Is It Normal To Send One Original BL To Importer Directly?

[noirfalisse]

In the case of a letter of credit, is it usual that an importer receives one original of the B/L (consignee = issuing bank) and this issuing Bank receives the 2 other originals ? I heard that this method may allow the importer to speed up the shipment release asking his bank to endorse the B/L before reception of the 2 other ones.
Transfer of documents from exporter to his bank plus transfer documents bank to bank may take up to 10 days, and shipment may arrives before documents are cleared by the issuing bank.
With this shortcut, the importer may already release the containers and let proceed to delivery.
What is your opinion ? Did the Banks generally accept this way ? Where are the possible risks for the exporter ?
Thank you for your fee-back
Etienne :?:

[shahriar]

dear noirfalisse,

if you ask me is there a practice, i will say yes, though little. but if you ask me is it a good practice? i will say depends. there are some problems that may arise due to this for both importer and exporter.

first, by sending one original to importer, the exporter will be possibly loosing control over the cargo. with the endorsement of the issuing bank, the exporter will take the charge of cargo and may never pay. ICC opinion says you will get no protection since that one original is outside the scope of LC.

again, the shipping document may have some discrepancy. it may be refused later by the issuing bank.

nevertheless, the practice that i see,

yes, sometimes one original is send to the exporter. if the exporter approaches the issuing bank for endorsement purpose, the issuing bank built a 100% margin or take prior acceptance of all possible discrepancies from the exporter.

hope that will help

shahriar

[cristiand969]

It will be very difficult to assume that issuing bank will endorse the B/L received from exporter and release it back to them without asking for such form of guarantee namely, that beneficiary will unconditionally take up documents or provides a guarantee in this respect to the bank. REMEMBER, firstly the issuing bank must be THE DUE HOLDER of that B/L (paid for goods covered by BL) and secondly in case endorses a document outside L/C terms (without any payment) the issuing bank may held responsible for involvement in this operation without having any right.
best regards
Cristian

[iLC]

i agree with Cristian. what shahriar is talking is mere possibilities and hardly happens in daily life. bankers are responsible animal after all.. :lol:

just for reference, ICC Opinion R414

QUERY

Where one of the original B/Ls are to be sent directly to the applicant or his agent and it is consigned to the order of the issuing bank; if a B/L shows a consignee to be a party other than the issuing bank......

Answer –

1. Where one of the original bills of lading are to be sent directly to the applicant or his agent and it is consigned to the order of the issuing bank, the issuing bank should not endorse the document to the applicant without an express authorization from the applicant to accept the documents, received from the remitter, as presented. By endorsing the bill of lading the issuing bank is denying the beneficiary good title to the goods in the event of discrepancies in the documents presented and the applicant failing to provide an acceptable waiver.

2. If the bill of lading shows a consignee to be a party other than the issuing bank, any endorsement is outside the scope of the credit and the issuing bank will be obliged to check the documents for compliance with the terms and conditions of the credit and, if need be, dishonor.

Despite the answers given above, it is for the beneficiary to understand the implications of accepting a letter of credit that requires an original bill of lading to be sent directly to the applicant or a nominated agent. The goods may be released to the applicant and payment withheld by the issuing bank (rightly or wrongly) due to discrepancies.

Cristian, i think shahriar was on the right track but a bit pessimist. sometimes good.. when bad things :twisted: really occurs.

iLC