Article-27-UCP-600-Clean Transport Document

Transport documents are international legal notes that specify the description, type, quantity, shipper, carrier, consignee and destination of merchandise issued by the carriers or their agents. There are different types of transport documents specific to the transportation mode such as sea, air, road or multimodal. A bills of lading is a transport document ie used for sea shipment. 

Article-27-UCP-600-Clean Transport Document

A bank will only accept a clean transport document. A clean transport document is one bearing no clause or notation expressly declaring a defective condition of the goods or their packaging. The word "clean" need not appear on a transport document, even if a credit has a requirement for that transport document to be "clean on board".

If, upon receipt of the goods, carrier finds that the packaging or the goods are in defective condition, he will make a notation on the transport document to this effect to avoid being subsequently held responsible for such defect. Due to that, the document is no longer clean, and any objections or claims for damages will have to be directed to the shipper of the goods.

An issuing bank or applicant want clean transport document which comply as per credit, document that bears no clause or notation that expressly declares a defective condition of the goods or its packaging. Unless the documentary credit stipulates otherwise, banks will refuse documents bearing such clauses or notations.

Even if credit calls for transport document such as “full set of original clean on board bill of lading”  the word clean not mandatory to appear on the bill of lading, and same need to be determines by checking the documents whether the presented bills of lading are clean or not.

If the word “clean” given on a bill of lading and further deleted, the bill of lading will not be deemed to be claused bill of lading, unless it specifically bears a clause or notation declaring that the goods or packaging are defective.

A clause on a transport document such as "packaging is not sufficient for the sea journey" or words of similar effect is an example of a clause expressly declaring a defective condition of the packaging. However, clause on a transport document as "packaging may not be sufficient for the sea journey" or words of similar effect does not expressly declare a defective condition of the packaging.

In above given example, the title of the document itself says that "clean bill of lading" however, body of the document bear a clause for defectiveness of the goods.

Sometimes, what appears to be a defect may be acceptable in a particular case, in which case the documentary credit should specifically allow the notation. An example would be for a shipment of steel where the transport document indicates the steel is rusty or showing evidence of rust.

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Chandan Kumar Yadav
My name is Chandan Kumar Yadav CDCS, CSDG, CITF, PGDIBO,AML-KYC, CCFE, MLIBF, CSF, 6SIGMA a trade finance professional with an experience of 11 years whereas worked with several stages of letter of credit, bank guarantee and on other payments methods of trade transactions such as documentary collection, open accounts, SBLC etc., I have a fair understanding of Trade Based Money Laundering as well, Blogging related to Trade Finance is my passion and I want to share which I know and learn from others, I have worked with Wells Fargo, Yes Bank Limited and Bank of America, India which helped me to gain knowledge, view of Trade Finance and importance of International Trade in world's economy. Trade Finance is thumping product, everyday we are learning something new so in order to keep learning I started this as one of the platform. . Let's Learn Together

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