ICC Digital Library Forum

We have issued a confirmed documentary credit avaliable with X bank by deferred payment ie. 270 days after the B/L date.
When the documents presented, we recognized that the "issue date" of received for shipment B/L was December 27, 2001 and the "shipped on board date was December 06, 2001.The subject of the discussion is to consider whether the "issue date" or the "shipped on board date" as the "B/L date" to fix the due date.
For our point of view, a received for shipment B/L with an on board notation which is prior to the issuance date must be a discrepancy (applicant has accepted the discrepancy) and the due date must be started from the issue date of the B/L which is B/L date.
Regards

My initial personal reaction, without liability/responsibility, is:

1. I can see an argument for saying the b/l you describe is internally inconsistent and thus discrepant, on the basis that the goods must -by definition- have been received for shipment before they could have been shipped -and not vice versa, particularly given the three week gap between shipment and issue.

2. I would have thought the expression ‘bill of lading date’ would be interpreted as the date of shipment, rather than the date of issue, given the provisions of sub-Article 23aii, sub-Article 43a and the date to which one looks to determine if shipment has taken place on or before the latest shipment date.


[edited 1/29/02 3:42:38 PM]

If you consider thoroughly the sub articles aii which states that “Loading on board or shipment on a named vessel may be indicated by pre-printed wording on the bill of lading that the goods have been loaded on board a named vessel or shipped on a named vessel, in which case the date of issuance of the bill of lading will be deemed to be the date of loading on board and the date of shipment.

In all other cases loading on board a named vessel must be evidenced by a notation on the bill of lading which gives the date on which the goods have been loaded on board, in which case the date of the on board notation will be deemed to be the date of shipment.”
One may on the face of it say the on board date is the issuance date, but this as per the article is only if the bill of lading has indicated the on board by preprinted wording on the bill of lading. In this case the date of issuance appearing on the bottom of the bill of lading is considered the shipment date. This is to calculate the date from which the presentation period as per article 43a.

In other scenarios, sub article does not spell out any suggestion as to the issuance date. It only address the requirements to stipulate the on broad notation to evidence that the goods have been actually shipped on broad the named vessel and that this notation if dated will be considered as the date of shipment. Again the date of shipment is for the purpose of calculating the presentation period only.

Having said that, if a bill of lading does not fall within the category of the first paragraph of sub article aii then the date of issuance is not the date of the on board notation.

Therefore I believe that the calculation of the due date commences from 27 December, however this might seem illogical

Consider the following example
If the credit stipulates that payment will be effected 270 days from bill of lading date” and the bill of lading presented indicates:

Received for shipment 6/12/2001
Shipped on board 10/12/2001

Would you calculate the maturity from the first or the second date? Obviously the on board date is the shipment date, but not the bill of lading date.

If you makes the dates reversed to indicate received for shipment 10/12/2001 and on board date 6/12/2001 the only thing is to raise is an inconsistent bill of lading.

However, one equally may raise the following question:

On what basis did you suggest that the received for shipment date is the issuance date, does the received for shipment date expressly qualifies itself or even imply that it is always an issuance date? This is a difficult question and fall out side the domain of article 23a ii.

Given the probabilities that different dates might appear on the bill of lading may we suggest to state, “payment will be effected … days from bill of lading shipment date”

Hatem,

I read your views with interest and accept that -overall- they might well be correct. However, I would comment:

A. Regarding your 3rd para, the date of shipment is also for establishing if late shipment has taken place.

B. You seem to take it as read that where a bill is issued on one date and shows shipment on another date the date of issuance is ‘the bill of lading date’, and certainly from a literal perspective I can well see the argument. However, based on the possible practical consequences for the buyer of interpreting ‘X days after bill of lading date’ as being ‘X days after date of issuance’, i.e. a dramatically curtailed credit period, I am not convinced.

I believe that where agreeing a contract with a credit period, the seller & buyer are far more likely to (intend to) agree that the credit period will run from the date of shipment, rather than the date the bill of lading happens to be issued (if different). Therefore, should the buyer and seller agree that payment will be ‘X days after the bill of lading date’, and the buyer & seller later dispute the meaning of this term, I would anticipate a court is more likely to favour the ‘X days after shipment’ interpretation. However, I recognise I cannot adduce any case law to support this.

C. Certainly my own bank’s practice, which I would hope is reflective of standard international banking practice, is to interpret ‘X days after bill of lading date’ as ‘X days after shipment’. I would be interested to learn other banks’ approach to this matter.

Regards, Jeremy

Jeremy

a. Yes I agree with you

b. Yes this will curtail the credit period from the applicant’s perspective but at the same time if the other interpretation is accepted it will extend the credit time given by the beneficiary for which he might not have been prepared or does not want agree. There is nothing to indicate that shipment date is the bill of lading date. Although I am not expert in cargo, I notice that shipping companies issue bills of lading to indicate that goods are in the process of shipment and that the goods are received for such process, however the on board notation is to clearly state that the goods have been loaded on board. Therefore it is difficult to suggest that the loaded on broad date is the bill of lading date. After all what does a bill of lading date mean? Is it the shipment date? Is it the received for shipment date? Is it the issuance date? Under one scenario the bill of lading date can mean the issuance date; when the B/L indicates by pre-printed wording that goods are shipped on board, then by definition the bill of lading date is the shipment date.

c. Please note that the article says: “the date of issuance of the bill of lading will be deemed to be the date of loading on board and the date of shipment” it no where says vise versa “the date of loading on board or the date of shipment will be deemed to be the date of issuance of the B/L.”

d. I agree with you that most banks interpret “x days from bill of lading date” as “x days from shipment date” but the question based on what? Is that interpretation correct?

e. If I go further to your (c) point regarding the contractual agreements between the seller and the buyer, we cannot give conclusive evidence of what really is their intention. For us bankers we are opinionated with this interpretation because we give more weight for the on board notation. The buyer as well is concerned with the shipment date as a prime event in the transaction for which he is going to pay, whereas for the court things should be more balanced to fathom the whole relationship and see from evidences, indications what were the parties up to.

Anyway, I appreciate your extrovert and open-mind approach, and likewise I would be interested to hear from fellow subscribers, as well as from you, on this issue especially from Laurence and TO Lee as they are conversed with cargo practices.

Hatem,

Your views are noted.

Regards, Jeremy

Further to my postings above, I have done a bit of research.

1. In DCI Volume 2 No 4 Autumn 1996 there is an article 'Judge Raymond Jack on the recent UK case of Bayerische Vereinsbank AG v. National Bank of Pakistan’. In it Judge Jack states:

“Article 14

Article 14 is generally concerned with the examination of documents to see whether they appear on their face to be in compliance with the terms and conditions of the credit. That will clearly cover examining transport documents to check DATE OF SHIPMENT against date of presentation. ……

If by some error the confirming bank fails to spot that a presentation was after the date of expiry of the credit, sub-Article 14(e) will, I suggest, bar it from later raising the point, just as it would in respect of a point on THE BILL OF LADING DATE.” [emphasis added]

This is an example, I believe, of a legal official using the expression ‘bill of lading date’ to mean the date of shipment as evidenced by the bill of lading.

2. In ‘News briefs, A matter of date’ in DCI Volume 3 No 3 Summer 1997 there is this:

“Not the kind of query one would expect to be referred to the Banking Commission, but still the reason for two recent rejections from different parts of the world, by the issuing banks, the documents having been previously found in order under UCP 500 by the negotiating banks. Both credits provided for payment at so many days from bill of lading date , the bills of lading were of the "received for shipment" type with "on board" notations added in the usual way with rubber stamps, and dated. The argument of the issuing banks was that only in the case of pre-printed "shipped" bills of lading was the "on board" date the same as the "issuance date" for purposes of calculation. Where there was a separate "on board" notation on a "received for shipment" bill, then the date for calculation was the date of issuance, not the "on board" date. Why that view should be taken in view of the section of sub-Article 23(a)(ii) stating "In all other cases....", is not clear. Has anyone experienced a similar problem?”

The views of the author (whom so ever he may be) seem pretty clear to me. (But then so are the views of the two issuing banks!)

[edited 1/30/02 4:54:31 PM]

Although I could see both Hatem and Jeremy's point of view, I would stick to the literal meaning of B/L date as the date of its issuance.

I would go along with Hatem & Jeremy.The ruling in Regent Corp. USA v. Azmat Bangladesh Ltd., where the drafts were payable X no of days after BL date the court relying on NYUCC SS3-104 (1) (c) and 3-109 (1) (a), ruled that the drafts were non-negotiable, because the date of payment (a prime requirement in a draft) was not certain. This date was not specific enough under S3-109 because the determination of the due date could not be found in a 'calendar or common reference book' such as an almanac.
I feel, that this is one of the areas where bankers can play key role in educating their customers.
regards, Khalid

I couldn't get the point made by Khalid in relation to the query. Would it make it different to the judge if the the draft was made payable X-days from the date of shipment? This is again uncertain date. Once the bank accepts the draft it should state the date of payment to make due date certain.

In an other situation, if the payment was to be made 120 days from date of the invoice and the invoice presented was dated 30 days prior to the date of the LC issuance and 60 days prior to the date of shipment, absent of any restrictions in the LC to avoid such occurrence, would a bank be able to stop payment and consider it a discrepancy? I don't think so. I believe this also applies to the b/l date. An applicant who is not careful has to, regrettably, face the consequence.