Hello everybody,
I've recently met with some L/C's quoting delivery terms EXW(beneficiary's factory), but requesting
transport document(CMR resp.B/L) for presentation.
In case of shipment by truck I do not see any particular trouble for beneficiary to obtain CMR,
but in the case of shipment by vessel I wonder if such kind of L/C is workable at all.
.
My question is: Do you think that L/C showing EXW delivery terms and requiring transport document should be rejected?
.
Thanks for your opinions, especially invited those with any practical experiences
Mojca
delivery terms EXW and transport documents
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KimChristensen
- Posts: 404
- Joined: Fri Apr 05, 2019 5:21 pm
delivery terms EXW and transport documents
Dear Mojca,
I am not sure whether I fall into the category of those with “practical Experiences”
But I will give it a go:
First of all I this it is very hard for the L/C banker in advance to determine whether or not this L/C is workable. I have seen some which works fine – and some that does not work at all.
Secondly, the L/C requirement may be relevant; you mention that L/C requires a B/L; if this is an article 23 B/L – then it seems that there is (at least) a UCP/Incoterms (is it Incoterms?) mismatch; as delivery is made once goods are picked up by the carrier – but B/L must show “Shipped on board”.
If on the other hand it is an article 26 B/L – then I may just work fine.
I think it would be wrong to just “reject” such an L/C; but it may be wise to discuss this with the applicant/beneficiary (wherever you are in the chain) – in order to make sure the L/C is actually workable; or if amendments should be considered; e.g. requiring an FCR, FCT or multimodal B/L.
I think this is as far as I can go with the information available – hope this helps you.
Best regards
Kim
I am not sure whether I fall into the category of those with “practical Experiences”
But I will give it a go:First of all I this it is very hard for the L/C banker in advance to determine whether or not this L/C is workable. I have seen some which works fine – and some that does not work at all.
Secondly, the L/C requirement may be relevant; you mention that L/C requires a B/L; if this is an article 23 B/L – then it seems that there is (at least) a UCP/Incoterms (is it Incoterms?) mismatch; as delivery is made once goods are picked up by the carrier – but B/L must show “Shipped on board”.
If on the other hand it is an article 26 B/L – then I may just work fine.
I think it would be wrong to just “reject” such an L/C; but it may be wise to discuss this with the applicant/beneficiary (wherever you are in the chain) – in order to make sure the L/C is actually workable; or if amendments should be considered; e.g. requiring an FCR, FCT or multimodal B/L.
I think this is as far as I can go with the information available – hope this helps you.
Best regards
Kim
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AbdulkaderBazara
- Posts: 256
- Joined: Fri Apr 05, 2019 5:15 pm
delivery terms EXW and transport documents
I agree with Kim, it is for beneficiary to accept or reject and not the bank. There could be side agreement(s) between beneficiary and applicant. The applicant will either directly pay the beneficiary for the service (sometimes it could be in advance) or arrangement could be made so that beneficiary collects such transport document from applicant's forwards and present it with the LC documents.
The beneficiary seems to accept such additional responsibility which sometimes may depend on a third party performance.
There could be many reasons for such deal to be concluded. A beneficiary may want to quote his price only on EXW terms and applicant agrees to it but may not be financed by a bank unless a transport document is issued in the name of such bank. In some countries banks have a mandate from their regulatory bodies to issue import LC only if a transport document is requested and certain documents such as invoice and certificate of origins are legalized by the respective countries embassies or consulates.
The beneficiary seems to accept such additional responsibility which sometimes may depend on a third party performance.
There could be many reasons for such deal to be concluded. A beneficiary may want to quote his price only on EXW terms and applicant agrees to it but may not be financed by a bank unless a transport document is issued in the name of such bank. In some countries banks have a mandate from their regulatory bodies to issue import LC only if a transport document is requested and certain documents such as invoice and certificate of origins are legalized by the respective countries embassies or consulates.