Trade Finance Expertise

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 overl

Partial shipment is the delivery of an order in more than one shipment. It means, when a buyer orders goods, all the goods are not shipped at once, rather they are sent to the buyer in parts. From UCP perspective when two different vessels/Aeroplane/Truck are being used for part shipments, even if leaves on same days, will be regarded as partial shipment. Field “43P” Partial Shipments is a field in MT 700 swift message type that is used to specify whether or not partial shipments are allowed under the documentary credit. This is an optional field.   Article-31-UCP-600-Partial Drawings or Shipments a. Partial drawings or shipments are allowed. Partial drawings or shipments are allowed unless the documentary credit specifically prohibits. b. A presentation consisting of more than one set of transport documents evidencing shipment commencing on the same means of conveyance and for the same journey, provided they indicate the same destination, will not be regarded as covering a

Field “39a” Percentage Credit Amount Tolerance is a field in MT 700 swift message type that is used to specify the tolerance relative to the documentary credit amount as a percentage plus and/or minus that amount. This is an optional field.   Article 30 provides three basic rules in relation to the application of a tolerance, whether mentioned in the documentary credit or not. Article-30-UCP-600-Tolerance in Credit Amount, Quantity and Unit Prices a. The words "about" or "approximately" used in connection with the amount of the credit or the quantity or the unit price stated in the credit are to be construed as allowing a tolerance not to exceed 10% more or 10% less than the amount, the quantity or the unit price to which they refer. Terms such as ‘about’ or ‘approximately’ that are stated in relation to the credit amount or quantity of the goods or any unit price will allow a tolerance of 10% more or 10% less. A tolerance must state against each criteria to

A document scrutinizer starts document scrutiny with four basic checks which are listed below: ·          LC Expired ·          LC Overdrawn ·          Late Shipment ·          Late Presentation Article 29 of UCP-600 provides some exceptional coverage on expiry and latest date for presentations. UCP 600 - Article 29 a. If the expiry date of a credit or the last day for presentation falls on a day when the bank to which presentation is to be made is closed for reasons other than those referred to in article 36, the expiry date or the last day for presentation, as the case may be, will be extended to the first following banking day. An expiry date and place are indicated in field “31d” of the credit, in case that applies at the counters of the issuing bank then that issuing bank must receive the documents no later than that expiry date of the credit, however, if that expiry date is not a banking day in the issuing bank’s country due to any national holiday or weekends the

There are certain risk in international shipment, whether thru air, road or sea, to avoid those risk an insurance document may be used to provide the cover for loss or damage to cargo while in transit.   Article-28-UCP-600-Insurance Document and Coverage a. An insurance document, such as an insurance policy, an insurance certificate or a declaration under an open cover, must appear to be issued and signed by an insurance company, an underwriter or their agents or their proxies. Any signature by an agent or proxy must indicate whether the agent or proxy has signed for or on behalf of the insurance company or underwriter. Let’s understand first the terms insurance policy, insurance certificate or a declaration under an open cover. Insurance Policy: An insurance policy is a legal contract between the insurance company (the insurer) and the person(s), business, or entity being insured (the insured). Declaration under and open cover and insurance certificate: The open cover is a

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 res

a. A transport document must not indicate that the goods are or will be loaded on deck. A clause on a transport document stating that the goods may be loaded on deck is acceptable.   A deck is a platform or a section of floor on a ship, most decks are open, without a roof, and positioned high on a ship , shipment of the goods on deck exposes the variety of risks such as sea-spray and wind, as well as the potential risk of being washed off or falling overboard due to bad weather conditions or inadequate lashing, apart from these there may be situation to lighten up the ship to save human as well by throwing the goods loaded on the deck of the ship. A clause on a transport document stating that goods may be loaded on the deck is acceptable as it depends on the situation and decision of master of the ship to prioritize  to save human’s life. Refer Below image : b. A transport document bearing a clause such as "shipper's load and count" and "said by shipper to co