Best Trade Solution

13) ABG shipping line informs the notify party “Pro Ltd” (who is also the applicant of the Letter of Credit
Issued by the Dena Bank, India in favour of Devdas Ltd) that the goods have reached the port. B/L
Is consigned “to Dena Bank”.
Since the goods are perishable in nature and the applicant urgently requires its delivery. Hence Paro
Ltd request ABG to deliver goods. What should be the course of action to ABG?
a. reject and wait for the documents to arrive
b. reject and provide delivery only on submission of shipping guarantee issued by Dena Bank
c. reject and provide delivery only on submission of Delivery order issued by Dena Bank
d. reject and provide delivery on indemnity issued by the applicant

B or C?

The answer is B

Delivery order is usually issued when the bank receives original CMR or RWB and requested to transfer its rights to the applicant.

Why can not the answer be B, shipping guarantee or indemnity is one or the same thing

Hi Pal,

difference is in the indemnity issuer, one thing is a bank, another thing is the applicant.
I dare say that sometime the applicant could have a better standing than a bank, but at least a bank should have a better reputation and not involved in the commercial transaction.
Other comments appreciated
Ciao

Hi All:

Since the BL is consigned to the issuing bank, only the issuing bank have the physical access to the goods. Normal procedure would be for the bank to endorse the BL to the applicant after the applicant have satisified all conditions lay out by the bank.

In this case, its apparent that the applicant doesn't have the time to wait for the issuing bank to endorse the BL to them or that the applicant might have difficulties fulfilling conditions lay out by the bank.

It would be a risk to the carrier to release cargo to the applicant. Carrier would be liable to the issuing bank. The carrier need to indemntify themselves against potential losses, expenses, legal fees if it so choose to release cargo to the applicant.

Hence, a letter of indemnity would be required from the applicant if they want the carrier to release cargo to them. Answer: D