We have received a credit requiring beneficiary to send 1/3 original ocean BL made out to shipper's order & blank endorsed to the applicant through the issuing bank.
We would like to enquire whether the issuing Bank could release the BL to the applicant( who subsequently take delivery of the goods) & upon receipt of the documents advises refusal due to some valid discrepancies.? Would the issuing bank escape liability for such an act?
1/3 Original BL sent to applicant thru issuing bank
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1/3 Original BL sent to applicant thru issuing bank
Mere receipt of the original B/L does not entitled the issuing bank to release the goods to the applicant, unless the terms of the credit specifically allow it to do so. however, prudence demand that the bene should question the applicant's intention for having such a stipulation in the credit.
1/3 Original BL sent to applicant thru issuing bank
SIGNIFICANCE OF BLANK ENDORSEMENT
A bill of lading endorsed in blank by the shipper makes it a "bearer" instrument. That menas, in layman terms, the finder the keeper. If it is sent to the issuing bank, the issuing bank is the holder by possession of it. If the issuing bank gives it to the applicant, it may incur liabilities, unless the shipper has given the issuing bank very clear instructions to hand it over to the applicant without the need for payment demand.
ABUSE OF BLANK ENDORSEMENT
We think this practice is an abuse to the blank endorsement arrangement, that is not meant to be used in such a way. This shows that the shipper does not understand blank endorsement and its significance. It is a very dangerous practice.
Even clear instructions are given, the banks involved, as good customer services, should give the shipper/beneficiary sound advice to point out the risk associated with such malpractice.
GOOD CUSTOMER SERVICES FROM BANKS
Sometimes, traders do not understand clearly what they are doing, due to lack of training. A good banker should step in and give timely advice as good customer service and as a means to create added value for their banking services.
We are from http://www.tolee.com
[edited 7/22/01 5:21:02 PM]
A bill of lading endorsed in blank by the shipper makes it a "bearer" instrument. That menas, in layman terms, the finder the keeper. If it is sent to the issuing bank, the issuing bank is the holder by possession of it. If the issuing bank gives it to the applicant, it may incur liabilities, unless the shipper has given the issuing bank very clear instructions to hand it over to the applicant without the need for payment demand.
ABUSE OF BLANK ENDORSEMENT
We think this practice is an abuse to the blank endorsement arrangement, that is not meant to be used in such a way. This shows that the shipper does not understand blank endorsement and its significance. It is a very dangerous practice.
Even clear instructions are given, the banks involved, as good customer services, should give the shipper/beneficiary sound advice to point out the risk associated with such malpractice.
GOOD CUSTOMER SERVICES FROM BANKS
Sometimes, traders do not understand clearly what they are doing, due to lack of training. A good banker should step in and give timely advice as good customer service and as a means to create added value for their banking services.
We are from http://www.tolee.com
[edited 7/22/01 5:21:02 PM]
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- Joined: Fri Apr 05, 2019 5:26 pm
1/3 Original BL sent to applicant thru issuing bank
Although I agree with T.O. Lee that it is not good practice, it is possible, though unusual, for the issuing bank to have good reasons for requesting 1 original B/L to be sent direct to them. An example would be where there is a short transit time involved and a lengthy delay anticipated in the presentation of documents (legalisation etc) to the negotiating bank. In such a case charges may start to accrue for storage at the destination port while awaiting bank documentation. If the issuing bank, anticipating this, releases the original B/L to the applicant upon payment to avoid such charges, this does not preclude the issuing bank from adopting normal procedures for checking documents and making payment under UCP 500.
It is acknowledged that there is a certain amount of risk here, but no more so than a L/C based on a transport document which is not a document of title.
It is acknowledged that there is a certain amount of risk here, but no more so than a L/C based on a transport document which is not a document of title.