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WHERE THE APPLICANT REFUSES TO TAKE UP THE DOCUMENTS

By Mr Old Man
Posted on November 8, 2016
4 min read
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Yellow sand beach, Hai Van Pass

QUESTION

Dear Mr. Old Man,

We appreciate your answer to the following case:

At the request of the applicant, we issued an L/C fully secured by the applicant’s deposit account with our bank. The documents required for presentation including 3/3 original bills of lading made out to the order of our bank notify the applicant.

Having now received the documents complying with the credit terms and conditions, we notified the applicant of the same and  asked him to come to the bank to take up the documents to take delivery of the cargo. However, so far the applicant has not come to our bank to take up the documents while the shipping company is requesting us to take delivery of the cargo as the bill of lading is made out to the order of our bank.

What should we do in this case? Should we take delivery of the cargo as the bill of lading is made out to the order of our bank?

Thanks and best regards,

NPT

——–

ANSWER

Hi,

If the documents presented are complying, the issuing bank must pay in accordance with the presenter’s instructions regardless whether the applicant takes up the documents to take delivery of the goods or not and regardless whether the bill of lading is made out to the order of the issuing bank or the applicant.

Where the issuing bank has honoured the complying presentation, the applicant must reimburse the issuing bank in accordance with terms and conditions of the L/C opening contract signed between the issuing bank and the applicant. Since the L/C in question is fully secured by the applicant’s deposit account with your bank, you are entitled to debit his account to pay for the claimed amount.

If the applicant for some reason is trying to refuse to take up the documents, you can send the documents including the duly endorsed bills of lading to the applicant’s office by courier service or hand the documents directly to the applicant.

You may provide the shipping company with a copy of the duly endorsed bill of lading to show that the title of the goods has been transferred to the applicant – the real owner of the goods.

LAST BUT NOT LEAST

Remember to keep a set of the photocopy documents and other evidence  in case of a dispute with Applicant and having to go to court.

Kind regards,

Mr. Old Man

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37 Comments

37 Comments

  1. Ms. Lien

    November 9, 2016 at 9:13 am

    Dear Mr. Old man,
    For the above situation, in case the Issuing bank send all the documents including the duly endorsed bills of lading to the applicant’s office by courier service or hand the documents directly to the applicant, how to ensure the applicant make payment to them?

    Reply

    • mroldman

      November 9, 2016 at 11:31 am

      As said in my above answer, as the L/C in question is fully secured by the applicant’s deposit account with the issuing bank, the issuing bank is entitled to debit the applicant’s account to pay for the claimed amount or reimburse itself.
      If the L/C is issued without cash deposit as security for the applicant’s payment obligation, the applicant can be requested to cover the payment in accordance with the terms and conditions of the L/C opening contract signed between the issuing bank and the applicant, that is to say, the applicant is obliged to provide full cash for payment or accept a loan.

      Reply

  2. naima dakki

    November 13, 2016 at 5:47 pm

    Good Day,, Please i am searching for an example of the Appended Declaration to Bill of Lading:

    | APPENDED DECLARATION TO BILL OF LADING                                                      | | | | |   APPENDED DECLARATION TO BILL OF LADING SIGNED BY THE VESSEL’S OWNER/CAPITAIN/AGENT/FORWARDER INDICATING:

    –        THE NAME OF THE VESSEL AND HER      PREVIOUS NAME

    –        THE NATIONALITY OF THE VESSEL

    –        THE OWNER OF THE VESSEL

    –        PORTS THAT THE VESSEL WILL CALL ON ON   ROUTE TO SAUDI ARABIA AND DECLARING THAT THE INFORMATION PROVIDED IS CORRECT AND COMPLETE AND THAT THE VESSEL SHALL NOT CALL ON OR ANCHOR AT ANY OTHER PORTS THAN THOSE MENTIONED IN THE DECLARATION, ON ROUTE TO SAUDI ARABIA (THE DECALARATION IS NOT REQUIRED FOR SHIPMENTS EFFECTED THROUGH NATIONAL SHIPPING CO. OF SAUDI ARABIA OR UNITED ARAB SHIPPING CO.) |

     Please if the L/C dose not indicate the number of the document to be submitted , as the appended declaration to bill of lading shall we submit only one original. Can you please help me for that .

    Reply

    • mroldman

      November 14, 2016 at 3:39 pm

      When a credit requires, for example, presentation of “Invoice”, “One Invoice”, “Invoice in 1 copy” or “Invoice – 1 copy”, it will be understood to be a requirement for an original invoice.

      The above also applies to your case.

      Reply

      • Naima

        December 25, 2016 at 7:11 pm

        Thank you,,

        Please could you advise me what are the other informations to put in the Appended declaration of Bill Of Lading.eg.
        L/C number,Bill of Lading Number and what are the other required informations to put.

        Reply

        • mroldman

          December 27, 2016 at 9:17 pm

          It depends on each shipping company that what information is required to appear on this appended declaration. It may contain: L/C number and date; vessel name; Flad/nationality; owner of the vessel and a certification….

          Reply

  3. Danushka

    November 22, 2016 at 11:09 pm

    I wanted to clear some doubts about tolerance. Please correct me with the following example about how I understand the tolerance.
    Example I
    Article 30 A.
    “about” or “approximately” If used in connection with the amount, quantity or unit price then, 10% +/- allowed.
    So if the LC used 1000 pens about/approximately USD10,000/-(FOB) means 1000pens can be sent at USD 9,000/- to USD 11,000/-
    Example II
    Article 30b
    5%+/- from quantity means, If 10,000MT @ USD 100,000/- mean, quantity can be 9000MT to 11000MT but the amount should remain at USD100,000/-
    Example III
    Article 30C
    5% – from amount means, If 10,000 MT @ USD 100/- (FOB) USD 1,000,000/- + Freight + Insurance USD10,000 (Total USD 1,010,000) and partial shipment not allowed yet, USD1,000,000 + (Cost and Insurance can reduce up to USD 9500) (Total USD 1,09,500)
    Example IV
    MT1000 at about USD 10,000 means, Quantity can be changed from 950MT to 1050MT (As per article 30b) and simultaneously LC value can be changed from USD 9000 to USD 11000.(Article 30a) So seller can send 950MT for USD 11,000
    Example V
    Also under MT700 field 39 if we put 10/10 means, If LC value is USD 100,000 (10,000pens @ USD 10) then goods can be consigned from USD 90,000 to USD 110,000. but the quantity and the unit price must be stated in the invoice as 1000 pens @ USD10.
    Example VI
    Also under MT700 field 39 if we put 10/10 means and under additional condition (47A) we say tolerance 5 +/- from quantity allowed then, If LC value is USD 10,000 (1,000pens @ USD 10) then goods can be consigned from USD 9,000 to USD 11,000 and the quantity may vary from 1050pens to 950 pens. So the seller can send a consignment worth of USD 11000 consist of 950 pens.
    Please correct me with the above examples in order to get clear understand about tolerance.

    Reply

    • mroldman

      November 24, 2016 at 9:12 am

      My quick comment:
      Example 1: Agreed
      Example 2: Agreed
      Example 3: Agreed
      Example 4: Agreed
      Example 5: Disagreed. I wonder if the L/C is badly worded. Something wrong if the L/C amount is reduced to USD90,000 while the quantity and the unit price remain unchanged (USD10,000 pens x USD10).
      Example 6: Agreed

      Reply

      • Danushka

        December 1, 2016 at 12:46 am

        Thk u so much Mr. Old Man

        Reply

  4. RASHADUL KARIM

    December 11, 2016 at 2:06 am

    Dear Mr. Old Man,

    Would appreciate if you kindly comment on the validity (true/false) of the following two statements:

    a. Acceptance of a draft by a nominated bank that is not a confirming bank does not make that bank liable to honour that draft at maturity.

    b. Issuance of a deferred payment undertaking by a nominated bank that is not a confirming bank does not make that bank liable to make payment at maturity.

    To me, both the statements are true/correct based on the assumption that a nominated bank is not bound to act on its nomination. Albeit it has agreed to act on its nomination, there is always a chance (in case of acceptance/deferred payment scenarios) of not making payment/honoring at the maturity date by the nominated bank.

    Reply

    • mroldman

      December 12, 2016 at 8:05 am

      Both are false. Once the nominated bank has accepted a draft or incurred a deferred payment undertaking, it has agreed to act on its nomination, hence, it is liable to make payment at maturity.

      Reply

  5. Naima

    January 10, 2017 at 2:24 pm

    Hi Mr.Old Man,,

    Please could you tell me who is the Agent of the Vessel and the Agent of the Carrier , are they the same , and if i have one document to be made by the Vessel agent but will be made by the Carrier Agent what will be the Carrier Agent ( Forwarder ?)

    Thank you

    Reply

  6. Danushka

    January 11, 2017 at 1:25 pm

    Dear Mr. Old Man,

    We have issued a LC with tolerance of 10/10 (39A) and under 47A stating that “Tolerance of 10pct in respect of quantity is allowed”. In the good description (45A) we have Stated “91Tons H Beam Steel”
    Can the beneficiary disregard the above tolerance level and shipped the quantity as per Article 30B? (Tons is not considered as Stipulated number of packing unit or individual items). Thx in Advance

    Danushka

    Reply

  7. Naima

    January 12, 2017 at 11:20 am

    Hi ,,

    I read the link so thank you very much but for the Forwarder of the Vessel it is not there , please if you do not mind do you have any other link.

    Reply

  8. Naima

    January 15, 2017 at 12:13 pm

    Good Day Mr.Old Man,,

    Please i want to know if the Bill of lading made by the Freight Forwarder as agent of the carrier is acceptable under Letter of Credit.

    Thank you

    Reply

    • mroldman

      January 16, 2017 at 1:48 pm

      Acceptable

      Reply

      • Naima

        January 17, 2017 at 2:55 pm

        Good Day Mr.Old Man,,

        Please if you do not mind , i want to know

        1- The NOVCC is a Freight forwarder
        2- The NOVCC must be a Freight Forwarder
        3- The Bill of Lading issued by the NOVCC is a House Bill of Lading
        4- The NOVCC is a forwarder of the Vessel
        5- The Bill of lading issued by the NOVCC will be signed as an agent of the Carrier
        6- Can a carrier be an NOVCC means that carriers always own or charter a vessel , is it possible that a Carrier is not owning or chartering a vessel and so be a Freight Forwarder or a NOVCC, so in that case the Freight Forwarder will be agent of another Freight Forwarder ?

        Thank you

        Reply

        • mroldman

          January 18, 2017 at 1:56 pm

          I am not specialized in freight forwarding industry. So, I am afraid I cannot give right answers to your questions.
          A freight forwarder or shipment consolidator who does not have ownership of the vessel (also known as a non-vessel operating common carrier – NOVCC), but assumes responsibilities for the shipments and issuing its own bills of lading and airway bills.

          From the above definition, here are the answers:
          1. Yes
          2. Yes
          3. Yes if it issues in the capacity of a freight forwarder
          4. I am not sure of the concept of forwarder of vessel
          5. Carrier transports goods by air, land or sea in its own or charterred vessels or equipment, and is named as carrier in the contract of carriage.
          A forwarder can sign a bill of lading as carrier

          Reply

  9. Naima

    January 17, 2017 at 7:16 pm

    Hi again Mr.Old Man,,

    Please can you tell me who’s is the Forwarder of the Vessel as i am not finding any thing in the Internet.

    Thank you

    Reply

  10. Naima

    January 18, 2017 at 2:59 pm

    Good Day Mr.Old Man,,

    Please i have one L/C for Saudia , among the required documents, they need the following one :

    APPENDED DECLARATION TO BILL OF LADING

    APPENDED DECLARATION TO BILL OF LADING SIGNED BY THE VESSEL’S OWNER/CAPITAIN/AGENT/FORWARDER INDICATING:

    – THE NAME OF THE VESSEL AND HER PREVIOUS NAME

    – THE NATIONALITY OF THE VESSEL

    – THE OWNER OF THE VESSEL

    – PORTS THAT THE VESSEL WILL CALL ON ON ROUTE TO SAUDI ARABIA AND DECLARING THAT THE INFORMATION PROVIDED IS CORRECT AND COMPLETE AND THAT THE VESSEL SHALL NOT CALL ON OR ANCHOR AT ANY OTHER PORTS THAN THOSE MENTIONED IN THE DECLARATION, ON ROUTE TO SAUDI ARABIA (THE DECALARATION IS NOT REQUIRED FOR SHIPMENTS EFFECTED THROUGH NATIONAL SHIPPING CO. OF SAUDI ARABIA OR UNITED ARAB SHIPPING CO.) |

    1- Please i want you to advise me about the meaning of the slash / (OR in the L/C, but for the entities that are referring are they:

    Signature of the Certificate will be as follow:

    vessel’s owner Or
    captain of the Vessel Or
    agent of the Vessel Or
    Forwarder of the Vessel

    OR signed by :

    vessel’s owner Or
    captain
    agent
    Forwarder

    For the word of Agent are they referring to Agent of the Vessel or Agent of the Carrier?

    Thank you

    Reply

    • mroldman

      January 23, 2017 at 3:17 pm

      Slash [/] in this case means any party of the mentioned parties can sign. If the transport document is signed by an agent, it depends on the type of the transport documents that the agent is signed for, e.g., As agent for the carrier (for B/L) or as agent for the master/owner/charterer (for CPBL)…

      Reply

      • Naima

        January 23, 2017 at 3:38 pm

        Good Day Mr.Old Man,,

        Thank you but for this case the agent of the carrier will sign the bill of lading as agent of the carrier but for the appended declaration of the bill of lading that can be signed by any party mentioned , so if this document is signed for example by the agent that will be agent of the vessel or only agent ( carrier agent ) so in this case the shipping company will sign both documents ( B/L and Appended declaration as agent of the carrier ).
        I made some researches in the internet and i found that for this document to Saudia this agent is the agent of the Vessel? so that me i have asked for those parties , are they relating to the vessel ( means owner of the vessel or captain of the vessel or agent of the vessel or forwarder of the vessel ) or are they separate meanings of the vessel which means eg. agent or forwarder , i asked the bank so they told me this agent is the agent of the carrier as if it is a document appended to bill of lading must be signed on the same way ?
        Can an agent or a captain of the vessel sign a document ?
        If i a have this document signed by the agent of the carrier signed as Forwarder of the vessel ( same wording as per the L/C ), and this same agent will sign the B/L as agent of the carrier is it OK?

        Reply

        • mroldman

          January 24, 2017 at 1:47 pm

          Just sign as agent, no need to indicate the capacity to avoid dispute. UCP does not require appended documents to indicate signing capacity as BL.

          Reply

  11. Danushka

    January 23, 2017 at 11:27 am

    We (Issuing Bank) have received a BL under a presentation stating taht “Loaded on Deck at the shipper’s and / or Charterer’s risk and expenses for any loss or damage without liability to the carrier however caused”. However it is loaded on a 20FT container.

    (1) As per article 26 goods cannot be loaded on deck. However, BL further states a remark “Dangerous Cargo” and this consignment is for our military. In that event I feel it is acceptable to keep them on the deck to minimize any loss or damage to the vessel. Therefore, can we quote the discrepancy as “ Goods have been loaded on deck” despite it has been loaded on a container?

    Reply

    • mroldman

      January 23, 2017 at 3:26 pm

      Discrepant as per Art 26 (a) – a transport document must not indicate the goods are or will be loaded on desk. Banks don’t care such a further statement!

      Reply

      • Danushka

        January 24, 2017 at 9:42 am

        THX MR OLD MAN.

        Reply

  12. Naima

    January 24, 2017 at 2:28 pm

    Good Day Mr.Old Man,,

    Really thank you very much for explaining to me this document as Appended declaration to Bill of Lading .
    Please can you tell me where i have to search for the Appended Documents in the UCP is it UCP 600?

    Thank you

    Reply

    • mroldman

      January 24, 2017 at 2:37 pm

      No, UCP 600 says nothing about appended documents, but ISBP 745 does.
      See here:
      Multiple pages and attachments or riders
      A24) When a document consists of more than one page, it must be possible to determine that the pages are part of the same document. Unless a document provides otherwise, pages which are physically bound together, sequentially numbered or contain internal cross references, however named or titled, will meet this requirement and are to be examined as one document, even if some of the pages are regarded as an attachment or rider.
      A25) When a signature or endorsement is required to be on a document consisting of more than one page, and the credit or the document itself does not indicate where a signature or endorsement is to appear, the signature or endorsement may appear anywhere on that document.

      Reply

      • Naima

        January 24, 2017 at 3:38 pm

        Hi Mr. Old Man,,

        Thank you very much, so those articles especially the article A24 ,
        When a document consists of more than one page, it must be possible to determine that the pages are part of the same document. So it is possible also that the pages are not part of the same document ( is that the meaning?)
        In that case i can have the Appended Declaration to Bill of Lading signed as AGENT ( the agent for the carrier told me that he can sign it as only Agent ) , the same agent for the carrier will sign the Bill of Lading as Agent for the Carrier.
        So Both documents will be made by the same entity ( Agent for the Carrier ), but signing the Appended Declaration to Bill of lading as Agent and signing the Bill of Lading as Agent for the Carrier.
        Please can you explain to me what is the meaning of :
        pages which are physically bound together,
        contain internal cross references,

        Reply

        • mroldman

          January 25, 2017 at 10:41 am

          The phrase “pages which are physically bound together, sequentially numbered or contain internal cross references” can be understood that a document consists of more than one page and these pages are sequenially numbered, e.g., page 1 of 3, page 2 of 3, page 3 of 3, or contain internal cross references, e.g., please refer to appendix 1.

          Reply

  13. Naima

    January 25, 2017 at 11:34 am

    Good Day Mr.Old Man,,

    Thanks

    Reply

  14. Naima

    January 25, 2017 at 5:38 pm

    Hi Mr.Old Man,,

    Please it is always about the Appended Declaration to bill of Lading as you know the Bill of Lading in L/C must be signed as per article 20 (a) i
    1-Any signature by an agent must indicate whether the agent has signed for or on behalf of the carrier or for or on behalf of the master.
    So my question here this document made by the same agent of the carrier that will be signed as agent only will not make any discrepancy?

    Thank you

    Reply

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