Home Mr Old Man Articles WHERE 1/3 ORIGINAL BILL OF LADING IS SENT TO THE ISSUING BANK

WHERE 1/3 ORIGINAL BILL OF LADING IS SENT TO THE ISSUING BANK

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QUESTION

Mr. Old Man,

We are exporting some goods to Nigeria. Importer Bank is First Bank of Nigeria, confirming bank is Standard Chartered Bank, Mumbai and advising bank is State Bank of India, Nagpur, India.

In our LC there is a clause, wherein through our advising bank, we have to submit 2/3 original Shipped on Board OCEAN BILL OF LADING and 3 Negotiable copies to the Confirming bank i.e. SCB, Mumbai. Further, we have to issue a certificate to SCB, Mumbai that 1/3 original Shipped on Board OCEAN BILL OF LADING have been sent directly to Issuing bank (i.e. FIRST BANK, NIGERIA) within 21 days by air courier.

Our worry is that if we send 1/3 original directly to the Issuing bank, the applicant can take possession of the container and if some discrepancy arises in the documents, SCB Mumbai may not complete the payment.

Please let me know if our understanding is correct and what is the recourse?

Pratik Tapadia

——————

ANSWER

Dear Pratik,

It is agreed that the confirming bank  must honour a complying presentation notwithstanding that 1/3 original bill of lading has been sent directly to the issuing bank. Therefore, please try to present complying documents to get the payment from the confirming bank.

I guess the bill of lading in question is required to be issued to the order of the issuing bank, i.e. First Bank of Nigeria. If so, like other banks, First Bank of Nigeria would hand the duly endorsed bill of lading to the applicant only when the applicant: (i) agrees in writing to waive all discrepancies, if any, in the documents, and (ii) undertakes to or has deposited sufficient funds (if the transaction is self financed by the applicant) or has provided a duly signed promissory note (if the transaction financed by the issuing bank) to enable First Bank of Nigeria to honour the L/C.

First Bank of Nigeria is the largest bank of the country. I believe it would act in accordance with international practice. Once having endorsed the bill of lading to enable the applicant to take delivery of the goods, it will certainly honour  notwithstanding whether the documents are discrepant or not.

Don’t worry too much! If it fails to honour, you may take legal action against it.

Kind regards,

Mr. Old Man

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2 Comments

  1. Patrick Hoang

    October 15, 2015 at 3:49 pm

    Dear Mr. Old Man,

    Good day.

    Please help us clarify this little problem.

    We are ABC Aluminium company and we export our products to the US. When applicant issued the L/C, they put our company name as ABC Aluminum.

    The truth is, Aluminium and Aluminum are basically the same as this is just the difference in English (Aluminium is British English while Aluminum is American English). In case we present the documents to issuing bank, is it considered as a discrepancy?

    Your quick reply will be very much appreciated.

    Best regards,

    Reply

    • mroldman

      October 15, 2015 at 4:38 pm

      1) You are advised to ask for an amendment if possible.
      2) The documents should show your company name as that in the LC.
      3) The discrepancy may be waived if the checker treats it as a spelling or typing mistake. It depends. I will not raise such a discrepancy.

      Reply

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