Bangladesh University of Professionals

Department of Business Administration

Law of Carriage of Goods

Presentation by
Group - B
Group Members:
1. Chandra Shekhar Roy Ev-1408094
2. Kazi Touhidul Islam Ev-1408087
3. Sumaiya Fahrin Ev-1408023
4. Md. Ajij Abdullah Ev-1408027
5. Nippon Chandra Ev-1408053
6. K.M. Zobayed Iqbal Ev-1404052
7. Mashiur Rahman Ev-1404094
8. Md. Nur-E-Alam Ev-1408077
9. Sabiha Arif Ev-1408021
What we are going to discuss:
 Definition of Contract of Carriage
 Carriage of goods
 Types of carrier
 Distinction between a Common Carrier and a Private Carrier
 Carriage of Goods by Land
 Carriage of Goods by Rail
 Carriage of Goods by Sea
 Bill of Lading
 Letters of Credit
 Documentation Requirements
 Risks in Letter of Credit Transactions
Chandra Shekhar Roy
Roll No: Ev-1408094

Definition of Contract of Carriage

Definition of Contract of Carriage
 A contract of carriage is a contract between a carrier of goods or
passengers and the consignee or passenger. Contracts of carriage
typically define the rights, duties and liabilities of parties to the
contract, addressing topics such as acts of God and including clauses
such as force majeure. Among common carriers, they are usually
evidenced by standard terms and conditions printed on the reverse of
a ticket or carriage document.
 The law relating to carrying of goods is contained in the following
enactments:

 In case of Carriage of goods by land:

i. The Carriers Act, 1865. ii. The Railways Act, 1890.
 In case of Carriage of goods by sea:
i. The Bills of Lading Act, 1856. ii. The Carriage of Goods by Sea Act,
1925.
iii. The Merchant Shipping Act, 1958. iv. The Insurance Act, 1938.
 In the case of Carriage of goods by air:
The Carriage by Air Act, 1934.

Wherever there is no specific provision for a particular matter in

these statutes, then the Courts resort Common Law
Carriage of goods
 Carriage of goods in law means the transferring of goods by land,
sea or air. The relevant law governs the right, responsibility,
liabilities, and immunities of carrier.
 Carriage of goods means the transferring of goods through land
(including inland navigation), air or sea by relevant parties. The
laws related to carriage in Bangladesh are mainly the Carriers Act
'1865.

Carrier:
Any person or an organization, by an express or implied contract,
with or without rumination, carries goods and/or passengers is
called carrier.
Kazi Touhidul Islam Dipu
Roll No: Ev-1408087

Types of Carriers
 Types of Carrier

On the bases of product On the bases of Route

Common Private Gratuitous

Sea Land Air
Carrier carriers carriers

The Common Carriers Railway

Common carrier or Public carrier
• A common carrier is one whose business is carriage of goods for
hire. A common carrier is defined as one who undertakes to carry
for heir, from place to place the goods of anyone without
discrimination.

• According to the common carrier act 1865- A common

carrier as an individual, firm, or company (other than the
government) who transport goods as a business, for money, over
land or inland waterways, without discrimination between
different consignors.
Important Features
• Only carriers of goods come within the definition
• A carrier of passengers is not a common carrier
• Who carries goods occasionally is not a common carrier.
• To carry the goods of anyone without discrimination and bound to
carry the goods of any person who is ready to pay the useful freight,
provided certain condition (relating to space, type of goods, etc) are
fulfilled .
• The liabilities of carrier are determined by the common carrier act,
1865.
Example of common Carrier
• Suppose ABC company who transport goods as a business, for
money, over land or inland waterways, without discrimination
between different consignors.
Private Carrier
• A private carrier is one who does not do regular business as a carrier but
occasionally carries goods for money.

Common Features
• A private carrier can determinate between different hirers.
• He is not bound to carry the goods of any and everybody.
• A private carrier is not governed by the common carriers act, 1865.
• He‘s position is as a bailee.
• A private carrier has the same right, duties and liabilities as a bailee under the
contract act.
• He is bound to take as much care of the goods entrusted to him as a man of
ordinary prudence would take under similar circumstances of his own goods of
the same quality, bulk and size.(section 151,152,and 161, contract act)
 Example of Private Carrier
• suppose a contractor has a lorry which uses mainly for
transporting his own goods but sometimes he lets it out
on hire to other.
Gratuitous Carrier
• A gratuitous carrier is one who carries goods (or passenger)
without any charge. Gratuitous carrier is in a position of a
bailee. But if such a carrier agrees to carry the goods, he must
also do the duties of the carrier. If a person undertake to
perform a voluntary act, he is liable if he performs it
improperly. Negligence by the carrier is actionable.
It is to be noted that an agreement of carriage with a gratuitous
carrier is void because of want of consideration. Therefore no
action can be taken against him for refusing to carry the goods
even though he has undertaken.

For example
• The owner of a motor car who gives a lift to a friend without
charge is a gratuitous carrier.
Sumaiya Fahrin
Roll No: Ev-1408023

Carriage of Goods by Land

 Carriage of Goods by Land
As mentioned, the following two statutes govern the carriage of goods
by land :

(i) The Carriers Act, 1865

(ii) The Railways Act, 1890

The Carriers Act, 1865 defines the term “common carrier” and
provides for his rights, duties and liabilities. As regards matters not
covered by this Act, the rules of English Common Law will apply.
 RIGHTS OF COMMON CARRIER
1) Right to get remuneration

2) Right to Retain

3) Right to Recover Expenses

4) Right to Recover Damages

5) Right to Refuse to Carry Goods

6) Right to Limit his liability

1) Right to get remuneration:
A common carrier is entitled to the agreed charges for His work .If charges have
not been agreed, common carrier is entitled to the agreed charges he is entitled to
reasonable charges for his services .He can demand payment of hire in advance
and if he is Not paid
he may Refuse to carry.

2) Right to Retain:
He has a right to retain the goods and refuse delivery thereof until his charges of
hire are paid If no charges are paid he can exercise particular lien over the goods .
The lien cannot be enforced If the carrier has agreed to give credit.

3) Right to Recover Expenses:

If some Expenses are incurred due to the safe carriage of goods due to disasters
such as flood Then the carrier can recover the expenses from the owner.
4) Right to Recover Damages:
Carrier can recover damages from the consignor if the goods of dangerous
natures are not packed properly due to which some accident happens so the
owner is liable to pay all the damages to the carrier or the vehicle.

5) Right to refuse to carry Goods:

He has a right to refuse to carry the dangerous nature goods. He can also refuse
to carry goods which he does not normally carry.

6) Right to Limit his liability:

A common carrier has a right to limit his liability by Entering into a special
contract Under Certain circumstances.
 Duties of Common Carrier
1) A common carrier is bound to carry goods of all persons who choose to
employ him. He can, however, refuse to carry goods under the following
circumstances:

(a) If there is no accommodation in the carriage

(b) If the person employing him is not willing to pay reasonable charges for
the carriage of goods

(c) If the goods are such which he is not accustomed to carry

(d) If the goods are to be carried over a route which is not his regular route
(e) If the consignor refuses to disclose the nature of the goods to be carried
(f) If the goods are not properly packed.

If a carrier refuses to carry the goods of a person for any reason other
than those mentioned above, he may be held liable for damages.
2) He must carry the goods over the usual and customary
route and take all reasonable precautions for their safe
carriage. He must not deviate from the usual route unless
rendered necessary by exceptional circumstances.

3) He must deliver the goods at the agreed time

and if no time had been fixed, within a reasonable time.

4) At Common Law, he is an insurer of the

goods in the sense that he warrants to carry the goods
safely and securely.
 Liabilities of a Common Carrier

The liability of a common carrier of goods is laid down in the

Carriers Act, 1865. For this purpose, the Act has classified the goods
into two categories:

i. Scheduled goods
ii. Non-scheduled goods

The scheduled goods are those which are enumerated in a

Schedule to the Act. They are valuable articles like gold, silver,
precious stones and pearls, bills and hundis, currency and bank notes,
glass, china silk, articles of ivory, time pieces, musical and scientific
instruments, etc. All other goods are non-scheduled.
 For scheduled articles exceeding Tk. 100 in value, the carrier is liable
for loss and damage only:

i. If the value and the description of the goods are disclosed by the
consignor to the carrier
or
ii. If the loss or damage is due to a criminal act of the carrier, his
agent

The carrier can charge extra for carrying scheduled articles, but he
cannot limit his statutory liability by any special agreement. (Sec. 7)

As regards non-scheduled articles, a common carrier can limit

his liability by special agreement with the consignor. But even in this
Section case he will be liable under sec 8 of the Act.

In case of loss or damage, the claimant must notify the carrier

within six months of the date of knowledge of the loss or damage.
Md. Ajij Abdullah
Roll No: Ev-1408027

Carriage of Goods by Rail

 Carriage of Goods by Rail
• The carriage of goods by rail is regulated by The Railways Act, 1890.

Responsibility of a Railway Administration as a Carrier of Goods

1. The responsibility of the railway administration for the loss, destruction or
deterioration of animals or goods delivered to the administration to be
carried by the railway shall, subject to the other provisions of this Act, be
that of a bailee under sections 151, 152 and 161 of the Contract Act, 1872.
2. An agreement purporting to limit that responsibility shall, in so far as it
purports to effect such limitation, be void, unless it-
(a) Is in writing signed by or on behalf of the person sending or
delivering to the railway administration the animals or goods, and
(b) Is otherwise in a form approved by the Government.
3. Nothing in the Carriers Act, 1865, regarding the responsibility of
common carriers with respect to the carriage of animals or goods, shall affect the
responsibility as in this section defined of the railway administration. (Section
73)
Responsibility of a Railway Administration as a Carrier of
Goods

a. The responsibility of the railway administration under the last foregoing

section for the loss, destruction or deterioration of animals delivered to the
administration to be carried on the railway shall not, in any case.

b. Where such higher value has been declared, the railway administration
may charge, in respect of the increased risk, a percentage upon the excess of
the value so declared over the respective sums aforesaid.

c. In every proceeding against the railway administration for the recovery

of compensation for the loss, destruction or deterioration of any animal, the
burden of proving the value of the animal, and, where the animal has been
injured, the extent of the injury, shall lie upon the person claiming the
compensation. (Section 73)
Responsibility of a Railway Administration as a Carrier of
Goods

3. The railway administration shall not be responsible for the loss,

destruction or deterioration of any luggage belonging to or in charge of a
passenger unless the railway servant has booked and given a receipt
therefore. (Section 74)

4. When any articles mentioned in the second schedule are contained

in any parcel or package delivered to the railway administration for carriage
by the railway, and the value of such articles in the parcel or package exceeds
three hundred Taka, the railway administration shall not be responsible for
the loss, destruction or deterioration of the parcel or package unless the
person sending or delivering the parcel or package to the administration
caused its value and contents to be declared or declared them at the time of
the delivery of the parcel or package for carriage by the railway, and, if so
required by the administration, paid or engaged to pay a percentage on the
value so declared by way of compensation for increased risk. (Section 75)
Responsibility of a Railway Administration as a Carrier of
Goods

• 5. When in the course of working the railway an accident occurs, being either a
collision between trains of which one is a train carrying passengers or the
derailment of or other accident to a train or any part of a train carrying
passengers, then, whether or not there has been any wrongful act, neglect or
default on the part of the railway administration such as would entitle a person
who has been injured or has suffered loss to maintain an action and recover
damages in respect thereof, the railway administration shall, notwithstanding
any other provision of law to the contrary, be liable to pay compensation to the
extent set out in sub-section

• (2) and to that extent only for loss occasioned by the death of a passenger dying
as a result of such accident, and for personal injury and loss, destruction or
deterioration of animals or goods owned by the passenger and accompanying
the passenger in his compartment or on the train, sustained as a result of such
accident. [The liability of the railway administration under this section shall in
no case exceed ten thousand Taka in respect of any one person.] (Section 82)
Responsibility of a Railway Administration as a Carrier of
Goods
• 6. In any suit against the railway administration for compensation for loss,
destruction or deterioration of animals or goods delivered to the railway
administration for carriage by the railway, it shall not be necessary for the
plaintiff to prove how the loss, destruction or deterioration was caused. (Section
76)
• 7. A person shall not be entitled to a refund of an over charge in respect of
animals or goods carried by the railway or to compensation for the loss,
destruction or deterioration of animals or goods delivered to be so carried, unless
his claim to the refund or compensation has been preferred in writing by him or
on his behalf to the railway administration within six months from the date of the
delivery of the animals or goods for carriage by the railway. (Section 77)
• 8. Notwithstanding anything in the foregoing provisions of this Chapter, the
railway administration shall not be responsible for the loss, destruction or
deterioration of any goods with respect to the description of which an account
materially false has been delivered under sub-section (1) of section 58 if the loss,
destruction or deterioration is in any way brought about by the false account, nor
in any case for an amount exceeding the value of the goods if such value were
calculated in accordance with the description contained in the false account.
Nippon Chandra Chanda
Roll No: Ev-1408053

Carriage of Goods by Sea

Contract of Affreightment

• A contract to carry goods by sea is called the “contract of affreightment”

and the consideration or charges paid for the carriage is called the
“freight”. A contract of affreightment may take either of the two forms,
namely—

• A charter party, where an entire ship, or a principal part of a ship is placed

at the disposal of merchant (known as a charterer); or
• A bill of lading where the goods are to be carried in a general ship and the
person consigning the goods is known as a shipper.
•
In both these contracts, the ship owner (the carrier) undertakes the
responsibility of carrying the goods of a consignor (i.e., either the charterer
or the shipper) safely and securely to the destination.

A contract of affreightment—whether in the form of a charter party or a bill

of lading — is governed by The Bills of Lading Act, 1856 and The Carriage
of Goods by Sea Act, 1925.
Conditions Contained in a
Contract of Carriage by Sea
• The terms included in a contract of carriage by sea are of two kinds. These are:

(i) Express terms, and

• (ii) Implied terms.

• Express terms are those which the parties have specifically agreed to and embodied in the
contract. Implied terms are those which law implies in every contract of carriage by sea unless
excluded specifically. There are four implied terms:

• (i) Implied warranty of seaworthiness. The ship owner, when he enters into a charter — party
for a voyage impliedly warrants that the ship is seaworthy. This is an assurance by the ship
owner, at the time of entering into the charter party, that (a) the ship is fit to encounter the
ordinary perils of navigation during voyage and (b) to carry the specific cargo. This warranty
of seaworthiness extends only to (a) seaworthiness at the time of sailing and (b) ‘fitness at the
time of loading the cargo. Once the ship has sailed or the goods are on board, this warranty
ceases to operate. But in case the voyage is divided into stages, the ship must be seaworthy at
the commencement of each voyage.
Conditions Contained in a
Contract of Carriage by Sea
• ii) ) The ship shall be ready to commence the voyage and shall carry
out the same with all reasonable dispatch and diligence.
• (iii) The ship shall not deviate from the agreed route without for
good cause, such as to ensure safety of the ship, to repair for further
damage or to save human life.
• (iv) The charter or the shipper shall not include in his cargo illegal
or contraband goods, or goods which are dangerous.
Charterparty
• Charterparty, is a contract of affreightment entered into for hiring
the whole ship or a principle part of ship to carry goods from one
port to another port. It also refers to the formal document in which
the contract of hiring of the whole or part of the ship.
• A charterparty is a contract which is negotiated in a free market
where bargaining strength of the parties is highly dependent on the
factor of supply and demand and governed by the ordinary law of
contract. There are three main categories of charterparty:
• 1. a voyage charterparty whereby the vessel is chartered for a
specified voyage;
• 2. a time charterparty whereby the vessel is chartered for a
specified period of time;
• 3. a charterparty by demise whereby the vessel is leased to the
charterer
Clauses of Charterparty
1. Name of the parties and of the ship along with the nationality of the
ship.
2. The class of the charter party , whether a voyage charter or time
charter and whether a charter by demise.

3. Location of the ship.

4. A statement that the cargo shall be lawful merchandize both at the port
of dispatch & the port of discharge.
5. The name of the place where the ship is to go.
6. The weight or volume of goods that would be shipped.
7. The liabilities of the charter regarding payment of freight whether it is
payable in advance or payable after completion of the entire voyage.
8. The duties of the master or the captain.
Duties of a carrier by sea
The carriage of goods by Sea Act, 1925 lays down that under every
contract of carriage of goods by sea the carrier shall be subject to
the following responsibilities.

1) The carrier i.e. the ship owner will be bound before and at the
beginning of the voyage.
a. make the ship seaworthy.
b. properly man, equip and supply the ship.

2) Carrier must properly and carefully load, handle, carry & keep the
goods.

3) After receiving the goods into his charge, the carrier of a shipper agent
of the carrier issue to the shipper a bill of lading.
Liabilities of a carrier by sea
• A carrier of goods by sea i.e. A shipper is liable only for loss or damage
arising or damaging from his negligence or fault. He is not liable even
for the loss caused by the neglect of the master or the mariner or the
crew in the navigation of the ship.

• A ship owner cannot limit or lessen his liabilities arising from his
negligence.

• The carrier shall not be liable in any event for any loss or damage to the
goods in an amount exceeding Euro 100 per package or unit unless, the
nature or the value of such goods have been declared by the shipper
before shipment.

• Goods often of dangerous nature to the shipment where of the carrier,

master has not consented.
K.M. Zobaed Iqbal
Roll No: Ev-1404052

Bill of Lading
Bill of Lading
 A bill of lading (BL - sometimes referred to as BOL or B/L) is a
document issued by a carrier to a shipper, acknowledging that specified
goods have been received on board as cargo for conveyance to a named
place for delivery to the consignee who is usually identified. A through
bill of lading involves the use of at least two different modes of
transport from road, rail, air, and sea. The term derives from the verb
"to lade" which means to load a cargo onto a ship or other form of
transportation.
 Bill of Lading
• A bill of lading can be used as a traded object. The standard short form bill of lading is
evidence of the contract of carriage of goods and it serves a number of purposes:
• It is evidence that a valid contract of carriage, or a chartering contract, exists, and it
may incorporate the full terms of the contract between the consignor and the carrier
by reference (i.e. the short form simply refers to the main contract as an existing
document, whereas the long form of a bill of lading issued by the carrier sets out all
the terms of the contract of carriage)

• It is a receipt signed by the carrier confirming whether goods matching the contract
description have been received in good condition (a bill will be described as clean if
the goods have been received on board in apparent good condition and stowed ready
for transport); and

• It is also a document of transfer, being freely transferable but not a negotiable

instrument in the legal sense, i.e. it governs all the legal aspects of physical carriage,
and, like a cheque or other negotiable instrument, it may be endorsed affecting
ownership of the goods actually being carried. This matches everyday experience in
that the contract a person might make with a commercial carrier like FedEx for
mostly airway parcels, is separate from any contract for the sale of the goods to be
carried; however, it binds the carrier to its terms, irrespectively of who the actual
holder of the B/L, and owner of the goods, may be at a specific moment.
Bill of Lading

• The BL must contain the following information:

• Name of the shipping company;
• Flag of nationality;
• Shipper's name;
• Order and notify party;
• Description of goods;
• Gross/net/tare weight; and
• Freight rate/measurements and weighment of goods/total freight
Mashiur Rahman
Roll No: Ev-1404094

Different types of bill of

ladings
 Different types of bill of ladings
• There are different criteria on which bill of ladings can be defined and
differentiated. Few of these criteria being the “place from where
carriers takes the responsibility of the cargo” (Port to port, Multimodal
and through bill of ladings) or if the owner of the cargo can sell the
cargo before it reaches by transferring the title of the bill of lading
(Negotiable and non-negotiable bill of lading)

• Different types of bill of ladings based upon Negotiable and non-

Negotiable documents.

• The main difference between the two types is title (ownership) of the
one can be transferred to another party while the other is consigned to
a named party and hence he/she has to be the final recipient of the
cargo as the title of this type of bill of ladings cannot be transferred.
Different types of bill of ladings

• 1. Straight bill of lading: The straight bill of lading is specified to

the particular party and the specified party cannot re-assign it to
anyone else. The party only has to take the delivery of the cargo and
the cargo cannot be sold by transferring the bill of lading to another
party’s name.

• 2. Order bill of lading: This is the bill of lading that one would
mostly come across onboard. The bill of lading is to the consignee or
to his order. That is the named consignee will be the owner of the
cargo or he can order the shipment to be delivered to another party
by endorsing the bill of lading to that party.
Different types of bill of ladings

3. Bearer bill of lading: The bearer bill of lading is the one in which the
bearer of the bill of lading is the owner of the cargo and there is no consignee named in
the bill of lading. This kind of bill of lading is very seldom found as there are huge risks
involved in the misuse of this kind of bill of ladings.

4. Switch bill of lading: This can said to be the duplicate bill of lading for a
cargo of which the bill of lading was already issued. Switch bill of lading is generally
requested by the consignee from the owner of the vessel when the consignee do not wish
to reveal to the new buyer the identity of the shipper of the cargo.

5. Clean Bill of Lading: If a consignment with no damage on packages

apparently, the carrier issues a Bill of lading called Clean Bill of Lading.

6. Unclean Bill of Lading/Claused bill of lading/foul bill of

lading/Dirty Bill of lading/Soiled Bill of Lading/Qualified bill of lading: If
owner of ship or his agent does not agree with one or more of the statements mentioned
in the bill of lading, he add the said clause or clauses on the bill of lading. This bill of
lading is called unclean bill of lading, claused bill of lading or foul bill of lading.
 Different types of bill of ladings

• Types of Bill of ladings based upon carriers responsibility

• 1. Port to port bill of lading (also called Ocean bill of lading): In this kind
of bill of ladings, Carriers responsibility starts at port of loading and ends at port of
discharge

• 2. Multi-modal or Combined bill of lading: This kind of bill of lading cover

more than one mode of transfers (for example, Ocean and rail or Ocean and road)
and covers all the mode of transfers. Carrier has the responsibility from place of
receipt to place of delivery of the cargo. Carrier can hire/sub contract to carry the
cargo in one or more mode of transfers.

• 3. Through bill of ladings: The main difference between multimodal and

through bill of lading is that in through bill of lading there is only one mode of of
cargo movement but has different legs, like sea and inland waterways. Whereas in
multimodal bill of lading there has to be at least two modes of cargo movement
(like sea and land).
• With respect to carrier’s responsibility, In through bill of lading, carrier is
responsible only for their leg of sea transport
Md. Nur-E-Alam Anik
Roll No: Ev-1408077

Letters of Credit
 Letters of Credit
• A letter of credit is a document issued by a third party that guarantees
payment for goods or services when the seller provides acceptable
documentation. Letters of credit are usually issued by banks or other
financial institutions, but some creditworthy financial services companies,
like insurance companies or mutual funds, might issue letters of credit under
certain circumstances.

• A letter of credit generally has three participants. First, there is

the beneficiary, the person or company who will be paid. Next, there is
the buyer or applicant of the goods or services. This is the one who needs the
letter of credit. Finally, there is the issuing bank, the institution issuing the
letter of credit. In addition, the beneficiary may request payment to
an advising bank, which is a bank where the beneficiary is a client, rather
than directly to the beneficiary. This might be done, for example, if the
advising bank financed the transaction for the beneficiary until payment was
received.
Types of Letters of Credit
• Most letters of credit are import/export letters of credit, which, as the
name implies, are letters of credit that are used in international trade.
The same letter of credit would be termed an import letter of credit by
the importer and an export letter of credit by the exporter. In most cases,
the importer is the buyer and the exporter is the beneficiary.

• There are also other types of letters of credit. The revocable letter of
credit can be changed at any time by either the buyer or the issuing bank
with no notification to the beneficiary. The most recent version of the
UCP, UCP 600, did away with this form of letter of credit for any
transaction under their jurisdiction. Conversely, the irrevocable letter of
credit only allows change or cancellation of the letter of credit by the
issuing bank after application by the buyer and approval by the
beneficiary. All letters of credit governed by the current UCP are
irrevocable letters of credit.
Letter of Credit Cycle
Letter of Credit Cycle
Letter of Credit Cycle
Letter of Credit Cycle
Letter of Credit Cycle
Letter of Credit Cycle
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Letter of Credit Cycle
Letter of Credit Cycle
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Letter of Credit Cycle
Letter of Credit Cycle
Letter of Credit Cycle
Letter of Credit Cycle
Letter of Credit Cycle
Sabiha Arif
Roll No: Ev-1408021

Documentation
Documentation Requirements
• In order to receive payment, the beneficiary must present
documentation of completion of their part in the transaction to the
issuing bank. The documents that the issuing bank will accept are
specified in the letter of credit, but may often include:

• Bills of exchange
• Invoices
• Government documents such as licenses, certificates of origin,
inspection certificates, embassy legalizations, and phytosanitary
certificates
• Shipping and transport documents such as bills of lading and airway
bills
• Insurance policies or certificates, except cover notes
Risks in Letter of Credit Transactions
• Letter of credit transactions are not without risks. The risks inherent
in these types of transactions include:
• Fraud risk, in which the payment is obtained through the use of
falsified or forged documents for worthless or nonexistent
merchandise
• Regulatory risk, in which government action may prevent
completion of the transaction
• Legal risk, in which legal action prevents completion of the
transaction
• Force majeure risk, in which completion of the transaction is
prevented by an external force, such as war or natural disaster
• Failure of the issuing or collecting bank
• Or insolvency of buyer or beneficiary.
Thank you...