PART 1: COMMERCIAL

DOCUMENTS UNDER
THE UCP
UCP 600

1
 INTRODUCTION

Nguyen Bich Ngoc (PhD)

Graduated at Foreign Trade University, Hanoi, 2006
Bachelor major in International Economics
Post-gradutated at La Trobe University, Melbourne, Australia, 2008
Master of International Business
PhD. at National Economics University, Hanoi 2017
International Business Management
Office: Room 907, Building A1, NEU Campus
Office Hours: Anytime by appointment (e-mail for appointment time)
Email: ngocnb@neu.edu.vn Phone: 0919956929
2
 Students
• Learning materials:
Learning materials – Lecture slides
– UCP 600
Grades
– Documents
Exam
• Grades
Requirements for
attending final exam of 10% 20% 50%
part 1:
Attendence Exam Final exam
• Attend more than
80% of the total classes
• Participate to classes Participation 90’ 90’
and teams
• Hand in 20% exam
paper

3
4
Who will I
should be?

5
 COMMERCIAL DOCUMENTS UNDER THE UCP
(UCP 600 & ISBP)

• Aim to document international standard banking pratice

for examination of commercial documents under the
UCP 600.

• Time: 4,5 weeks

• Contents:
– Introduce about L/C
– How UCP 600 is important in international payment
– Understand main commercial documents

6
 Learning outcomes

• Understanding of letter of credits

• Understanding of commercial documents
• Understanding of international standard baking
practice for the examination of commercial documents
• Understanding of the way organizations dealing with
import – export documents in international payment
7
 Questions need to concern

• What is letter of credit (credit) – L/C?

• Why L/C is popularly used in international

payment?

• Why you have to concern about UCP 600 when

doing international business?

• Which content of UCP 600 you need to care

much about as a business man?
8
International payment methods
• Cash
• Telegraph
• Collection:
– Without documents
– With documents
• D/A (Document against Acceptance)
• D/P (Document against Payment)
• Letter of credits

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10
11
A letter of credit is basically a
guarantee from a bank that a
particular seller will receive a payment due
from a particular buyer. The bank guarantees
that the seller will receive a specified amount
of money within a specified time. In return for
guaranteeing the payment, the bank will require
that strict terms are met. It will want to
receive certain documents - for example
shipping confirmation - as proof.

12
Request to issue a credit

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14
15
 Revocable L/C
• Give issuer the amendment or cancellation right of
the credit any time without prior notice to the
beneficiary

• Not any protection to the beneficiary

• Not used frequently

• UCP 600 has no reference to revocable letters of

credit. All credits issued subject to UCP 600 are
irrevocable unless otherwise agreed between the
parties
16
 Irrevocable L/C
• Can not be amended or cancelled without the
agreement of the credit parties.

• Cannot be modified without the written

consent of both the issuing bank and the
beneficiary.

• Confirmed irrevocable letters of credit need

also confirming bank's written consent in order
any modification or cancellation to be effective
17
 Unconfirmed & Confirmed L/C

• For extra security

• Required by the beneficiary
• To guarantee payment even if the issuing
bank fails to make it.
• So, a confirmed letter of credit provides
more security than an unconfirmed one.

18
 Transferable L/C

• Can be passed from one ‘beneficiary’

(person receiving payment) to others.
• Commonly used when intermediaries are
involved in a transaction.
• Is irrevocable L/C

19
 Standby Letter of Credit 
• Issued by a bank on behalf of the buyer

• Guarantee that the seller (beneficiary) will

receive payment upon the presentation of
specified documents in the event the buyer
fails to pay the beneficiary according to the
terms of the contract.

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 Revolving Letter of credit

A single revolving letter of credit can cover

several transactions between the same
buyer and seller.

21
 Back-to-back L/C
• May be used when an intermediary is involved but a transferable
letter of credit is unsuitable.
• Is irrevocable letter of credit

• Facilitates the seller to obtain another letter of credit.

• Back to back letter of credit is generally used by the middleman or

agencies to hide the identity of the real suppliers or manufacturers.
• Such transactions originate when a seller receives a letter of credit
covering goods which must be obtained from a third party who in
turn requires a letter of credit. The “second” issuing bank looks to
the first issuing bank for reimbursement after paying under the
second letter of credit.

22
 At Sight L/C
• Any nominated bank has to pay to the beneficiary when
providing a complying presentation within 5 banking days
since the day documents are received.
• Two types of sight letters of credit:
– Sight negotiation: the beneficiary may obtain the payment right
at the time of presentation by negotiating the sight draft and
the documents with the nominated bank. The issuing bank
must pay/reimburse upon receipt of the complying documents.
– Sight payment : the beneficiary is paid at sight, i.e., right at the
time the complying documents are presented to the nominated
bank.

23
 Deferred payment L/C
is a credit which:
• Calls for presentation of specified documents on or
before a specified date;

• Provides for payment to be made to the beneficiary a

specified number of days or mounths after the
presentation of documents, or after date of shipment, or
other specified date; and

• Ussually does not call for drafts or other negotiable

instruments to evidence the debt obligation of the paties
involved.
24
 Questions need to concern

• What is letter of credit (credit) – L/C?

• Why L/C is popularly used in international

payment?

• Why you have to concern about UCP 600 when

doing international business?

• Which content of UCP 600 you need to care

much about as a business man?
25
26
1

27
CHAPTER 1
INTRODUCTION AND DEFINITIONS

28
 Objectives

o To introduce the international standard

banking practice (ISBP) and the application
of UCP 600
o To point out some popular definitions
o To identify some inportant considerations
under the UCP 600.

29
 UCP and ISBP
UCP = The Uniform Customs and Practice for Documentary
Credit
UCP was created to:
• Bring uniformity to a field in which individual practices
often differed
• Prevent the detriment of documentary practitioners in all
countries
By using the ISBP
Document checkers can bring their practices in line with
those followed by their colleagues worldwide.
reduce number of documents refused for
discrepancies on first presentation. 30
 The application of UCP 600
UCP 600 = rules

apply to any documentary credits (“credit”)

(including, to the extent to which they may be
applicable, any standby letter of credit) when the
text of the credit expressly indicates that it is
subject to these rules.

bind on all parties thereto unless expressly

modified or excluded by the credit

31
 The application and issuance of the credit
from ISBP
• The terms of a credit are independent of the underlying
transaction even if a credit expressly refers to that transaction
• To avoid unnecessary costs, delays and disputes in the
examination of documents, the applicant and beneficiary
should carefully consider:
o which documents should be required
o by whom they should be produced, and
o the time frame for presentation.

• A credit should not require presentation of documents that

are to be issued and/or countersigned by the applicant
32
 Definitions

• Credit means any arrangement, however named

or described, that is irrevocable and thereby
constitutes a definite undertaking of the issuing
bank to honour a complying presentation.

• Applicant means the party on whose request the

credit is issued.

• Beneficiary means the party in whose favour a

credit is issued.
33
34
 Definitions
• Issuing bank means the bank that issues a credit at the
request of an applicant or on its own behalf.
• Advising bank means the bank that advises the credit at
the request of the issuing bank.
• Confirming bank means the bank that adds its
confirmation to a credit upon the issuing bank’s
authorization or request
• Nominated bank means the bank with which the credit is
available or any bank in the case of a credit available with
any bank.
35
 Honour means:

a. to pay at sight if the credit is available by sight

payment.
b. to incur a deferred payment undertaking and
pay at maturity if the credit is available by
deferred payment.
c. to accept a bill of exchange (“draft”) drawn by
the beneficiary and pay at maturity if the credit is
available by acceptance.
36
 Definitions
• Banking day means a day on which a bank is regularly open
at the place at which an act subject to these rules is to be
performed.
• Confirmation means a definite undertaking of the
confirming bank, in addition to that of the issuing bank, to
honour or negotiate a complying presentation.
• Negotiation means the purchase by the nominated bank of
drafts (drawn on a bank other than the nominated bank)
and/or documents under a complying presentation, by
advancing or agreeing to advance funds to the beneficiary
on or before the banking day on which reimbursement is
due to the nominated bank. 37
 Definitions

• Presentation means either the delivery of

documents under a credit to the issuing bank or
nominated bank or the documents so delivered.
• Presenter means a beneficiary, bank or other party
that makes a presentation.
• Complying presentation means a presentation that
is in accordance with the terms and conditions of
the credit, the applicable provisions of these rules
and international standard banking practice.
38
 Considerations in L/C
• A credit is irrevocable even if there is no indication to that
effect.

• Banks deal with documents and not with goods, services or

performance to which the documents may relate.

• A credit must state the bank with which it is available or

whether it is available with any bank. A credit available with
a nominated bank is also available with the issuing bank.

• A credit must state whether it is available by sight

payment, deferred payment, acceptance or negotiation.

39
 Considerations in L/C
• A credit must not be issued available by a draft drawn on the
applicant.
• A credit must state an expiry date for presentation. An expiry date
stated for honour or negotiation will be deemed to be an expiry date
for presentation.
• The place of the bank with which the credit is available is the place
for presentation. The place for presentation under a credit available
with any bank is that of any bank. A place for presentation other
than that of the issuing bank is in addition to the place of the issuing
bank.
• A presentation by or on behalf of the beneficiary must be made on
or before the expiry date

40
 Consideration with words in L/C
• The expression "on or about" or similar will be interpreted
as a stipulation that an event is to occur during a period of
five calendar days before until five calendar days after the
specified date, both start and end dates included.

• The words "to", "until", "till", “from” and “between”

when used to determine a period of shipment include the
date or dates mentioned, and the words “before” and
"after" exclude the date mentioned.

• The words “from” and "after" when used to determine a

maturity date exclude the date mentioned.

41
 Consideration with words in L/C

• The terms "first half" and "second half" of a

month shall be construed respectively as the 1st
to the 15th and the 16th to the last day of the
month, all dates inclusive.

• The terms "beginning", "middle" and "end" of a

month shall be construed respectively as the 1st
to the 10th, the 11th to the 20th and the 21st to
the last day of the month, all dates inclusive.

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CHAPTER 2
GENERAL PRINCPLES OF ISSUANCE AND
EXAMINATION OF DOCUMENTS

43
 2.1. ABBREVIATIONS

• Ltd – Limited • Virgules “/” should not

• Int’l – International be used as a substitute
for a word because it
• Co – Company may have different
meanings.
• kgs/kos – kilos
• Ind – Industry
• mfr – manufacturer

• mt – metric tons
44
 2.2. DATES
Phrases often used to signify time on either side of a date or event:
• "within 2 days after" indicates a period from the date of the event until two
days after the event.
• "not later than two days after" does not indicate a period, only a latest date.
Note: If an advice must not be dated prior to a specific date, the credit must so
state.
• "at least two days before" indicates that something must take place not later
than two days before the event. There is no limit as to how early it may take
place.
• "within 2 days of" indicates a period 2 days prior to the event until 2 days
after the event 
Note: The term "within" when used in connection with a date excludes that
date in the calculation of the period.

45
 How to write dates?
• Date may be expressed in
different formats. Provided Eg: the 12th of November
that the date intended can be 2010 could be expressed
determined from the as:
document or from other – 12Nov10
documents included in the
– 12.11.2010
presentation, any of those
– 12.11.10
formats are acceptable.
– 2010.11.12
• However, to avoid confusion it – 11.12.10
is recommended that the – 121110,
name of the month should be
– etc.
used instead of the number.
46
 2.3. EXPRESSIONS NOT DEFINED IN UCP 600

Expressions such as:

– "shipping documents",
– "state documents acceptable",
– “third party documents acceptable” and
– “exporting country”
should not be used as they are not defined in
the UCP 600.

47
 If used in a credit, their meaning should be made apparent.
If not, they have the following meaning under ISBP:

• "shipping documents"- all doc's (not only transport documents), except

drafts, required by the credit.
• "state documents acceptable" - documents presented later than 21
calendar days after the date of shipment are acceptable as long as they
are presented no later than the expiry date for presentation as stated in
the credit.
• “third party documents acceptable” – all documents, excluding drafts
but including invoices, may be issued by a party other than the
beneficiary
• “exporting country” – the country where the beneficiary is dominated,
or the country of origin of the goods, or the country of receipt by the
carrier or the country from which shipment or dispatch is made.

48
 2.4. Issuer of documents
• If a credit indicates that a document is to be
issued by a named person or entity, this condition
is satisfied if the document appears to be issued
by the named person or entity.

• It may appear to be issued by a named person or

entity by use of its letterhead, or if there is no
letterhead, the document appears to have been
completed or signed by, or on behalf of, the
named person or entity.
49
 2.5. LANGUAGE

• Under international standard banking practice, it is

expected that document issued by the beneficiary
will be in the language of the credit.

• When a credit states that documents in two or

more language are acceptable, a nominated bank
may, in its advice of the credit, limit the number of
acceptable languages as a condition of its
engagement in the credit.

50
 2.6. MATHENATICAL CALCULATIONS

• Detailed mathematical calculations in

documents will not be checked by banks.

• Banks are only obliged to check total values

against the credit and other required
documents.

51
 2.7. MISSPELLINGS OR TYPING ERRORS

• A misspelling or typing error that does not affect the

meaning of a word or the sentence in which it occurs
does not make a document discrepant.

– For example, a description of the merchandise as

"mashine" instead of "machine", "modle" instead
of "model".

• However, a description as "model 123" instead of

"model 321" would not be regarded as a typing error
and would constitute a discrepancy
52
 2.8. ORIGINALS AND COPIES
• Document issued in more than one original may be marked "Original",
"Duplicate", "Triplicate", "First Original", "Second Original", etc. None of
these markings will disqualify a document as an original.
• It can sometimes be difficult to determine from the wording of a credit
whether it requires an original or a copy, and to determine whether that
requirement is satisfied by an original or a copy.
• For example, where the credit requires:
– “Invoice”, “One invoice” or “ Invoice in 1 copy”, it will be understood to be a
requirement for an original invoice.

– “Invoice in 4 copies”, it will be satisfied by the presentation of at least one original

and the remaining number as copies of an invoice.

– “One copy of invoice”, it will be satisfied by presentation of either a copy or an

original of an invoice.

53
 Considerations with copies
• Where an original would not be accepted in state of a
copy, the credit must prihibit an original.
– For example, “photocopy of invoice – original document not
acceptable in state of photocopy”, or the like.

• Where a credit calls for a copy of a transport document

and indicates the disposal instructions for the original of
that transport document, an original transport document
will not be acceptable.

• Note: Copies of documents need not be signed.

54
 2.9. SHIPPING MARKS
• Shipping marks contained in some documents often include
information in excess of what would normally be considered
“shipping marks”, and could include information such as the
type of goods, warnings as to the handling of fragile goods, net
and/or gross weight of the goods, etc. The fact that some
documents show such additional information, while others do
not, is not a discrepancy.

• Transport documents covering containerized goods will

sometimes only show a container number under the heading
“shipping marks”. Other documents that show a detailed
marking will not be considered to be in conflict for that reason.

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 2.10. SIGNATURES
• Even if not stated in the credit, drafts, certificates and
declarations by their nature require a signature. Transport
documents and insurance documents must be signed in
accordance with the provisions of the UCP 600.

• If the content of a document indicates that it requires a

signature to establish its validity, it must be signed. For
example, “This document is not valid unless signed” or similar
terms.

• A signature on a company letterhead paper will be taken to be

the signature of that company, unless otherwise stated. The
company name need not be repeated next to the signature.

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CHAPTER 3
MAIN COMMERCIAL
DOCUMENTS

57
MAIN SHIPPING DOCUMENTS

58
 3.1. DRAFTS

1. TENOR AND MATURITY DATE

2. HOW TO CALCULATE MATURITY DATE

3. AMOUNT

4. HOW THE DRAFT IS DRAWN

5. CORRECTIONS AND ALTERATIONS

59
A sample of a draft

60
 TENOR

• The tenor must be in accordance with the

terms of the credit.

• If a draft is drawn at a tenor other than sight,

or other than a certain period after sight, it
must be possible to establish the maturity
date from the data in the draft itself.

C3 - 61
 Example
if a credit calls for drafts at a tenor 60 days after the bill of lading date,
where the date of the bill of lading is 12 July 2007, the tenor could be
indicated on the draft in one of the following ways:
– "60 days after bill of lading date 12 July 2007", or
– "60 days after 12 July 2007", or
– "60 days after bill of lading date" and elsewhere on the face of the draft
state "bill of lading date 12 July 2007", or
– "60 days date" on a draft dated the same day as the date of the bill of
lading, or
– "10 September 2007", i.e., 60 days after the bill of lading date.

• If the tenor refers to xxx days after the bill of lading date, the on board
date is deemed to be the bill of lading date even if the on board date is prior
to or later than the date of issuance of the bill of lading.

62
 Maturity date
• 10 days after or from March 1 is March 11.

• at 60 days after or from bill of lading date, the earliest of goods on

board dates will be used for calculation of the maturity date.
– For example: the credit requires shipment from European port, and
the bill of lading evidences on board vessel "A" from Dublin August
16 and on board vessel "B" from Rotterdam August 18. The draft
should reflect 60 days from the earliest on board date in a European
port, i.e., August 16.
• If one set of bills of lading is presented under one draft, the date of the
last bill of lading will be used for the calculation of the maturity date.
• While the examples refer to bill of lading dates, the same principles apply
to all transport documents.

63
 How to calculate maturity date
• If a draft states a maturity date by using an actual date, the date must have been
calculated in accordance with the requirements of the credit.
• "at XXX days sight", the maturity date is established as follows:
– In the case of complying documents, or in the case of non-complying
documents where the drawee bank has not provided a notice of refusal, the
maturity date will be XXX days after the date of receipt of documents by the
drawee bank.
– In the case of non-complying documents where the drawee bank has provided
a notice of refusal and subsequent approval, , the maturity date will be XXX
days after the date of acceptance of the draft by the drawee bank.
• In all cases the drawee bank must advise the maturity date to the presenter. The
calculation of tenor and maturity dates, as shown above, would also apply to
credits designated as being available by deferred payment, i.e., where there is no
requirement for a draft to be presented by the beneficiary.

64
 Amount
• The amount in words must accurately
reflect the amount in figures if both are
shown, and indicate the currency, as stated
in the credit.
• The amount must agree with that of the
invoice, unless as a result of UCP 600 sub-
article 18(b).

65
 How the Draft is Drawn

• The draft must be drawn on the party stated

in the credit.
• The draft must be drawn by the beneficiary.

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 Corrections and Alterations

• Corrections ans alterations on a draft, if any, must

appear to have been authenticated by the drawer.
• In some countries a draft showing corrections or
alterations will not be acceptable even with the
drawer’s authentication. Issuing banks in such
countries should make a statement in the credit to
the effect that no correction or alteration must
appear in the draft.

67
 Questions to review
1. Does the format comply with the requirements of a draft?
2. Is name of the draft in the language in which it is issued?
3. Draw? Is the draft drawn on the party indicated in the L/C?
4. Expiry? Does the draft call for payment at sight or payment at a
future determinable date?
5. Place of payment?
6. Place and date of issue?
7. Signature of issuer?
8. Are the amounts in words or figure identical?
9. Does the draft contain the notations and clauses provided for in
the L/C, such as "drawn under L/C No....?"
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 3.2. INVOICES

1. DEFINITION OF INVOICE

2. DESCRIPTION OF THE GOODS, SERVICES

OR PERFORMANCE

3. AND OTHER GENERAL ISSUES RELATED

TO INVOICES

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 DEFINITION OF INVOICE
• A credit requiring an “invoice” without further definition
will be satisfied by any type of invoice presented
(commercial invoice, customs invoice, tax invoice, final
invoice, consular invoice, etc.). However, invoices
identified as “provisional”, “pro-forma” or the like are
not acceptable.
• When a credit requires presentation of a commercial
invoice, a document titled “invoice” will be acceptable.
Description of the goods, services or performance and
other general issues related to invoices
Other samples
70
 DESCRIPTION OF THE GOODS, SERVICES OR
PERFORMANCE
• The description of the goods, services or performance in the invoice
must correspond with the description in the credit.
• The description of goods, services or performance in an invoice must
reflect what has actually been shipped or provided
• An invoice must evidence the value of the goods shipped or services or
performance provided. Unit price(s), if any, and currency shown in the
invoice must agree with that shown in the credit. The invoice must
show any discounts or deductions required in the credit. The invoice
may also show a deduction covering advance payment, discount, etc.,
not stated in the credit.
• Unless required by the credit, an invoice need not be signed or dated.
• The quantity of merchandise, weights and measurements shown on the
invoice must not conflict with the same quantities appearing on other
documents.
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 OTHER GENERAL ISSUES RELATED TO INVOICES

• The quantity of the goods required in the credit may vary

within a tolerance of +/- 5%.
• Even when partial shipments are prohibited, a tolerance
of 5% less in the credit amount is acceptable, provided
that the quantity is shipped in full and that any unit price,
if stated in the credit, has not been reduced. If no
quantity is stated in the credit, the invoice will be
considered to cover the full quantity.
• If a credit calls for instalment shipments, each shipment
must be in accordance with the instalment schedule.
72
 Questions to review
1. Is the invoice issued by the beneficiary as stated in the L/C?
2. Is the invoice issued to the applicant named in the L/C?
3. Does the description of goods correspond exactly to that
stated in the L/C/
4. Does the value of the goods and/or unit price match that
of the L/C as regards the amount currency?
5. Are the delivery conditions (CIF/FOB,...) listed in the
invoice and consistent with the L/C?
6. Is the invoice signed, if required by the L/C?

73
 3.3. BILLS OF LADING

• Full set of originals

• Signing of bill of lading
• On board notations
• Ports of loading and ports of discharge
• Transhipment and partialshipment
• Clean bills of lading
• Goods description
• Freight and additional costs

74
 Full set of originals
• Transport documents marked “First Original”,
“Second Original”, “Third Original”, “Original”,
“Duplicate”, “Triplicate”, etc., or similar
expressions are all originals.

• Bills of lading need not be marked “original” to be

acceptable as an original bill of lading.

• 3/3 bill of lading means 3 originals and 3 copies

75
 Signing of bill of lading

• Original bills of lading must be signed in the form

described in UCP 600 sub-article 20(a)(i) and
indicate the name of the carrier, identified as the
carrier.

• If a credit states “Freight Forwarder’s Bill of

Lading is acceptable” or uses a similar phrase,
then the bill of lading may be signed by a freight
forwarder. In this event, it is not necessary to
show the name of the carrier.
76
 On board notations
• If a pre-printed “Shipped on board” bill of lading is
presented, its issuance date will be deemed to be the date
of shipment unless it bears a separate dated on board
notation, in which event the date of the on board notation
will be deemed to be the date of shipment whether or not
the on board date is before or after the issuance date of the
bill of lading.

• “Shipped in apparent good order”, “Laden on board”,

“clean on board” or other phrases incorporating words such
as “shipped” or “on board” have the same effect as
“Shipped on board”.
77
 Ports of loading and ports of discharge
• The named port of loading may instead be stated in the field headed
“Place of receipt” or the like, if it is clear that the goods were
transported from that place of receipt by vessel, and provided there is
an on board notation evidencing that the goods were loaded on that
vessel at the port stated under “Place of receipt” or like term.
• The named port of discharge may be stated in the field headed “Place
of final destination” or the like if it is clear that the goods were to be
transported to that place of final destination by vessel, and provided
there is a notation evidencing that the port of discharge is that stated
under “Place of final destination” or like term.
• If a credit gives a geographical area or range of ports of loading or
discharge (e.g., “Any European Port”), the bill of lading must indicate
the actual port of loading or discharge, which must be within the
geographical area or range stated in the credit.
78
 Transhipment and partialshipment
• Transhipment is the unloading from one vessel and reloading to another
vessel during the carriage from the port of loading to the port of discharge
stated in the credit.
• If a credit prohibits partial shipments and more than one set of original bills
of lading are presented covering shipment from one or more ports of loading
(as specifically allowed, or within the geographical area or range stated in the
credit), such documents are acceptable provided that they cover the
shipment of goods on the same vessel and same journey and are destined
for the same port of discharge.
• In the event that more than one set of bills of lading are presented and
incorporate different dates of shipment, the latest of these dates of
shipment will be taken for the calculation of any presentation period and
must fall on or before the latest shipment date specified in the credit.
• Shipment on more than one vessel is a partial shipment, even if the vessels
leave on the same day for the same destination.
79
 Clean bills of lading
• Clauses or notations on bills of lading which expressly declare
a defective condition of the goods or packaging are not
acceptable. Clauses or notations which do not expressly
declare a defective condition of the goods or packaging (e.g.,
“packaging may not be sufficient for the sea journey”) do not
constitute a discrepancy. A statement that the packaging “is
not sufficient for the sea journey” would not be acceptable.

• If the word “clean” appears on a bill of lading and has been

deleted, the bill of lading will not be deemed to be claused or
unclean unless it specifically bears a clause or notation
declaring that the goods or packaging are defective.

80
 Goods description, Freight and additional costs
• A goods description in the bill of lading may be shown in general terms
not in conflict with that stated in the credit.
• If a credit requires that a bill of lading show that freight has been paid or
is payable at destination, the bill of lading must be marked accordingly.
Applicants and issuing banks should be specific in stating the
requirements of documents to show whether freight is to be prepaid or
collected.
• If a credit states that costs additional to freight are not acceptable, a bill
of lading must not indicate that costs additional to the freight have been
or will be incurred. Such indication may be by express reference to
additional costs or by the use of shipment terms which refer to costs
associated with the loading or unloading of goods, such as Free In (FI),
Free Out (FO), Free In and Out (FIO) and Free In and Out Stowed (FIOS).

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 Questions to review
1. Does the name of the ship appear?
2. Are the port of loading and discharge stated and consistent
with the requirement of the L/C?
3. Does the B/L bear the date of issue?
4. Is the issuer?
5. Is the B/L signed by the issuer?
6. Does the B/L bear “clean on board" notation?
7. Does the document indicate the number of original B/L issue?
8. Is the B/L issued to the correct order party as required by the
L/C?

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Are all the other conditions required in the
L/C such as:
• Name and address of the shipper
• Name and address of the consignee
• Name and address of the notify party
• Shipping marks
• Number of packages
• Description of goods
• Weight
• Freight notation
• Additional notations

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 3.6. INSURANCE DOCUMENT

• Issuers of insurance documents

• Risks to be covered
• Dates
• Percentage and amount
• Insured party and endorsement

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 Issuers of insurance documents
• Insurance documents must appear to have been issued
and signed by insurance companies or underwriters or
their agents or proxies. If required by the insurance
document or in accordance with the credit terms, all
originals must appear to have been countersigned.

• An insurance document is acceptable if issued on an

insurance broker’s stationery, provided the insurance
document has been signed by an insurance company or
its agent or proxy, or by an underwriter or its agent or
proxy. A broker may sign as agent for the named
insurance company or named underwriter.
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 Risks to be covered
• An insurance document must cover the risks defined in
the credit. If a credit requires “all risks” coverage, this is
satisfied by the presentation of an insurance document
evidencing any “all risks” clause or notation, even if it is
stated that certain risks are excluded. An insurance
document indicating that it covers Institute Cargo
Clauses (A) satisfies a condition in a credit calling for an
“all risks” clause or notation.  

• Insurance covering the same risk for the same shipment

must be covered under one document

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 Dates
An insurance document that incorporates an
expiry date must clearly indicate that such
expiry date relates to the latest date that
loading on board or dispatch or taking in
charge of the goods (as applicable) is to occur,
as opposed to an expiry date for the
presentation of any claims thereunder.

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 Percentage and amount
• An insurance document must be issued in the currency of
and, as a minimum, for the amount required by the
credit. The UCP does not provide for any maximum
percentage of insurance coverage.
• If it is apparent from the credit or from the documents
that the final invoice amount only represents a certain
part of the gross value of the goods (e.g., due to
discounts, pre-payments or the like, or because part of
the value of the goods is to be paid at a later date), the
calculation of insurance cover must be based on the full
gross value of the goods.
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 Insured party and endorsement
• An insurance document must be in the form as required
by the credit and, where necessary, be endorsed by the
party to whose order claims are payable. A document
issued to bearer is acceptable where the credit requires an
insurance document endorsed in blank and vice versa.
• If a credit is silent as to the insured party, an insurance
document evidencing that claims are payable to the order
of the shipper or beneficiary would not be acceptable
unless endorsed. An insurance document should be issued
or endorsed so that the right to receive payment under it
passes upon, or prior to, the release of the documents.

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 Sample of CI M
1. Certificate Number: a unique number that will be assigned to your cargo
insurance certificate.
2. Shipment Date: departure date of your international or domestic shipment
of commercial cargo, household goods, vehicles, boats, machinery,
commodities, merchandise, etc.
3. Assured: Your or receiver name (the beneficiary of insurance) and address.
4. Insurer: Name of the cargo insurance policy underwriters.
5. Shipping Details: name of the shipping company (ocean carrier, airline,
trucking co.), vessel name, voyage / flight number.
6. Insured Value: normal rule is to insure for CIF + 10%. Total cost of the cargo,
freight shipping charges, insurance premium and add 10%. This amount
should cover the REPLACEMENT COST plus any unforeseen expenses.
7. Place of Origin: city, state / region, country, port of departure.

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 Sample of CI
8. Final Destination: city, state / region, country, port of destination.
9. Description of Goods: what is being shipped, number of packages / pallets, weight,
marks, VIN / ID numbers.
10. Average Terms & Conditions: special terms for your cargo shipment. Cargo Insurance
Policy deductible is 1% of the insured value with $500 minimum. Household goods are
subject to 3% deductible, minimum of $250.
11. CONDITIONS: Warranties and conditions according to American Institute Cargo Clauses.
12. Additional Notes: more details on your international or domestic shipment; letter of
credit information, etc.
13. Consignee: if the receiver of the cargo is different from the Assured.
14. Claims Agent: company at the country of destination to be notified in case of cargo
damages or losses.
15. Claims Procedures: steps to file the cargo insurance claim and list of required supporting
documents.

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 Questions to review
1. Was the insurance document issued as a policy or certificate in compliance with the L/C
stipulations?
2. Have all issued originals of the insurance document been presented?
3. Is the insurance document issued and signed by an insurance company or underwriter or
their agent? Confirmation of cover from insurance brokers will be rejected by the banks.
4. Is the insurance document correctly dated and signed?
5. Is the information regarding the transport route and mode of transport consistent with
the L/C?
6. Is the amount insured sufficient and the value correct?
7. The insurance currency must be consistent with that of the L/C unless otherwise stated?
8. Does the insurance cover all risks as required in the L/C? If the L/C states "Insurance
against all risks", an insurance document with the notation "all risks" is accepted, even if
it is stated that certain risks are excluded.
9. Does the insurance cover all additional risks resulting from the type of shipping or
transport route such as reloading, on deck loading or storage?
10. Is the insurance certificate correctly endorsed, if endorsement is required?

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 CERTIFICATES OF ORIGIN
• Basic requirement:
– satisfied by the presentation of a signed, dated document that
certifies to the origin of the goods.
• Issuers of certificates of origin
– must be issued by the party stated in the credit.
– if a credit requires a certificate of origin to be issued by the
beneficiary, the exporter or the manufacturer, a document issued by
a chamber of commerce will be deemed acceptable, provided it
clearly identifies the beneficiary, the exporter or the manufacturer as
the case may be.
– If a credit does not state who is to issue the certificate, then a
document issued by any party, including the beneficiary, is
acceptable.

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 Contents of certificates of origin
• The certificate of origin must appear to relate to the invoiced goods. The
goods description in the certificate of origin may be shown in general terms
not in conflict with that stated in the credit or by any other reference
indicating a relation to the goods in a required document.

• Consignee information, if shown, must not be in conflict with the

consignee information in the transport document. However, if a credit
requires a transport document to be issued “to order”, “to the order of
shipper”, “to order of the issuing bank” or “consigned to the issuing bank”,
the certificate of origin may show the applicant of the credit, or another
party named therein, as consignee. If a credit has been transferred, the
name of the first beneficiary as consignee would also be acceptable.
• The certificate of origin may show the consignor or exporter as a party other
than the beneficiary of the credit or the shipper on the transport document.

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 Some samples of CO

• Form A: exporting products (preferential tariff treatment)

• From B: exporting products (not preferential tariff
treatment)
• Form D: CEPT between ASEAN countries
• Form E: ASEAN – China
• Form AK: ASEAN – Korea
• Form S: Vietnam – Laos, Vietnam – Cambodia
• Form T: Textiles Vietnam-EU

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GOOD LUCK STUDENTS!

THE END

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