LC Commondiscrepancies

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Letters of Credit

Common Discrepancies


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Tab le o f Con t en t s

Click on chap ter title to go to appropriate pa ge.

General Information .................................................................1

Common Discrepancies: Things to Check First ......................3

The Draft ..................................................................................4

Commercial Invoice .................................................................5

Ocean Bills of Lading...............................................................7

Non-Negotiable Sea Waybill....................................................9

Charter Party Bill of Lading ...................................................11

Air Transport Document.........................................................13

Transport Document Covering at Least Two Different

Modes of Transport ................................................................15

Road, Rail or Inland Waterway Transport Documents ..........17

Courier Receipt, Post Receipt, or Certificate of Posting ........19

Insurance Policy .....................................................................20

Consular Invoice.....................................................................22

Packing List............................................................................23

Weight Certificate/List ...........................................................24

Certificate of Analysis............................................................25

Certificate of Origin ...............................................................26

Inspection Certificate..............................................................27


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Letters of Credit Common Discrepancies Page 1

Gene ra l I n f o rm a t i on

We offer this information as an aid in preventing the errors which, for you as an

exporter, delay your payment and are often costly in time, extra handling, messengerservice and telecommunications costs.

We trust that you will find the information in this document useful. If you have anyquestions, please contact the Trade Services Division.

The information provided in this brochure is provided as a courtesy. Theinformation does not and is not intended to provide you with a complete list, or anexplanation, of the requirements of UCP. We make no representation or warrantyas to the accuracy of the information contained in this brochure, and shall have noliability for any inaccuracy in, or incompleteness of, the information. You may notrely on the information in this brochure in preparing documents to be submitted

under a letter of credit or in making your own determination whether documentsmeet the requirements of the letter of credit or are consistent with UCP.

We strongly suggest use of the Uniform Customs and Practice for DocumentaryCredits, 2007 revision, ICC Publication No. 600 (UCP) as a reference in documentpreparation and presentation.

We recommend that a transmittal letter accompany all presentations of documents,indicating the correct Letter of Credit number and giving proper instructions, suchas:

Whom to contact in the event of discrepancies.

Whether we are to credit your account, remit funds to your bank or issue a check.

In cases of acceptance, whether we are to discount the draft, return same afteracceptance or hold to maturity.

Letter of Credit Conditions

As documents must conform strictly to the requirements of the Letter of Credit inaddition to amendments, it is important that you review the conditions of each creditimmediately upon receipt. If you are unable to comply with any of the terms,communicate with your customer at once to arrange for the necessary amendments

before documents are presented.


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General Information (continued)

Variations in Amount, Quantity and Unit Prices of Credits

If you are uncertain about the exact amount that you will draw, or the quantity ofmerchandise or the unit price, you can add the word about or approximatelybefore the amount of the credit, the quantity of merchandise or the unit price. Thiswill permit a leeway of 10% more or less on the amount of the credit.

Variations in Quantity of Merchandise

Credits that do not specify the quantity of merchandise in terms of exact number ofpacking units or items permit a leeway of 5% more or less in the quantity to beshipped. However, if merchandise being shipped is expressed in exact number ofpacking units or individual items, then there is no leeway.

Cli ck he r e t o r e t u r n t o Tab l e o f Con t en t s .


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Com m on Discrepanc ies : Th ings to Check Fi rs t

The discrepancies listed are the most common. If they are eliminated, most

payments could be made upon first presentation of the documents.

It must be understood, however, that this document does not represent all potentialdiscrepancies.

The Letter of Credit Document Checkers First Steps Must be to Determine that:

The letter of credit relates to the documents being examined.

The letter of credit has not expired, or, if it has expired and was available with anominated bank, that presentation be made to such nominated bank on or before theexpiry date.

That the merchandise was shipped on or before the latest shipment date.

The letter of credit is available for drawing.

The amount available under the letter of credit is sufficient to cover the drawing.

All required documents have been presented, including the original letter of credit , ifrequired.

If multiple or partial drawings are permitted, determine the current amount available

under the letter of credit balance.

Whether any transfer(s), and/or assignments have been issued.

Documents under the letter of credit have been presented within the requiredpresentation period. A presentation must be made no later than 21 calendar daysafter the date of shipment, but not later than the expiry date of the credit.



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The Dra f t

Draft. Verity that:

It is drawn under the correct letter of credit.

It is purportedly drawn and signed by the beneficiary (the second beneficiary, if thedocuments are under a transfer).

Tenor is at sight or time as stipulated in the credit.

It is signed by the beneficiary and endorsed in blank by the payee.

Amount agrees with the invoice unless otherwise stipulated in the credit.

N o t e: if invoice am ount exceeds letter of credit am ount, dra fts m ust not exceed theam ount perm itted in the credit. See Article 18(B).

Amount in figures and words agree.

Balance of the letter of credit is not exceeded.

Drawee/payee is as required in the letter of credit.

No alterations appear on the face of the draft.

It is dated.

Any statement required on the draft by the letter of credit appears on the draft.



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Com m erc ia l I nvo i ce

Commercial Invoice. Verify that:

Beneficiarys name and country is exactly as stated in the letter of credit.

Account partys name and country is exactly as stated in the letter of credit unlessotherwise specified.

Description of the goods is identical to the letter of credit requirements.

Shipping marks and numbers are consistent with those appearing on the bill oflading and letter of credit.

It does not cover used, rebuilt, or second hand merchandise unless it is allowedby the letter of credit.

Quantity of merchandise, weights, and measurements are consistent with thoseappearing on the bills of lading and other documents, and the letter of credit.

It does not include an over-shipment or merchandise not stated in the letter of creditor does not include merchandise covered by another letter of credit unlessauthorized.

Amount covers the complete shipment of the merchandise when letter of creditprohibits partial shipments or is within the tolerance of 5% of sub-article 30 (B) ofUCP600.

The value is proportionate to the partial quantity shipped, if the credit allows partialshipments.

Merchandise value, shipping expenses and insurance are itemized separately only ifrequired by the credit.

Shipping terms such as CIF, FOB, etc. are as stipulated in the credit.

Charges e.g., storage, handling, cable, demurrage; commissions are not included,unless authorized in the letter of credit.

Unit prices agree with the credit terms.


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Commercial Invoice (continued)

Calculations, extensions, and additions are included if required by the letter of credit.

However, banks are not responsible for verifying mathematical calculations ofextensions or additions of the invoice.

Amount agrees with that of the draft unless the difference is allowed under the letterof credit.

It is signed, if required.

Provisional invoice is not presented, unless authorized in the letter of credit.

It is notarized, legalized, or visaed, if required.

Certifications are signed and in accordance with the letter of credit requirements.

The required number of originals and copies are presented and are consistent withUCP 600 Articles 17(B) and (C).

There are no internal inconsistencies within the invoice.

The invoice contains no statement, clauses or notations prohibited by U.S. lawand/or regulation, e.g., boycott clauses.

Shows all discounts or deductions as required in the credit.

If the credit calls for installment shipments, the previous installment(s) were shippedas required by the credit and the current installment (this drawing) is notinconsistent with the credit requirement for this installment.



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Ocean Bi l l s o f Lad ing

Ocean Bills of Lading. Verify that:

A full set of original Bill(s) of Lading has been presented, unless otherwise stipulatedin the credit.

The Bill of Lading on its face appears to indicate the name of the carrier and to havebeen signed or otherwise authenticated as follows:

The signature line must read:

a) Carrier: Then only the signature/authenticator of the carrier need appear.

b) Master: Then only the signature/authenticator of the master need appear.

c) Ag ent for the Carrier: The signer/authenticator must identify themselves and inwhat capacity they are acting, e.g., A.B.C. Company as agent for the carrier.

d) Ag ent for th e Master: The signer/authenticator must identify themselves and inwhat capacity they are acting, e.g., A.B.C. Company as agent for the master.

NOTE:If Bill of Lading does not appear to in dicate the nam e of the carrier then the

signature block mu st do so.

The Bill of Lading indicates the goods have been loaded on board or shipped on anamed vessel either by:

a) Preprinted wording on the Bill of Lading, or

b) By means of an on board notation which must be dated.

If the Bill of Lading contains an indication intended vessel, or similar qualificationin relation to the name of the vessel, then the on-board notation must include thedate of shipment and the name of the actual vessel. See UCP 600 Article 20 (ii), lastparagraph.

The Bill of Lading indicates the port of loading, and port of discharge stipulatedin the credit, even if described in the credit as shipment from, and/or shipment

to.

If the Bill of Lading contains an intended or similar qualification in relation to theport of loading, then the on board notation must include the port of loadingstipulated in the credit be dated and must indicate the name of the vessel. See UCP600 Article 20 (iii), last paragraph.


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Ocean Bills of Lading (continued)

It is consigned as stipulated in the credit.

The Bill of Lading is properly endorsed, if necessary.

Except for shipments in container(s), trailer(s), and/or lash barge(s), as evidenced bythe Bill of Lading, the credit allows for the trans-shipment also, if the Bill of Ladingindicates a place of trans-shipment between the port of loading and the port ofdischarge stipulated in the credit, provided that the entire carriage is covered by oneand the same Bill of Lading.

No clause(s) appears on the Bill of Lading declaring a defective condition of thegoods, and/or packaging.

The merchandise description is not inconsistent with that stipulated in the credit.

The Bill of Lading does not cover other merchandise not called for in the credit.

In the case of:

a) A shipped on board bill of Lading the date of the Bill of Lading, or

b) Received for shipment Bill of Lading, the date of the on board notation is within thelatest date allowed for shipment.

All alterations bear an initial or a stamp.

The name and address of the notify party is as stipulated in the credit.



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Non-Nego t iab le Sea Wayb i l l

Non-Negotiable Sea Waybill. Verify that:

The document is titled Sea Waybill.

A full set of original Sea Waybill(s) has been presented, unless otherwise stipulated inthe credit.

The sea waybill on its face appears to indicate the name of the carrier and to havebeen signed or otherwise authenticated as follows:






NOTE:If the Sea W aybill does not appear to indicate the nam e of the carrier then

the signa ture block m ust do so.

The Sea Waybill indicates the goods have been loaded on board or shipped on anamed vessel either by:

a) Preprinted wording on the Sea Waybill, or

b) By means of an On Board notation which must be dated.

If the non-negotiable Sea Waybill contains an indication Intended Vessel, orsimilar qualification in relation to the name of the vessel, an On Board notationindicating the date of shipment and the name of the actual vessel is required.

The Sea Waybill indicates the Port of Loading, and Port of Discharge stipulated in

the credit, even if stipulated in the credit as Shipment From, and/or ShipmentTo.


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Non-Negotiable Sea Waybill (continued)

If the non-negotiable Sea Waybill does not indicate the port of loading stated in the

credit or if it contains an Intended or similar qualification in relation to the port ofloading then the On Board notation must include the port of loading stipulated inthe credit, the date of shipment, and the name of the actual vessel.


Except for shipments in container(s), trailer(s), and/or lash barge(s), as evidenced bythe Sea Waybill, the credit allows for trans-shipment also if the Sea Waybill indicatesa place of trans-shipment between the port of loading and the port of dischargestipulated in the credit, provided that the entire carriage is covered by one and thesame Sea Waybill.

No clause(s) appears on the Sea Waybill declaring a defective condition of the goods,and/or packaging.


The Sea Waybill does not cover other merchandise not called for in the credit.

In the case of:

a) A shipped On Board Sea Waybill the date of the Sea Waybill, or

b) In the case of received for shipment Sea Waybill, the date of the On Board notationis within the latest date allowed for shipment.



There is an indication of the status of the freight charges on the face of the documentin accordance with the stipulations of the credit.

In all other respects the document meets the stipulations of the credit.

The data content is not inconsistent with the data content found in the otherstipulated documents presented.



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Char t e r Par ty B i l l o f Lad ing

Charter Party Bill of Lading. Verify that:

A full set of original Bill of Lading(s) has been presented, unless otherwise stipulatedin the credit.

The Bill of Lading indicates that it is subject to a charter party and it appears on itsface to have been signed or otherwise authenticated as follows:


a) Owner: Then only the signature/authenticator of the owner need appear.


c) Ag ent for the Ow ner: The signer/authenticator must identify themselves and inwhat capacity they are acting, e.g., A.B.C. Company as agent for the owner.


NOTE:Banks w ill accept a Bill of Lading t hat d oes or does n ot appear to in dicate

the nam e of the carrier.

The Bill of Lading indicates the goods have been loaded on board or shipped on anamed vessel either by:

a) Preprinted wording on the Bill of Lading, or

b) By means of an on board notation which must be dated.

The Bill of Lading indicates the Port of Loading. and Port of Discharge stipulatedin the credit, even if described in the credit as shipment from, and/or shipmentto. The Port of Discharge may also be shown as a range of ports or a geographicalarea, as stated in the credit.

The Bill of Lading is consigned as stipulated in the credit.

The document is subject to a charter party or is labeled a charter party Bill of Lading.

No clause(s) appear on the Bill of Lading declaring a defective condition of the goods,and/or packaging.



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Charter Party Bill of Lading (continued)

In the case of:

a) A shipped on board Bill of Lading the date of the Bill of Lading, or

b) Received for shipment Bill of Lading the date of the on board notationis within the latest date allowed for shipment.



The Bill of Lading does not cover other merchandise not called for in the credit.

The Bill of Lading is properly endorsed, if necessary.

There is an indication of the status of the freight charges on the face of the documentin accordance with the stipulations on the credit.




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Ai r T ranspo r t Docum en t

Air Transport Document. Verify that:

The original for consignor/shipper has been presented even if the credit stipulates afull set of originals, or similar expressions.

The airway bill on its face appears to indicate the name of the carrier and to havebeen signed or otherwise authenticated as follows:



b) Ag ent for th e Car rier: The signer/authenticator must identify themselves and in

what capacity they are acting, e.g., A.B.C. Company as agent for the carrier.

NOTE: If Air W aybill does n ot appear to indicate the nam e of th e carrier th en the


The air transport document indicates the goods have been accepted for carriage.

If the credit requires an actual date of dispatch that such date is indicated on the airtransport document, in the form of a specific notation.

The air transport document indicates the airport of departure, and the airport ofdestination as stipulated in the credit even if stipulated in the credit as shipment

from and/or shipment to.

The air transport document appears to contain all the terms and conditions ofcarriage, or some terms and conditions by reference to a source, or document otherthan the air transport document.

The data content of the document is consistent with the data content found in theother stipulated documents presented.


The credit allows for trans-shipment if the air transport document indicates a placeof trans-shipment between the airport of loading and the airport of dischargestipulated in the credit.


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Air Transport Document (continued)

NOTE:Ev en w here the credit prohibits t rans-sh ipm ent, an air transpor t docu m ent

that indicates trans-shipm ent w ill take place is acceptable provided one and t hesam e air tran sport docum ent covers the entire carriage.

No clause(s) appear on the air transport document declaring a defective condition ofthe goods, and/or packaging.


The air transport document does not cover other merchandise not called for in thecredit.

The date of the air transport document, or in the case where the credit requires anactual date of dispatch, that such date is within the latest date for shipmentstipulated in the credit.






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Transpor t Docum ent Cover ing a t Leas t

Tw o D i f fe ren t Modes o f Transpor t

Multimodal Transport Document. Verify that:

A full set of original multimodal transport document(s) has been presented, unlessotherwise stipulated in the credit.

The Bill of Lading on its face appears to indicate the name of the carrier ormultimodal transport operator and to have been signed or otherwise authenticatedas follows:






NOTE:If Bill of Lading does not appear to in dicate the nam e of the carrier then the


The multimodal transport document indicates the goods have been dispatched, taken incharge, or loaded on board, as the case may be, either by:

a) Preprinted wording on the multimodal transport document, in which case the date ofissuance of the document is the date of shipment, or

b) By means of a stamp or other indication, the date of which will be considered the dateof shipment.

The place of taking in charge, and the place of final destination are as stipulated inthe credit.

The multimodal transport document does not indicate it is subject to charter party.

The multimodal transport document is properly endorsed.

No clause(s) appear on the Bill of Lading declaring a defective condition of the goods,and/or packaging.


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Multimodal Transport Document (continued)

The date indicating dispatch, taken in charge, or on board, as the case may be, is

within the latest date for shipment stipulated in the credit.



The multimodal transport document does not cover other merchandise not called forin the credit.


Its data content is consistent with the data content found in the other stipulateddocuments presented.




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Road , Ra i l or I n l and Wa te rw ay Transpo r t Docum en ts

Road, Rail or Inland Waterway. Verify that:

A full set of original (marked as original(s) or not) transport documents have beenpresented but in the absence of an indication of the number issued you may acceptthe transport documents presented as constituting a full set.

The transport document on its face appears to indicate the name of the carrier and tohave been signed or otherwise authenticated by the carrier or named agent for or on

behalf of the carrier and/or indicate receipt of the goods by signature, stamp, ornotation by the carrier or named agent for or on behalf of the carrier as follows:



b) Ag ent for the Carrier: The signer/authenticator must identify themselves and inwhat capacity they are acting, e.g., A.B.C. Company as agent for the carrier.

NOTE:If Transpor t Docu m en t d oes n ot appear to indicate the nam e of the carrier

then the signature block mu st do so.

The document contains an indication the goods have been received for shipment,dispatch, or carriage, as the case may be.

The transport document indicates the place of shipment, and the place of destination

stipulated in the credit.


The credit allows for trans-shipment if the transport document indicates unloadingand reloading from one means of conveyance to another, in different modes oftransport, between the place of shipment and the place of destination stipulated inthe credit.

No clause(s) appear on the transport document declaring a defective condition of thegoods, and/or packaging.


The transport document is dated within the latest date for shipment stipulated in thecredit.


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Road, Rail or Inland Waterway (continued)



The transport document does not cover other merchandise not called for in thecredit.

The transport document is properly endorsed, if necessary.


The data content of the document is consistent with the data content found in theother stipulated documents presented.




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Cour ie r Receip t , Post Rece ip t , o r Cer t i f i ca te o f Post ing

Courier Receipt, Post Receipt, or Certificate of Posting. Verify that:

It is stamped, or otherwise authenticated, and dated in the place from which thecredit stipulates the goods are to be dispatched.


It is dated not later than the latest date allowed for shipment.




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I nsu ran ce Po l i cy

Insurance Policy. Verify that:

Unless prohibited in the letter of credit, an insurance certificate is acceptable underan open cover pre-signed by insurance companies or underwriters or their agents. Aninsurance policy may be presented in lieu of a certificate (Art 28D UCP600).

NOTE: Cover n otes are not acceptable, un less au thor ized in the letter of credit.

Original and duplicate are presented, if issued in duplicate; even though letter ofcredit does not specify that policy be presented in duplicate.

It is signed (original and duplicate) by the insurance company or its agent or by theunderwriters or their agents and, where required, it must be countersigned.

It is dated not later than the shipment date as evidenced on the transport documentor it has evidence that the insurance cover is in effect from the date of loading ordispatch, or taking in charge of the goods.

It is endorsed by the party to whom losses are payable and in the form requiredunder the letter of credit.

It is issued in the currency stipulated in the credit.

Unless stipulated in the credit, minimum insurance amount is 110% of the CIF valueor the 110% of CIP value (freight/carriage and insurance paid value).

NOTE:If the CIF or CIP value cannot be determ ined, banks w ill accep t a s

m inimu m 110% of the am ount for w hich pay m ent, acceptance, or negotiation is

required , or 110% of the gross am ount of the invoice, wh ichever is larger .

Name of the vessel and shipping ports are as indicated in the transport document. Ifinsurance policy indicates name of shipping port, then it must be consistent withtransport document.

It covers trans-shipment, if the transport document indicates that trans-shipmentoccurred.

Specific risks required in the credit are covered.

All risk statement is included if the credit requires an all risk cover.


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Insurance Policy (continued)

Any additional risks required in the credit are included, e.g., war risk, TPND

(theft pilferage and non-delivery), strikes, riots and civil commotions, etc.

All insurance riders are affixed to the insurance document and are cross-referencedand stamped or signed to form part of the original document.

Marine extension clauses are in the form as stated in the credit.

Description of the merchandise, quantity, and the shipping marks and numbers areconsistent with that appearing in the other documents.



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Consu la r I nvo ice

Consular Invoice. Verify that:

NOTE: The Consular Invoice and the remaining documents below and any other notlisted are not covered in UCP 600 and therefore the following are standard guidelines.As always the Letter of Credit should detail the information required on thesedocuments and information should also be consistent with other documentsstipulated in the Letter of Credit terms.

If the credit required a consular invoice in one or more original, all must appear to bevisaed.

The documents contain enough information to relate it to the current shipment.

Any and all changes, alterations, and/or corrections bear the stamp of the consulate.

In all other respects, the document meets the stipulations of the credit.


The document contains no statements, clauses or notations prohibited by U.S. lawand/or regulation, e.g., boycott clauses.



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Pack in g L is t

Packing List, Verify that:

It lists the contents of each package, bale, carton or other container and is titled aspacking list.

It relates to the other documents required by the letter of credit and is notinconsistent with those documents.

It covers the merchandise invoiced.

The description of the merchandise is consistent with the merchandise descriptioncontained in the letter of credit and the other shipping documents.



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Weigh t Ce r t i f i cate / Li st

Weight Certificate/List. Verify that:

It is signed and dated, if it is a weight certificate. Weight list need not be signed anddated.

It states the weight(s) of the goods being invoiced.

It is issued by the party stipulated in the credit, but if no stipulation is made then adocument prepared and signed by the beneficiary is acceptable.

NOTE:Banks w ill not accep t a docum en t issued by the beneficiary if t he cred it

describes the issuer of the docum ent using am biguous term s, e.g., first class,

local, w ell know n.

It is properly titled.

It relates to the other stipulated documents presented, and its data content is notinconsistent with the data contained in the other stipulated documents presented.

The weights on the weight certificate/list corresponds with the weight on transportdocument and/or invoice, e.g., gross weight = gross weight on transport document,and net weight = net weight on invoice you may need to convert English metricmeasures or visa versa. However, banks are not responsible to verify mathematicalcalculations or addition on the weight certificate/list.




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Cert i f i ca te o f Ana ly s is

Certificate of Analysis. Verify that:

It is signed, titled and dated properly.

It complies with analysis specifications required in the credit.

It is issued by the party stipulated in the credit but, if no stipulation is made, adocument prepared and signed by the beneficiary is acceptable.




Unless otherwise stipulated in the credit statements that only a sample of themerchandise has been analyzed is acceptable.


Merchandise description is consistent with that shown in the credit and othershipping documents.



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Cert i f i ca te o f Or ig in

Certificate of Origin. Verify that:

It is signed, dated and properly titled.

It certifies the country of origin, and, if required by the credit, it is the country asspecified in the credit.

It is issued by the party stipulated in the credit; if the credit does not stipulate, then adocument prepared and signed by the beneficiary is acceptable.





Its data content is not inconsistent with the data content found in the otherstipulated documents presented.

The document contains no statements, clauses or notations prohibited by U.S. lawand/or regulation, e.g., boycott clauses.

It is visaed by the competent authority, such as Chamber of Commerce or ConsulateGeneral, if it is stipulated in the credit.



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I nspect ion Cer t i f i cate

Inspection Certificate. Verify that:

It is properly titled, signed and dated.

It complies with the inspection requirements contained in the credit, if any.

It is issued by the party designated in the credit; but, if no stipulation is made, then adocumentary prepared and signed by the beneficiary is acceptable.




Merchandise description is not inconsistent with the description stipulated in thecredit.

Statements referring to percentage passed/failed will be disregarded unlessotherwise stipulated in credit.

If the credit requires a clean report of findings, that the document presented is sotitled, signed and dated.

Unless otherwise stipulated in the credit, statements that only a sample or samples ofmerchandise has been inspected is acceptable.


Its data content is not inconsistent with the data content found in other stipulateddocuments presented.



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