ICC Digital Library Forum

Dear all,

Now it seems that not everybody has the same meaning of par. 61 What shall we do?

Daniel

For the moment, let's forget about the fact that the CPT Incoterm is consistent with a freight prepaid transport document of any kind. In fact, let's reduce our consideration of Incoterms to merely matching symbols, and both the L/C and the transport document read "CPT Dubai." Suppose the required document were an ocean B/L rather than a ground transport document, and the L/C required "freight prepaid up to Dubai." Would you then require the freight prepaid notation to read :"Freight prepaid up to Dubai?" Of course not!

Oh yes I would Don, as it is an express requirement of the credit. (It is not for me as a banker to speculate as to the 'meaning' applied to an Incoterm by the seller & buyer in the underlying contract.)

Glenn,

Sorry, paragraph 61 does not make not it clear that ‘document examiners should only be concerned with relative charges associated to a particular term when the LC itself incorporates the term's relative publication’. Also, there is not any reason why I, as a doc. credit banker, should have -or be required to have- any detailed familiarity with Incoterms 2000. Therefore, I simply would not support the reasons you put forward for refusal.

Daniel,

Don’t worry; we often have different interpretations of UCP articles, ISBP paragraphs and credit terms. It all adds to the ‘joy’ of working in the surreal world of doc. credits.



[edited 2/10/2009 4:00:56 PM]
[edited 2/10/2009 4:03:35 PM]

By reading the above, I would like to share with every one a similar case that I got hit few years ago…The case:
.
Trade terms: CFR Mexico City which requires presentation of “Ocean Bills of Lading” with conditions that: 1) Port of discharge: any west coast U.S. or Mexican port with final destination (or place of delivery) Mexico City. 2) Marked “Freight Prepaid up to Mexico City”.
.
Bills of Lading presented indicate: Port of discharge “Los Angeles” with place of delivery “Mexico City” and marked “Freight Prepaid”. (Documents were paid without questions)
.
A claim was made by the applicant few weeks after presentation was honored claiming that document (B/L) contains discrepancy: (“Freight Prepaid” instead of “Freight Prepaid up to Mexico City”). We later settled the claim with $2,500.00 which represents inland (Truck) freight form port of discharge to Mexico City. We tried to extend the claim to the shipping agent and we were advised that there was no wrong doing on part of the shipping agent because Notation of “Freight Prepaid” on Bills of Lading represents ocean freight charges paid up to the port of discharge and cost of delivery are for account of consignee.
.
It is my opinion that “Trade Term” is an indication as required by L/C that examination of documents MAY consider such terms as reference and/or guideline for checking other documents, however, all other documentary requirement should be checked accordingly without an assumption that the stated trade term will (or can) supersedes documentary requirement.

An excellent posting Albert.

Albert, Jeremy,

Sorry, but the DC was opened with the wrong Incoterm. If it had been the right one - CPT - we would be back to square one i.e. the first posting.

Daniel

The unfortunate truth is that understanding is inconsistent where Incoterms is concerned. Additionally, I have found that many document examiners generally feel compelled to protect themselves and their clients and that sometimes they go beyond the mandates provided for in the rules. Over the years there have been attempts to cite a discrepancy, such as:
a beneficiary invoicing for a $300.00 handling fee or a
$200.00 export license fee that the bank considers not
permissible under an EXW or ex-factory shipping term, as strictly defined in Incoterms. Some cite ISBP paragraph 61 as the basis for their refusal, others quote Incoterms even where the LC is silent as to the origin of the shipping term.
Also, in the commodity world, I routinely issued LC's calling for
a term of sale as ‘FOB,’ but
where the underlying bill of lading
requirement requests ocean "freight prepaid". Many bankers informed me that I had improperly issued the LC and some refused to advise the LC. However, it was no error. The applicant's in certain industries frequently charter the vessels and pay the ocean freight. Some, own their own vessels. The beneficiaries, as BL shipper, collect and present the "freight prepaid" BL's and show FOB on their invoices and receive payment against the LC. Very common though not always understood by the document examiners.
Generally, I agree that the shipping term in the LC should be mirrored in the Inv. and to the extent that the LC mandates special pricing requirements, they should be mirrored or clearly satified on the appropriate document.

In this particular instance, if the truck was marked "freight prepaid" and reflects that the goods are being delivered solely to Dubai, then the LC condition in this case is generally satisfied (Based on the few details provided) and there should not be a need to quote the full LC statement "freight prepaid to Dubai".

In Albert's example, the BL did reflect a discrepancy that was overlooked. However, it was an uncommon situation.