ICC Digital Library Forum

We have a client who wants to start issuing L/C's using FCR's instead of Bills of Lading.
They want delivery to be to the shipping companies warehouse in HK, instead of to UK port as at present.
I assume the L/C terms will have to be FCA. Are there any other considerations or implications we need to be aware of.
They import lots of small consignments (usually several to a container) and I suppose this is an attempt to simplify the process, with a view to everything being done electronically.
Thanks and regards.

Dear Peter,

FCA does not sound unreasonable. It will of course depend on the agreement between the parties. I would assume that there is a “price issue” since delivery point changes from UK to HK. So I really can not say.
That agreement should of course be reflected by the wording of the credit.

You should also take into account that the change from a B/L to a FCR is rather fundamental. The FCR is not considered a “transport document” from a L/C point of view. This means that the examination of the document will not be based on e.g. article 23 but on article 20 and 21 like any other certificate. In addition to that – all the “transport based requirements” in UCP 500 – like period for presentation does not automatically apply. This means that you (and the applicant) should be extra careful when drafting the L/C.

There are a couple of ICC opinions that can be found at DC-Pro. ISBP paragraph 20 is also relevant.

Hope this helps you.

Best regards
Kim

Hi
I would also like to add another point. As you probably know, an FCR is not negotiable. If your bank's procedures require that the goods be collateral for such transactions, you will have to reconsider the position. A possible solution that I have used in such cases is to receive an undertaking from the (reliable and well-known) forwarders that they will only dispose of the goods on our bank's formal instructions, and that in case of shipment by sea the B/L will be issued to our bank's order and sent to our bank free of payment.

Best regards
Judith

Thank you for your previous replies.
The client has now decided to go with 'on board' FCR's dated no later than latest shipment date evidencing receipt of goods for despatch. The freight forwarder is
OK with this, as is the client.
I presume as the FCR is not a 'transport document' under UCP we shouldn't have a problem if the two dates dont match.
However the applicant requires as part of the L/C that documents must be presented within 20 days from date of cargo received but not later than expiry date.
Do we need to add anything to the L/C to clarify this given that an FCR wouldnt normally require this and would allow presentation of documents up to the expiry date of the credit.

Thanks

Peter