B/L showing three ports of discharge

[milindparab]

If a L/c, which is asking for a charter party B/L, puts a condition saying the B/L should show three different ports of dishcarge under "port of discharge column", can the negotiating bank point out this as discrepancy, wrongly interpreting this clause as the opening bank must have given an option and any one port name should be mentioned instead of all the three. Is this a valid point from negotiating bank's point of view??

[larryBacon]

Whenever there is wording in a L/C which can lead to trouble, it probably will !
In this case an amendment should have been sought clarifying the situation. It is not enough to assume that there is an option allowing any one of the three ports to be used.

Laurence A. J. Bacon
laurence_aj@hotmail.com

[PGauntlett]

The ICC recognise that C/P b/l's have different characteristics to other b/l's and, therefore, destinations are not always known at the time of issuing the b/l's. They have stated that it is acceptable for these b/l's to show eg 'Japanese Port' when the l/c calls for shipment to Japanese Port. By this logic a range of disports matching those shown in the l/c is also acceptable.

[T.O.Lee]

Mr. P Gauntlett said the right thing. As a lecturer in charter party B/L and L/C, I wish to share some of my knowledge with banker friends here.

First let me begin with my past story in the seventies. I was at that time engaged in timber business with a company, also being a Sabah state agent in Hong Kong, as an ADC (Aide de Camp), dealing with the Ministers, Tuns, Dan Sris and Datos (Malaysian equivalents to Duke, Viscount, KCMG, CBE, MBE, OBE etc in U.K.) in the Sabah State, West Malaysia (North Borneo). When a shipper from Asia, engaged in commodity trade, for example, timber or logs, loaded the chartered vessel, he would not know where his buyers would come from, Japan, Korea or Taiwan? Based on the timber journal analysis, he expected a 15% price rise in a couple of weeks. So in the charter party, he, as a charterer, had the right to name three ports of discharge so that he could unload the cargo in any or all of these three ports of discharge. The shipowners would charge more for this option because he had to prepare an agent in each of these three ports of discharge to do some supporting services, such as supply of fresh water, bunker, provisions for the crew, adminstration works with the port authority, and similar works.

So the charter party and the charter party B/L might have registered three ports of discharge. This is perfectly normal. If the buyers from Japan, Taiwan or Korea paid with L/C, then Bankers should not try to see this as a discrepancy, and killed the trade. LC is to facilitate trade and not to creat barriers to trade.

To go further, a charterer may name three ports of loading because he does not know exactly what quantity of timber would come from each port of loading. With natural produce, such as timber, the production depends on weather, such as heavy rains may hinder log cutting, nevigatibility of the small rivers transporting the cut logs downstream to the port of loading, etc. So it is only NORMAL to see a BL with three ports of loading and three ports of discharge. Of course, to avoid troubles with LC presentations, a charterer may also ask the master mariner (official name for a master in the UCP 500) to issue three BsL, each with a different port of loading.

So bankers should learn more about the trade practices of their customers as part of the "know your customer" best practice, not just for credit worthiness but also for determination of discrepancies. If they have doubt, they should find out the answer from either their customers or from an expert or consultant. Some bankers in Hong Kong ask us to check the charter party BL for them to alleviate their burden.

I am from www.tolee.com


[edited 5/24/01 11:53:34 PM]

[vobrien]

I feel P Gauntlett has the right line on this one and I agree with T.O. Lee that ".banks should not try to see this as a discrepancy"

ICC also stated in a previous opinion. I have my handwritten notes from an ICC meeting but I can not find the actual reference - sorry.

Quote
"in the event of charter party bills of lading being allowed and the credit specifiying shipment to a range of ports, or, as in your case, a country's port(s), the charter party bill of lading may show in the port of discharge box "Korean Port(s)".

So, with Charter Party B/L's called for in a Credit there seems to be some leaway.

Hope this helps.

Vin
[edited 5/1/01 7:09:25 PM]

[PavelA]

I agree with above comments but I would also vote for covering expressly this issue in the following UCP revision.

Pavel Andrle