Who Should the Bill of Lading Be Made Out To — the Presenting Bank or the Issuing Bank?

When a Letter of Credit (LC) says it’s available with any bank by deferred payment and requires a Bill of Lading (B/L) made out to the order of the negotiating bank and endorsed to the issuing bank, exporters sometimes get stuck on a practical question:

To whose order should the Bill of Lading actually be issued?

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QUESTION

Dear Mr. Old Man,

My company has received an LC in the form of MT 710 with the following details:

• Field 46A (Documents Required): Full set of marine Bills of Lading made out to the order of the negotiating bank and endorsed by them to the order of XYZ Bank.
• Field 41D (Available with… by…): Any bank by deferred payment.
• Field 52A (Issuing Bank): XYZ Bank.

This LC was advised to my company by ABC Bank through Bank A.

I wonder whether the Bill of Lading should be issued to the order of Bank A or to the order of XYZ Bank.

Looking forward to your valued advice.

Thank you.

MM

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ANSWER

Dear MM,

Thank you for your question. Before answering directly, let’s clarify a few important points.

1. What is an MT 710?

MT 710 is a SWIFT message sent by an advising bank that has received an LC from the issuing bank (or a non-bank issuer) to another advising bank or directly to the bank advising the beneficiary.

This message type is typically used when the issuing bank does not maintain a SWIFT relationship with the beneficiary’s bank.

Not always, but in practice, issuing banks that transmit LCs via MT 710 are often smaller or less financially robust institutions. Hence, exporters should stay alert to potential frauds, especially if the LC passes through multiple intermediary banks.

2. Can a deferred payment LC be available with any bank?

An LC available with any bank by deferred payment is not standard, because a bank cannot incur a deferred payment undertaking unless it has a prior arrangement or confirmation authority from the issuing bank.

That said, such terms do appear in practice. Usually, these LCs specify the place and date of expiry in the beneficiary’s country, which benefits the exporter by allowing better control over document presentation deadlines.

3. To whose order should the Bill of Lading be issued?

In principle, whether the Bill of Lading (B/L) is made out to the order of Bank A (the advising/presenting bank) or endorsed to XYZ Bank (the issuing bank) does not change XYZ Bank’s title to the goods.

However, even though the LC is available with any bank, Bank A may be unwilling to incur a deferred payment undertaking without a prior arrangement with the issuing bank. As a result, Bank A may not wish to endorse the B/L to the order of XYZ Bank.

According to UCP 600 Article 6, a credit available with a nominated bank is also available with the issuing bank. Therefore, the beneficiary may present documents directly to the issuing bank.

In such cases, the B/L may be issued directly to the order of the issuing bank (XYZ Bank).

Alternatively, if Bank A agrees and is willing to endorse it to the order of XYZ Bank as per LC terms, the B/L can also be made out to the order of Bank A.

I hope this helps clarify the issue.

Best regards,

Mr. Old Man