Article-32-UCP-600-Instalment Drawings or Shipments

Instalment drawing or shipments are a type of shipments where suppliers deliver the specified quantity of items not at a time but by splitting it in a several times.

An issuing bank need to check the applicant’s exact needs with regard to delivery of the goods. This will ensure that the credit, when issued, accurately reflects those needs, particularly in respect of partial shipments and the continued availability of the documentary credit in the event of a failure by the beneficiary to adhere to an instalment schedule. 


Article-32-UCP-600-Instalment Drawings or Shipments

If a drawing or shipment by instalments within given periods is stipulated in the credit and any instalment is not drawn or shipped within the period allowed for that instalment, the credit ceases to be available for that  and any subsequent instalment.

Usually in case of instalment drawing field “45a” of the credit will have a start and an end date for particular instalment, and these dates are not to overlap, beneficiary must need to ship the goods within that stated instalment period. However, in case even a single shipment is not as per period given in credit then the credit is ceased to be available for that and any subsequent drawing.

Example: Documentary credit states:

• 200 Cars to be shipped between 1 May and 31 May 20XX.

• 150 Cars to be shipped between 1 July and 31 July 20XX.

• 150 Cars to be shipped between 1 September and 30 September 20XX.

In above scenario, the credit given 3 particular periods and the beneficiary must have to ship the goods as per that, if in case beneficiary is unable to ship the goods as per above stated requirements then article 32 will be applied and credit will be ceased to be available for that and subsequent shipments.

Suppose, beneficiary has shipped the first instalment as per given period, however, were not able to ship 150 Cars between 1st July to 31st July 20XX and ships the same in month of August 20XX, then this article of UCP will be applied and that presentation may be rejected due to non-complying with shipment periods, credit will also be ceased to be available for last drawing.

Example (where article 32 does not apply): Documentary credit states:

• 200 Cars to be shipped no later than 31 May 20XX.

• 150 Cars to be shipped no later than 31 July 20XX.

• 150 Cars to be shipped no later than 30 September 20XX.

In this structure, the beneficiary could ship all 500 cars by 31st May, when the intention of the applicant was most likely for three separate shipments to occur, in this case, article 32 will not apply.

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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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