Goods Description On Insurance Policy/Certificate

BruceS · Post by **BruceS** » Thu Mar 16, 2006 12:00 am

Recently we had a case where the issuing bank picked up a discrepancy on the Insurance Cert. with the goods description. The Description of Goods under the Dc states: 4/4 Walnut No. 1 common Kiln Dried Sawn Timber. The Insurance Policy stated Hardwood Lumber. We disagreed citing Art. 37 C of UCP500. The issuing bank countered with ICC Banking Commission Opinion 1995-2001 Query R363. I would like to hear your opinions.

Thank you,
Bruce

RolandLeupi · Post by **RolandLeupi** » Fri Mar 17, 2006 12:00 am

Even if both description refer to wood I find however the description on the insurance policy to generic. In this case I understand the discrepancy raised
Roland

KimChristensen · Post by **KimChristensen** » Fri Mar 17, 2006 12:00 am

Dear Bruce,

I must say that I am in line with Roland here. I really can not tell from the two descriptions if this is the same or not.
Had they said e.g. “timber” then I think that 37(c) was relevant.

Best regards
Kim

NigelHolt · Post by **NigelHolt** » Fri Mar 17, 2006 12:00 am

There simply is no such thing as a ‘too generic’ goods description. The issue simply is- ‘Is “Hardwood lumber” APPARENTLY inconsistent [per sub-Article 37c] with “4/4 Walnut No. 1 common Kiln Dried Sawn Timber” from a BANKER’S (i.e. non-expert’s) perspective’?

I incline to the view that it is not, on the basis that in everyday usage the words ‘lumber’ and ‘timber’ are inter-changeable I believe and there is nothing in the goods description to suggest the ‘timber’ cannot be hardwood.

In the case of R363 the collective view of the ‘Banking’ Commission was that 'Koolyanobbing Lump Iron Ore' was apparently inconsistent with ‘Iron ore concentrate’ to a banker. Unfortunately this august body has not deigned to give us its reasoning.

[edited 3/17/2006 10:39:03 AM]

KimChristensen · Post by **KimChristensen** » Fri Mar 17, 2006 12:00 am

Dear Jeremy,

Yes – it is surely not a clear cut case, and no doubt the evaluation is, if the description in the insurance is inconsistent with the description in the credit.

I will agree that “lumber” and “timber” are most likely the same – wood in some form!

So had the insurance document only mentioned “lumber” or “timber”, I would have no problem classifying that as a “goods described in general terms”.
I find it hard (!!) however to place “hardwood” in the same category. To me this is “specifying” the goods in another way than it is done in the credit. As a “non-wood-expert-LC-banker” to me this is something else; in LC language: “inconsistent”.

I can find nothing to document this – so it is just my personal evaluation. (and I agree that R.363 is not to much help here).

Best regards
Kim

NigelHolt · Post by **NigelHolt** » Fri Mar 17, 2006 12:00 am

Kim,

I have to say that the more I think about this, the more certain I am there is not any apparent inconsistency between the insurance document and the credit goods description.

With respect to ‘hardwood’, the wood in question is ‘Walnut’. I see nothing to suggest -to the non-expert- that describing the goods as ‘hardwood’ is inconsistent with ‘Walnut’ and our sole concern -per sub-Art 37c- is apparent inconsistency and no more. As it happens, walnut is classified as a ‘hardwood’.

Hope you have a good weekend.

Regards, Jeremy

KimChristensen · Post by **KimChristensen** » Fri Mar 17, 2006 12:00 am

Dear Jeremy,

There is one interesting angle in this – when comparing your arguments to mine: What does “.. not inconsistent with the description of goods in the credit” actually mean?

As I read your arguments, the issue is whether it is APPARENT that the description in the insurance document is inconsistent with that in the credit. I.e. it must be CLEAR (or relatively clear) that this is in fact not the same.

My arguments is based on what I call “the stupid banker argument”: I do not know if “walnut” and “hardwood” are the same; hence it is “inconsistent”.

I may be “over interpreting” you but this seems to me to be the basis for the difference in opinions here.

I must also make one further comment: This is the first time I have noticed that you have (softly I admit) based an argument on facts outside the credit: that walnut is classified as hardwood

I wish you a nice weekend as well.

Best regards
Kim

[edited 3/17/2006 12:46:19 PM]
[edited 3/17/2006 12:46:56 PM]

NigelHolt · Post by **NigelHolt** » Fri Mar 17, 2006 12:00 am

Kim,

Do the Danes have the expression that someone ‘is like a dog with a bone’? ;>

No, my argument is not that “the issue is whether it is APPARENT that the description in the insurance document is inconsistent with that in the credit”. My argument is that the issue is whether it APPEARS that the description in the insurance document is inconsistent with that in the credit to a banker, e.g. that there are words in the insurance document that suggest different goods are being covered from those described in the invoice. Here (1) ‘lumber’ is a synonym for ‘timber’ and (2) ‘hardwood’ is an adjective that does not seem in conflict with ‘walnut’.

Woof, woof Jeremy
[edited 3/17/2006 4:12:20 PM]

KimChristensen · Post by **KimChristensen** » Fri Mar 17, 2006 12:00 am

Dear Jeremy,

Hmm dogs & bones; we do actually – but I do not think it is absolutely fair to “blame” all Danes for my “behaviour”

In any case – I am still not totally convinced; so I will just go to my doghouse and wait for my weekend snack.

Kim

RolandLeupi · Post by **RolandLeupi** » Tue Mar 21, 2006 12:00 am

Thanks for the support of everybody. Now to keep in touch with present case we do lots of import from Cameroun. The wording however is french for evident reasons. If timber or lumber are same what about "fardeaux Iroko" and "débités Iroko".So in addition to the specific knowledge of the wood a very specific knowledge of the language is also necessary.
Seems an unending story, but firt of all very dangerous.
Roland