I fear that -possibly not for the first time- Laurence & T.O. seem to misunderstand the role of banks and the Banking Commission and give the appearance -at least to me- of wishing to impose on them unrealistic and unreasonable duties.
It is not for banks to ‘police’ Incoterms. Neither is the role of the Banking Commission to oblige banks to alter their practices. On the contrary, it is the role of the Banking Commission to represent and reflect the views of banks. Should this conflict with other ICC Commissions, then that’s just too bad.
Having said that, I do not accept T.O.’s & Laurence’s arguments anyway regarding the impact of banking practice on Incoterms. I repeat, they are no more than standard terms and conditions that the buyer/seller are at liberty to modify in anyway they chose -just like UCP, ISP, URDG etc- and radical alteration, in the contract, of an Incoterm does not render it ‘invalid’ (in the legal sense).
I agree it is useful for a doc credit banker to have a knowledge of Incoterms. However, I believe this to be primarily for the purpose of issuing or advising credits (so as to identify any apparent inconsistencies/omissions in the credit terms) and not for the examination of documents. Although, I must stress, I am not arguing Incoterms can never have a role in doc examination. As to the ISBP statement under discussion, I imagine it is the product of it not being uncommon for bankers to come across instances of contracts stated to be on an FOB basis, where the seller has agreed to pay freight. Whereas, they have come across few contracts stated to be on an CFR & CIF, for example, basis where the buyer has agreed to pay the freight.
Finally, I do not intend to participate further in discussions on this matter as my position is certainly not going to change.
Jeremy
Should bankers neglect the inconsistency due to application
Should bankers neglect the inconsistency due to application
Jeremy,
I am leaving for the airport in fifteen minutes and cannot post a lengthy response. Just a few points here:
1 All ICC Commissions have to work in harmony.
2 ICC Banking Commission does not have the right to work alone and be immune from the application of Incoterms 2000.
3 If this is OK, then carriers may issue BsL not complying with UCP 500 as a return.
4 Who of will suffer? Not the banks, not the carriers, but their customers.
5 Banks, as well as carriers and insurers, are serving the same customers. So banks as services providers should not play the master role but a servant role to serve the customers who have to abide by the Incoterms 2000 if they use them.
6 We strongly disagree that the Banking Commission can work differently than other ICC Commissions and not to respect the products other Commissions have made, such as the Incoterms 2000.
www.tolee.com
I am leaving for the airport in fifteen minutes and cannot post a lengthy response. Just a few points here:
1 All ICC Commissions have to work in harmony.
2 ICC Banking Commission does not have the right to work alone and be immune from the application of Incoterms 2000.
3 If this is OK, then carriers may issue BsL not complying with UCP 500 as a return.
4 Who of will suffer? Not the banks, not the carriers, but their customers.
5 Banks, as well as carriers and insurers, are serving the same customers. So banks as services providers should not play the master role but a servant role to serve the customers who have to abide by the Incoterms 2000 if they use them.
6 We strongly disagree that the Banking Commission can work differently than other ICC Commissions and not to respect the products other Commissions have made, such as the Incoterms 2000.
www.tolee.com
Should bankers neglect the inconsistency due to application
T.O.,
I hope you enjoy your transcendental meditation course. I look forward to seeing the results when you return to the Earthly plane.
Jeremy
I hope you enjoy your transcendental meditation course. I look forward to seeing the results when you return to the Earthly plane.
Jeremy
-
larryBacon
- Posts: 689
- Joined: Fri Apr 05, 2019 5:26 pm
Should bankers neglect the inconsistency due to application
Jeremy,
nobody has suggested that the Banking Commission "police" Incoterms. However, as a member of the Banking Commission, you should be aware that last year it advocated greater co-operation with other ICC Commissions. The reason for this is the mutual benefit of all Commissions involved. Consistency of approach to overlapping issues between Commissions will help in terms of clarity. This, in turn, should promote greater acceptance of ICC rules, Incoterms etc.
Laurence
nobody has suggested that the Banking Commission "police" Incoterms. However, as a member of the Banking Commission, you should be aware that last year it advocated greater co-operation with other ICC Commissions. The reason for this is the mutual benefit of all Commissions involved. Consistency of approach to overlapping issues between Commissions will help in terms of clarity. This, in turn, should promote greater acceptance of ICC rules, Incoterms etc.
Laurence
Should bankers neglect the inconsistency due to application
Laurence,
As its a ‘quicky’ I’ll respond.
I am well aware of the above, and support it. The point is I see no lack of consistency between the ISBP ‘provision’ at dispute and Incoterms, given Incoterms ‘default’ nature. What I do not want to indulge in is a long winded debate on who’s right, as it will change nothing in practice.
Jeremy
As its a ‘quicky’ I’ll respond.
I am well aware of the above, and support it. The point is I see no lack of consistency between the ISBP ‘provision’ at dispute and Incoterms, given Incoterms ‘default’ nature. What I do not want to indulge in is a long winded debate on who’s right, as it will change nothing in practice.
Jeremy
-
larryBacon
- Posts: 689
- Joined: Fri Apr 05, 2019 5:26 pm
Should bankers neglect the inconsistency due to application
Jeremy,
could you please elaborate on what you regard as Incoterms "default" nature ?
Laurence
could you please elaborate on what you regard as Incoterms "default" nature ?
Laurence
Should bankers neglect the inconsistency due to application
Laurence,
As I said in my first posting:
'... just like UCP, the provisions of Incoterms 2000 apply unless the relevant contract provides contrary provisions'.
I can see I'm going to be drawn back into this discussion if I'm not careful, so I'll really must now 'call it a day'.
Jeremy
[edited 9/17/02 9:21:17 AM]
As I said in my first posting:
'... just like UCP, the provisions of Incoterms 2000 apply unless the relevant contract provides contrary provisions'.
I can see I'm going to be drawn back into this discussion if I'm not careful, so I'll really must now 'call it a day'.
Jeremy
[edited 9/17/02 9:21:17 AM]
-
larryBacon
- Posts: 689
- Joined: Fri Apr 05, 2019 5:26 pm
Should bankers neglect the inconsistency due to application
Jeremy,
I agree that the term used can be customised by agreement, by contract etc, but often such customisation is not reflected in the L/C and bankers involved are unlikely to take account of the contract in determining L/C compliance.
The waters are muddied even more by L/Cs quoting terms which may or may not be Incoterms. Unless the relevant version of Incoterms is quoted in the L/C, there is no default position indicating the provenance of the term used. Strictly speaking, this may render academic arguments over whether FOB B/Ls can show freight prepaid, as the term may be undefined in the absence of the relevant Incoterm.
Laurence
I agree that the term used can be customised by agreement, by contract etc, but often such customisation is not reflected in the L/C and bankers involved are unlikely to take account of the contract in determining L/C compliance.
The waters are muddied even more by L/Cs quoting terms which may or may not be Incoterms. Unless the relevant version of Incoterms is quoted in the L/C, there is no default position indicating the provenance of the term used. Strictly speaking, this may render academic arguments over whether FOB B/Ls can show freight prepaid, as the term may be undefined in the absence of the relevant Incoterm.
Laurence
Should bankers neglect the inconsistency due to application
VIPASSANA COURSES ARE GOOD FOR DOCUMENT EXAMINERS
I am back with a sharper mind that can focus on one thing without other side thoughts jumping out of my mind simultaneously. My mind can remain thoughtless for a period of time too. Jeremy and Laurence, would you try to check whether you can do this for one or two minutes.
Otherwise you may need to take a 10 day Vipassana Meditation Course, which is very helpful in finding the discrepancies, with a much more concentrated mind. It took me three days from 4.30 am (not a typo here) to 9.30 pm just to practice absolute concentration of my mind, free of parallel thoughts, by watching my breaths, through the "Anapana" (in ancient "Pali" language, a "Latin" in India) approach. The rest 7 days are for application of a concentrated and undiverted mind to explore the whole body for subtle sensations both inside and outside.
Of course, for those who have taken the 10-day Vipassana course, this is only a by-product. The main purpose is to achieve happy, peaceful and harmonized life, with a final goal to be liberated from all miseries, and to gain true wisdom – the “Panna” and ultimately, the “Nibbana”. For those who do not understand what I am talking about, please visit www.suttama.dhamma.org
Coming back to the main subject, merely putting in a contract the magic word "FOB" does not mean anything. Incoterms 2000 require parties to show their intentions and name it as "FOB Incoterms 2000" to give the "default" effect as described by Jeremy.
T. O.
www.tolee.com
[edited 9/30/02 6:01:41 PM]
I am back with a sharper mind that can focus on one thing without other side thoughts jumping out of my mind simultaneously. My mind can remain thoughtless for a period of time too. Jeremy and Laurence, would you try to check whether you can do this for one or two minutes.
Otherwise you may need to take a 10 day Vipassana Meditation Course, which is very helpful in finding the discrepancies, with a much more concentrated mind. It took me three days from 4.30 am (not a typo here) to 9.30 pm just to practice absolute concentration of my mind, free of parallel thoughts, by watching my breaths, through the "Anapana" (in ancient "Pali" language, a "Latin" in India) approach. The rest 7 days are for application of a concentrated and undiverted mind to explore the whole body for subtle sensations both inside and outside.
Of course, for those who have taken the 10-day Vipassana course, this is only a by-product. The main purpose is to achieve happy, peaceful and harmonized life, with a final goal to be liberated from all miseries, and to gain true wisdom – the “Panna” and ultimately, the “Nibbana”. For those who do not understand what I am talking about, please visit www.suttama.dhamma.org
Coming back to the main subject, merely putting in a contract the magic word "FOB" does not mean anything. Incoterms 2000 require parties to show their intentions and name it as "FOB Incoterms 2000" to give the "default" effect as described by Jeremy.
T. O.
www.tolee.com
[edited 9/30/02 6:01:41 PM]
Should bankers neglect the inconsistency due to application
Jeremy,
We have edited our last posting to make it more clear the duty of bankers not to neglect the implications of Incoterms 2000 used in invoice and marine BL.
We would like to bring your attention to the latest and final version of ISBP, ICC Document 470/951rev4, in which the opinions of Laurence and us have been adopted regarding paragraph 69 and 95 on the duty of bankers to check the implications of Incoterms 2000, which cannot be neglected in the invoice and the marine BL. Here it goes:
QUOTE
ICC Document 470/951rev4
69. If a trade term is part of the goods description in the credit, or stated in connection with the amount, the invoice must state the trade term specified, and if the description provides the source of the trade term, the same source must be identified (e.g. a credit term "CIF Singapore Incoterms 2000" would not be satisfied by "CIF Singapore Incoterms", etc.). Charges and costs must be included within the value shown against the stated trade term in the credit and invoice. Any charges and costs shown beyond this value are not allowed.
95. The word “clean” need not appear on a bill of lading even though the credit may require a “clean on board bill of lading” or one marked “clean on board”.
For the convenience of members, the original text in ICC Document 470/951rev3 is quoted as follows for comparing the changes in rev4 quoted above:
QUOTE
69. If a trade term is part of the goods description in the credit, or stated in connection with the amount, the invoice must state the trade term specified, and if the description provides the source of the trade term, the same source must be identified (e.g. a credit term "CIF Incoterms 2000" would not be satisfied by "CIF Incoterms", etc.). The invoice should not show charges which are beyond those normally included in the quoted trade term.
95. If a trade term, such as an Incoterm, appears in the credit or in the documents, for the purposes of examination, the conditions implied by the trade term will be disregarded. For example, the fact that a bill of lading may indicate that freight has been prepaid under an EXW, FAS or FOB Incoterm is not, in itself, reason for refusal, unless the credit requires the document to be marked freight collect.
UNQUOTE
So are you going to vote for this ISBP version? And if your bank is going to observe this new paragraph 69 and 95 in ISBP according to ICC Document 470/951rev4?
For further details of our various comments to ICC Banking Commission during the drafting stage of ISBP, and other ICC Documents, please refer to our DC website.
www.tolee.com
[edited 10/13/02 7:06:41 PM]
We have edited our last posting to make it more clear the duty of bankers not to neglect the implications of Incoterms 2000 used in invoice and marine BL.
We would like to bring your attention to the latest and final version of ISBP, ICC Document 470/951rev4, in which the opinions of Laurence and us have been adopted regarding paragraph 69 and 95 on the duty of bankers to check the implications of Incoterms 2000, which cannot be neglected in the invoice and the marine BL. Here it goes:
QUOTE
ICC Document 470/951rev4
69. If a trade term is part of the goods description in the credit, or stated in connection with the amount, the invoice must state the trade term specified, and if the description provides the source of the trade term, the same source must be identified (e.g. a credit term "CIF Singapore Incoterms 2000" would not be satisfied by "CIF Singapore Incoterms", etc.). Charges and costs must be included within the value shown against the stated trade term in the credit and invoice. Any charges and costs shown beyond this value are not allowed.
95. The word “clean” need not appear on a bill of lading even though the credit may require a “clean on board bill of lading” or one marked “clean on board”.
For the convenience of members, the original text in ICC Document 470/951rev3 is quoted as follows for comparing the changes in rev4 quoted above:
QUOTE
69. If a trade term is part of the goods description in the credit, or stated in connection with the amount, the invoice must state the trade term specified, and if the description provides the source of the trade term, the same source must be identified (e.g. a credit term "CIF Incoterms 2000" would not be satisfied by "CIF Incoterms", etc.). The invoice should not show charges which are beyond those normally included in the quoted trade term.
95. If a trade term, such as an Incoterm, appears in the credit or in the documents, for the purposes of examination, the conditions implied by the trade term will be disregarded. For example, the fact that a bill of lading may indicate that freight has been prepaid under an EXW, FAS or FOB Incoterm is not, in itself, reason for refusal, unless the credit requires the document to be marked freight collect.
UNQUOTE
So are you going to vote for this ISBP version? And if your bank is going to observe this new paragraph 69 and 95 in ISBP according to ICC Document 470/951rev4?
For further details of our various comments to ICC Banking Commission during the drafting stage of ISBP, and other ICC Documents, please refer to our DC website.
www.tolee.com
[edited 10/13/02 7:06:41 PM]