it fulfils the function of the document and otherwise complies with sub-article 14 (d). The document title indicated that Cleanliness exists. Why should an examiner read into the wording that the tanks were not clean because they were not cleaned at the moment the Cleanliness Cert. was issued? If a maid calls in sick does that make the house she was due to clean automatically dirty?
Rising or falling prices should never be the basis for finding a discrepancy. In the US banks are taken to court when they refuse to pay, period. To my mind a discrepancy is something that can be supported by a rule, ICC opinion, etc. In this case, based on the facts presented, I do not see how refusal can be upheld.