Anatomy of Documents under the Microscope of UCP 600


By Ravi MehtaPh.D. 


The UCP tells bankers to determine compliance with the LC on the basis of examination of the documents alone, which the LC calls for presentation. The UCP has codified standard for examination of the documents, which the bankers must observe to determine whether or not the documents appear on their face to constitute a complying presentation.  So the beneficiary must examine, before presentation, whether the required documents are complying. For this purpose, the beneficiary must understand the UCP requisites for documents. The typical constituents of a document are name, signature, date, address, data content, original or copy, and currency. The constituents must be as per the UCP specifications and LC stipulations to make the document fit as complying presentation. The prepared or arranged document must be examined before presentation, for ensuring complying presentation.  A document must be complete, clear, consistent and complying. Let us checklist the UCP requisites for documents. Documentation needs knowledge and expertise.  Use knowledge for document preparation. Use knowledge for pre-presentation document examination.  Rely upon good knowledge for good documentation.  Rely upon good documentation for good chances in payment.

For correct documentation what is required is correct understanding of UCP.
Because what is required in a document is what is required by UCP.
 

The complying structure of a document

 

NAME

What’s in a name? In UCP-regulated documentation name is an important thing as it is considered for determination of compliance.  Name is a vital part of the document as new UCP says:

. A transport document must appear to indicate the name of the carrier.
. A commercial invoice must be made out in the name of the applicant. 
  

SIGNATURE

Which document need to be signed or not? Who can sign? How to sign? The signature part of the document if signed must meet the UCP rules. The rules allow different methods of signature production – handwritten, mechanical, and electronic. The rules allow various options in the matter of who can sign – signature by document issuing company or its agent, master, or proxy. You should know the alternative methods and options.   

. A document may be signed by handwriting, facsimile signature, perforated signature, stamp, symbol or any other mechanical or electronic method of authentication.

. A requirement for a document to be legalized, visaed, certified or similar will be satisfied by any signature, mark, stamp or label on the document which appears to satisfy that requirement.

. A bank shall treat an original any document bearing an apparently original signature.

. A transport document must appear to indicate the name of the carrier and be signed by the carrier, or a named agent for or on behalf of the carrier, or by the master or a named agent for or on behalf of the master.

. Any signature by an agent must indicate whether the agent has signed for or on behalf of the carrier or master.

.  A commercial invoice need not be signed.

. An insurance document must appear to be issued and signed by an insurance company, an underwriter or their agents or their proxies.

DATE

Expiry date for presentation. Issuance date.  Shipment date.  UCP is very particular about date requirement. You must be particular to fulfill the date requirement. You must check the date. The UCP rules for date are:

. A document may be dated prior to the issuance date of the credit, but must not be dated later than its date of presentation.

. A credit must state an expiry date for presentation.

. An expiry date stated for honor or negotiation will be deemed to be the expiry date for presentation.

. If the expiry date of a credit or the last day for presentation falls on a day when the bank to which presentation is to be made is closed for reasons other those referred to in article 36, the expiry date or the last day for presentation, as the case may be, will be extended to the first following banking day. The latest date for shipment will not be, however, extended as a result.

.  A transport document should indicate the date on which the goods have been dispatched, taken in charge or shipped on board.

. A presentation consisting of more than one set of  transport documents evidence shipment commencing on the same means of conveyance and for the same journey, provided they indicate the same destination, will not be regarded as covering a partial shipment, even if they indicate different dates of shipment…. If the presentation consists of more than set of transport documents, the latest date of shipment as evidenced by any of the sets of transport documents will be regarded as the date of shipment.

. In case of transport documents other than courier receipt the date of issuance is the date of shipment unless stated otherwise by notation. In case of the courier receipt the date of pick up or of receipt is the date of shipment.  A post receipt or certificate of posting, however named, evidencing receipt of goods for transport must be dated at the place from which the credit states the goods are to be shipped.

. A presentation including one or more original transport documents subject to articles 19, 20, 21, 22, 23, 24 or 25 must be made by or on behalf of the beneficiary not later than 21 calendar days after the date of shipment as described in these rules, but in any event not later than the expiry date of the credit.

. The date of the insurance document must be no later than the date of shipment, unless it appears from the insurance document that the cover is effective from a date not later than the date of shipment.

ADDRESS

New UCP addresses the address problem in documentation. The usual problem is that the address on a document may not be the same as on the LC. The new UCP is a solution.

UCP 600 says:  When the address of the beneficiary and the applicant appear in any stipulated document, they need not be the same as those stated in the credit or in any other stipulated document, but must be within the same country as the respective addresses mentioned in the credit. Contact details (telefax, telephone, email and the like) stated as part of the beneficiary’s and the applicant’s address will be disregarded. However, when the address and contact details of the applicant appear as part of the consignee or notify party details on a transport document subject to articles 19, 20, 21, 22,23, 24 or 25, they must be stated as in the credit.

 

DATA CONTENT

The essence of UCP is regulation of data content. Data must not be conflicting. Prepare and examine documents before presentation to ensure they are conflict-free. The UCP regulates data content as below:

Data in a document, when read in context with the credit, the document itself and international standard banking practice, need not be identical to, but must not conflict with, data in that document, any other stipulated document or the credit.

In documents other than the commercial invoice, the description of the goods, services or performance, if states, may be in general terms not conflicting with their description in the credit. 

The description of the goods, services or performance in a commercial invoice must correspond with that appearing in the credit.

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

Check the data content for spelling errors to be on the safe.  Though a spelling mistake or typing error that does not affect the meaning of the word or the sentence in which it is used, may not make the document discrepant, as ISBP Paragraph 28 says, it does not mean we should ignore the mistake, for rectification,  if we happen to see it before presentation.  “Correct documentation” should be your attitude and policy.  “Present the documentation as it is and correct it after presentation” - this is a wrong way of business management.

 

A stitch in time saves nine."               

“Better safe than sorry”

 

 ORIGINAL vs. COPY

An LC says “in duplicate”. What does it mean? Another LC says to present “copies of documents” Where LC is not clear UCP 600 makes it clear. The new UCP tells what “in duplicate” means UCP says “at least one original of each document stipulated in the credit must be presented”. So you must know the UCP rules for original and copy.

You must understand articles 17 of UCP 600 that speaks of original document. If you handwrite a document it is original unless you write “copy” on it.  Similarly, if you use business letterhead for documentation the document is original unless the document indicates otherwise – that is, you write or stamp “copy” on it.  If the LC says, for example, in duplicate, the UCP clarifies that it means one original and the remaining number in copies. If an LC demands presentation of copies

of documents it means presentation of either originals or copies. Where LC is not clear new UCP makes it clear. So you must know new UCP. You must learn it. You must use it.

The sub-article “c” of article 17 needs special attention. It says:

“Unless a document indicates otherwise, a bank will also accept a document as original if it:

. Appears to be written, typed, perforated or stamped by the document issuer’s hand; or

. Appears to be on the document issuer’s original stationery; or

. States that it is original, unless the statement appears not to apply to the document  presented.

 A rail transport document marked “duplicate” will be accepted as an original. A rail or inland waterway transport document will be accepted as an original whether marked as an original or not.

 

CURRENCY

The commercial invoice must be made out in the same currency as the credit.

. The insurance document must be in the same currency as the credit.

 

Conclusion  

 

Make correct documentation. Examine the documents for accuracy. Correct the documentation, if and where necessary, before presentation. “A stitch in time saves nine."  For correct documentation you must have correct understanding of UCP. Because what is required in a document is what is required by UCP. 

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