Documents To Be Presented Are Not Standard Shipping Document

[eda]

Hi there,
I am opening a letter of credit however the documents to be presented ( 46A) are not standard shipment documents like B/L, Invoice..etc
After the goods arrive at customs we make the importation and they are delivered to the site. When they arrive at site, I issue a " delivery receipt certificate" signed and stamped by both parties and then the seller takes this document, present it to the bank and receives the payment. I am on the safe side.
Is "transshipment, latest date of shipment" shall be binding clauses or will mean nothing?
Let's say I put the latest date of shipment as 13 September 2008, however the bank will se no shipment document so does this clause mean nothing????
Awaiting your opinions.

Thanks
Eda

[iLC]

dear eda,

you are quite right. we put tons of clauses in the letter of credit to ensure that we will get the goods we want. if you are issuing a delivery receipt after getting the goods in order, there is no requirement to put such clauses.

but i dont think a prudent banker will be ready to honor the presentation which is constitute of merely a delivery receipt. you said your document are not standard bill of lading or invoice. how can the bank determine the value of the shipment? do you put it on the delivery receipt?

if i continue, there will be a long posting. so i stop. just to address specific issues -

1. transshipment is usually prohibited to protect the goods. in you case its not necessary.

2. its not mandatory even for a standard letter of credit to have a latest shipment date.

3. even there is not shipping document available to the bank, still it is possible to assess the shipment detail. UCP sets standard for the bill of lading or airway bill but didnt restrict you from getting similar benefits from other documents. you just need to perform an extra duty; define the content of the document.

iLC

[eda]

Dear İLC,
Thank you very much for your reply.
We'll mention the value of the goods on the " delivery receipt certificate" and the bank will also require an invoice to the pertaining amount. The bank accepts opening such an L/C.

Regarding your 3rd note below, I have grown interest in the details of it. Because my point is; yes we are on the safe side, we do not make payment until the goods arrive at site however payment is not the only issue, this is a turnkey project and work schedule is tight, we also want to push the seller to make shipments on time, in line with work schedule. I can apply penalties according to the contract but getting this project finished on time is the most important thing. Yes I won't pay until goods arrive at site there is some delay or damage due to transshipment but a delay in the project due to above issues will cost very very high to us.
Therefore what do you mean by " get similar benefits from other documents? What can put else on delivery receipt certificate???

Thanks in advance
Eda

[shahriar]

dear eda,

i dont think iLC meant that you will get all the benefit of a transport document from a non-transport document. transport documents like BL or AWB or CMR are governed by certain laws and therefore are more protected. i think what iLC is saying that you can assess the dates. its not a big thing. you can just add clauses like "delivery receipt must be dated no later than ....."

right now your bank is examining the document under UCP article 14f which says

If a credit requires presentation of a document other than a transport document, insurance document or commercial invoice, without stipulating by whom the document is to be issued or its data content, banks will accept the document as presented if its content appears to fulfil the function of the required document and otherwise complies with sub-article 14 (d).

it is also possible that you use a transport document along with the delivery receipt. choose incoterm as DDP or DDU whichever fits a better. in fact this is more frequently used.

regd

shahriar

[eda]

Dear Shahriar,
Thank you for your comments.Then I will add a clause about date of certificate (but since the certificate is about arrival date at site, the bank cannot have idea about shipment date) or I will also require "copy" of B/L withe teh delivery receipt certificate I guess second one will be better.

Regards
Eda

[shahriar]

dear Eda,

we need to understand first the need latest date of shipment. why would some one put that clause? you put them cause you need your goods on time. to uphold this spirit UCP also says that documents must be presented within 21 days from the date of shipment. why? cause you need the documents to release your goods. so timely shipment is not enough, you also need the documents timely.

but your case is different. you are issuing certificates only after getting the goods in hand. you know when do you require yours goods to be arrived at your counter. so a simple clause about the date of delivery receipt will serve your purpose. banks need not to know when the goods were shipped in this case.

sometimes i think though that there is no use of even that clause. if goods arrives late, you may simply refuse to issue delivery certificate. however a date clause will put some extra pressure on the beneficiary since theoretically its possible that bank will not accept your waiver even if you issue a deliver receipt after the last date of arrival.

you though have your own way. you can issue a delivery receipt on back date.

but if i were the banker, i will always look for a transport document. trading in the way like has higher risk of fraud and accommodation bills.


shahriar