ICC Digital Library Forum

Credit by issuing bank has the following goods description

'as per beneficiary's contract no. 1234 dated xxxxxx.'

No further details on the goods are given in the LC.

Invoices presented quoted the credit description 'as per beneficiary's contract...xxxxx.'There is a further description of goods as Fire Merchandise listing various items like rubber hoses,etc.

This is not considered discrepant as it was taken as additional info. But the BL presented mentioned only Fire Merchandise with no reference to the credit description i.e. 'as per beneficiary's
.... dated xxxxx.'

Is this description in the BL considered sufficient to provide the linkage necessary to the invoice & credit?
[edited 6/11/01 3:02:46 PM]
[edited 6/11/01 3:05:51 PM]

Documents are consistent. However, I would recommend that, in the future, you insist in asking the I/B for a proper description of goods. Otherwise you run the risk of handling l/c and docs covering prohibited goods and failing to meet your bank's due diligence procedures.

I agree fully with Mr. Gauntlett's comments.
In addition, this format of L/C is open to fraudulent presentation due to lack of description or unit prices. The task of the bank trying, on the basis of the documents alone, to determine whether fraud is being perpetrated, will be impossible.

Laurence A. J. Bacon

From our experience in providing training and consultancy services to traders, we are aware that some importers trust the exporters, particularly after they have many years of happy trading. They may be dealing with many different items. Hence the importer would be pleased to state a very loose description of the goods in the LC upon the exporter's request, so that when the importer needs additonal item not mentioned in the LC, he can do so without paying amendment fees. This is one of their practices to allow the exporter to ship additional goods without LC amendments.

I have seen a lot of LCs in the Far East in the eighties with description of the goods being "General Merchandise". I had handled such LCs when I was young, with honest Chinese trading houses in Malaysia owned by Datuks (in Malay and Datos in English).

If the discrepancies in the description of the goods were referred to the applicant, he would have gladly waived them.

So in practice, if the parties know clearly what they are doing, there should not be any real problem.

According to sub-Article 37 (c) of the UCP 500 (which we presume the LC is subject to), in documents other than the commercial invoice, such as the BL, the description of the goods may be in general terms not inconsistent with the description of the goods in the Credit. So we do not see any discrepancy in the BL.

In fact, the description of the goods in the BL shows that the goods are fire fighting equipment and hence they are consistent with the description of the goods in the Credit.

The commercial invoice has clearly indicated that the fire merchandise is shipped under the Contract No. XXX. There is no doubt for the document checker that the BL is shipping goods under this Contract No. if the BL bears linkage to the commercial invoice, such as LC No., shipping marks and the like.

According to Article 3 of the UCP 500, mentioning the Contract No. XXX in the Credit does not give any additional protection to the underlying transaction. An LC is a payment mechanism and should not be used to police the trade, which should be the purpose of the underlying contract.

A document checker should examine documents with simple common sense, according to the late Bernard Wheble. Otherwise the document checker may be better replaced by a robot, that is more efficient, reliable (no human errors), cost savings [no housing, health care, low interest lending, insurance, also working in 24/7 mode (24 hours a day and 7 days a week)].

I am from www.tolee.com

[edited 2/21/02 9:13:14 PM]