ISBP Para 65
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LeeHowSeng
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- Joined: Fri Apr 05, 2019 5:19 pm
ISBP Para 65
In connection with this paragraph would you accept an invoice showing CIF Inocterm 2000 whereas Credit does not metioned specifically CIF Incoterm 1990 or 2000 but only mentioned CIF .
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KimChristensen
- Posts: 404
- Joined: Fri Apr 05, 2019 5:21 pm
ISBP Para 65
Yes!
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VijayalakshmiK
- Posts: 9
- Joined: Fri Apr 05, 2019 5:28 pm
ISBP Para 65
Hi,
My personal view is that, we should not accept the invoice. Reference in an invoice to 'Incoterms 2000/1990' can be made only if the same referred to in the sales contract.
If reference to incoterms 2000 or 1990 is not mentioned in the credit. I shall consider that the same is not referred to in the sales contract.
Hence the invoice should be considered as discrepant. It does not correspond to the description in the LC.
My personal view is that, we should not accept the invoice. Reference in an invoice to 'Incoterms 2000/1990' can be made only if the same referred to in the sales contract.
If reference to incoterms 2000 or 1990 is not mentioned in the credit. I shall consider that the same is not referred to in the sales contract.
Hence the invoice should be considered as discrepant. It does not correspond to the description in the LC.
ISBP Para 65
Vijayalakshmi,
Sorry, but I’m going to have to take issue with you.
I regret I cannot see what is the relevance of the likely contents of the sales contract to determining the compliance of the documents. My understanding is that the compliance of the documents must be determined by the express terms of the credit, the UCP etc. alone.
Per sub-Art 37(c) the ‘description of the goods must correspond with the description in the Credit’. To me, personally, if the ‘description of the goods’ in the Credit includes the price basis ‘CIF’ and the invoice shows the price basis as ‘CIF Incoterms 2000’ there is not any lack of ‘correspondence’. As para 62 of Pub. 645 says, ‘There is no requirement for a mirror image’. ‘Incoterms 2000’ is simply SUPPLEMENTARY information. Obviously, the reverse situation would be a discrepancy.
Regards, Jeremy
This posting is made without any liability/ responsibility on my part exclusively for use in the DC-Pro discussion forum and therefore must not be reproduced with out my agreement.
Sorry, but I’m going to have to take issue with you.
I regret I cannot see what is the relevance of the likely contents of the sales contract to determining the compliance of the documents. My understanding is that the compliance of the documents must be determined by the express terms of the credit, the UCP etc. alone.
Per sub-Art 37(c) the ‘description of the goods must correspond with the description in the Credit’. To me, personally, if the ‘description of the goods’ in the Credit includes the price basis ‘CIF’ and the invoice shows the price basis as ‘CIF Incoterms 2000’ there is not any lack of ‘correspondence’. As para 62 of Pub. 645 says, ‘There is no requirement for a mirror image’. ‘Incoterms 2000’ is simply SUPPLEMENTARY information. Obviously, the reverse situation would be a discrepancy.
Regards, Jeremy
This posting is made without any liability/ responsibility on my part exclusively for use in the DC-Pro discussion forum and therefore must not be reproduced with out my agreement.
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LeeHowSeng
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- Joined: Fri Apr 05, 2019 5:19 pm
ISBP Para 65
Hi Jeremy ,
I totally agree with you as credit by nature are separate transactions from sales contract . Applicant's bears risk of any ambiguity in its instructions as per ISBP Para 2 .
Hence it should not be a discrepany.
Thanks Jeremy !
I totally agree with you as credit by nature are separate transactions from sales contract . Applicant's bears risk of any ambiguity in its instructions as per ISBP Para 2 .
Hence it should not be a discrepany.
Thanks Jeremy !
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VijayalakshmiK
- Posts: 9
- Joined: Fri Apr 05, 2019 5:28 pm
ISBP Para 65
Hi Jeremy,
Thanks for your comments, Probably I was not clear enough.
I agree with you that the compliance of the documents must be determined by the express terms of the credit and the UCP. I also wish to state that we deal with documents and we determine compliance on what is stated on the face of documents.
When the description of the goods in the credit includes the price basis ‘CIF’ and the invoice shows the price basis as ‘CIF Incoterms 2000’ Are we in a position to judge whether that information is supplementary?
We have to consider the fact that the documentary credits issued are to reflect the pro-forma invoices, contracts of sale, purchase orders etc. as agreed between buyer and seller. The terms of delivery agreed between the buyer and seller need not be the same as stated in Incoterms 2000. Probably this is the reason why the documentary credit did not make a reference to Incoterms.
Without reference to Incoterms, FOB, CIF, CFR, etc can have all kinds of meanings.
For example, you can come up with some funny meanings such as "Free on Boeing" for air-transport. By just mentioning ‘CIF’ the seller might have intended on a terms which is not same as specified in ‘Incoterms 2000’, and that is why the documentary credit does not refer to ‘Incoterms 2000’.
Therefore by stating ‘Incoterms 2000’ the seller can change the terms of delivery, which may not be agreeable to the buyer. Hence I shall not consider the same as additional information.
Rgds
Thanks for your comments, Probably I was not clear enough.
I agree with you that the compliance of the documents must be determined by the express terms of the credit and the UCP. I also wish to state that we deal with documents and we determine compliance on what is stated on the face of documents.
When the description of the goods in the credit includes the price basis ‘CIF’ and the invoice shows the price basis as ‘CIF Incoterms 2000’ Are we in a position to judge whether that information is supplementary?
We have to consider the fact that the documentary credits issued are to reflect the pro-forma invoices, contracts of sale, purchase orders etc. as agreed between buyer and seller. The terms of delivery agreed between the buyer and seller need not be the same as stated in Incoterms 2000. Probably this is the reason why the documentary credit did not make a reference to Incoterms.
Without reference to Incoterms, FOB, CIF, CFR, etc can have all kinds of meanings.
For example, you can come up with some funny meanings such as "Free on Boeing" for air-transport. By just mentioning ‘CIF’ the seller might have intended on a terms which is not same as specified in ‘Incoterms 2000’, and that is why the documentary credit does not refer to ‘Incoterms 2000’.
Therefore by stating ‘Incoterms 2000’ the seller can change the terms of delivery, which may not be agreeable to the buyer. Hence I shall not consider the same as additional information.
Rgds
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LeeHowSeng
- Posts: 15
- Joined: Fri Apr 05, 2019 5:19 pm
ISBP Para 65
Hi Vijaya,
I totally disagree with you as what you hv mentioned is not practical at all if you still consider LC as a mechanism of payment. Yes bank does not need to determine whether info presented as addtional or not but as what Jermay has mentioned so long that it appears on it's face complies with term and conditons of LC it would be fine .(UCP Art 13) Furthemore ISBP Para 2 has specifically mentioned any ambiguity in issuance instructions given , applicant bear the responsibility .
Cheers
I totally disagree with you as what you hv mentioned is not practical at all if you still consider LC as a mechanism of payment. Yes bank does not need to determine whether info presented as addtional or not but as what Jermay has mentioned so long that it appears on it's face complies with term and conditons of LC it would be fine .(UCP Art 13) Furthemore ISBP Para 2 has specifically mentioned any ambiguity in issuance instructions given , applicant bear the responsibility .
Cheers
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KimChristensen
- Posts: 404
- Joined: Fri Apr 05, 2019 5:21 pm
ISBP Para 65
As stated in my shortest posting in the DC-Pro forum ever (the one in this discussion from 1-5-2005; which by the way can be quoted freely should anyone wish so 
, I would not consider this is discrepancy.
That being said, I do think that Vijaya has a valid point. Terms like CIF and FOB are not “borne” Incoterms clauses; and as Vijaya points out there may be a huge difference between the interpretation; even though e.g. FOB is translated to Free On Board. As I understand it, the US interpretation is very far from the Incoterms interpretation; actu-ally closer to Ex Works (EXW).
What then if the trade term is one “invented” for the Incoterms, like CFR and FCA … well good question.
In any case, I fail to see the relevance of ISBP paragraph 2. A statement saying CIF Hong Kong – need not be ambiguous at all; this can come directly from the sales con-tract, where it is clearly defined; perhaps to say that, it is understood to be similar to CIF – Incoterms 2000 – EXCEPT the following points ….. In any case it MAY be different from the Incoterms definition.
And what should have been stated in the credit: CIF Hong Kong (NOT as per Incoterms 1936, 1953, 1967, 1976, 1980, 1990 or 2000)
So it is not a clear cut case; but my argument for accepting this is partly based on the points raised by Jeremy – and in fact ISBP paragraph 65 who states, that if a specific source is mentioned in the credit, then this should be reflected in the invoice (if part of goods description). It does not mention the opposite scenario – which we have here. Consequently I would consider this a DETAILING of the term mentioned in the credit, and would choose not to “look beyond” the document; i.e. not considering the commercial contract at all (which I guess is in line with the latest posting from Lee How).
Apologize for the confusion, but this is an interesting question – where you can argue both ways.
So there you have it: My personal comments without responsibility / liability.
Best regards
Kim
, I would not consider this is discrepancy.That being said, I do think that Vijaya has a valid point. Terms like CIF and FOB are not “borne” Incoterms clauses; and as Vijaya points out there may be a huge difference between the interpretation; even though e.g. FOB is translated to Free On Board. As I understand it, the US interpretation is very far from the Incoterms interpretation; actu-ally closer to Ex Works (EXW).
What then if the trade term is one “invented” for the Incoterms, like CFR and FCA … well good question.
In any case, I fail to see the relevance of ISBP paragraph 2. A statement saying CIF Hong Kong – need not be ambiguous at all; this can come directly from the sales con-tract, where it is clearly defined; perhaps to say that, it is understood to be similar to CIF – Incoterms 2000 – EXCEPT the following points ….. In any case it MAY be different from the Incoterms definition.
And what should have been stated in the credit: CIF Hong Kong (NOT as per Incoterms 1936, 1953, 1967, 1976, 1980, 1990 or 2000)
So it is not a clear cut case; but my argument for accepting this is partly based on the points raised by Jeremy – and in fact ISBP paragraph 65 who states, that if a specific source is mentioned in the credit, then this should be reflected in the invoice (if part of goods description). It does not mention the opposite scenario – which we have here. Consequently I would consider this a DETAILING of the term mentioned in the credit, and would choose not to “look beyond” the document; i.e. not considering the commercial contract at all (which I guess is in line with the latest posting from Lee How).
Apologize for the confusion, but this is an interesting question – where you can argue both ways.
So there you have it: My personal comments without responsibility / liability.
Best regards
Kim
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LeeHowSeng
- Posts: 15
- Joined: Fri Apr 05, 2019 5:19 pm
ISBP Para 65
Hi Vijaya ,
No offend we are sharing our views and thanks for the feedback .
Cheers
No offend we are sharing our views and thanks for the feedback .
Cheers
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JudithAutié
- Posts: 195
- Joined: Fri Apr 05, 2019 5:20 pm
ISBP Para 65
The French have a saying « better is the enemy of good », which I think applies to this problem.
When the Incoterms 2000 were approved and put into use, knowledgeable exporters often specified clearly that they were quoting on the basis of the newest set of terms, i.e. Incoterms 2000, in order to avoid any confusion.
It is common usage to specify the edition of terms of any sort (such as Incoterms, but also UCP rules) that have been updated to ensure that everyone is talking about the same ones. However it is also commonly considered that the revision in use on the date of the sales contract is the revision that will be applied unless otherwise stated.
What also often happens is that the incoterm is programmed into the invoicing software and pops up automatically. (Sometimes the “software” that has been programmed is in fact the clerks brain
)
I strongly suspect that if this is the only discrepancy and the case came to court, the court would not uphold such a discrepancy unless the buyer could prove that the contract was based on another interpretation of CIF.
I would certainly fight tooth and nail if this discrepancy were thrown at me, but this is my own opinion, without responsibility nor liability etc…
Judith
When the Incoterms 2000 were approved and put into use, knowledgeable exporters often specified clearly that they were quoting on the basis of the newest set of terms, i.e. Incoterms 2000, in order to avoid any confusion.
It is common usage to specify the edition of terms of any sort (such as Incoterms, but also UCP rules) that have been updated to ensure that everyone is talking about the same ones. However it is also commonly considered that the revision in use on the date of the sales contract is the revision that will be applied unless otherwise stated.
What also often happens is that the incoterm is programmed into the invoicing software and pops up automatically. (Sometimes the “software” that has been programmed is in fact the clerks brain
)I strongly suspect that if this is the only discrepancy and the case came to court, the court would not uphold such a discrepancy unless the buyer could prove that the contract was based on another interpretation of CIF.
I would certainly fight tooth and nail if this discrepancy were thrown at me, but this is my own opinion, without responsibility nor liability etc…
Judith