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BL MADE OUT TO ORDER BLANK ENDORSED

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QUERY FROM SIVASMILES
MADE TO ORDER AND BLANK ENDORSED.
NEED CLARFICATION

Lets make the following assumption
xxx is a exporter and manufacturer of goods and he is exporting his goods from india to uk under documentary credit basis.The buyer is yyy.
With this instruction in B/L .,"MADE TO ORDER AND BLANK ENDORSED",PLEASE CLARIFY WHAT I REALLY SHOULD PUT IN THE CONSIGNEE PART OF B/L WHICH MAKES THE xxx IN SAFER SIDE.

Please clarify

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COMMENT FROM MR. OLD MAN
B/L to Order Blank Endorsed

Hi Sivasmiles,

Armargedo’s explanation is quite clear. I just want to add something regarding what you mean by the xxx safer side.

In the L/C transaction, the B/L is rarely required to be issued to order blank endorsed but usually required to be issued to the order of the issuing bank. This is normally required by the issuing bank as the issuing bank, which is also the bank financing the transaction, wants to control the title to the goods until the applicant has fulfilled his obligations under the contract between the issuing bank and the applicant for issuing the L/C. The issuing bank will endorse the B/L to (the order of) the applicant when the applicant deposits enough funds (if the transaction is self financed by the applicant) or when the applicant provides a duly signed promissory note (if the transaction financed by the issuing bank) to enable the issuing bank to honour the L/C.

An experienced beneficiary would also require the B/L to be issued to the order of the issuing bank rather than the B/L issued to order blank endorsed. He has good reasons to insist on such a requirement:

Any one who holds the B/L made out to order blank endorsed is entitled to the goods. Suppose that 1/3 B/L has been sent directly to the applicant after shipment, the applicant may take up delivery of the goods but may refuse to pay or try to delay the payment, especially when the documents presented to the issuing bank are not complying.

The beneficiary can avoid such a risk by having the B/L made out to the order of the issuing bank. The issuing bank is obligated to honour once he has endorsed the B/L to the applicant whether the documents are complying or discrepant.

If the L/C requires the B/L to be issued to order blank endorsed, it would be only safer (as you mean) for the beneficiary if the documents (including 3/3 original B/L) presented are complying with terms and conditions of the L/C.

Best regards,
Nguyen Huu Duc

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COMMENT FROM ARMAGEDO

Hi! If B/L is issued "TO

Hi!

If B/L is issued "TO ORDER" then it is of the same meaning as TO ORDER OF SHIPPER (i.e. company stated in shipper's box).

And so, condition that B/L to be endorsed (blank endorsed) means that at the back side there should be (blank) endorsement made by the party mentioned in SHIPPER box.

As You may see endorsement is depending on who is stated in shipper's box.
If shipper is Company XXX then it should make blank endorsement.
If not then only the company indicated in Shipper's box of B/L.

So in Your case B/L to be issued as follows (in general):
Shipper: Company AAAAA
Consignee: TO ORDER

And at the backside of EACH B/L there to be endorsement made by Company AAAA in the way

COMPANY AAAA
SIGNATURE
STAMP OF COMPANY AAAA

That's all.
————————-
Really cannot understand what do you mean by "which means the XXX in safer side".
The only what You should care is to comply with LC terms and conditions (this will guarantee the only safe side for beneficiary).
And in regard of that B/L the above way is the only correct way.
————————–
Good luck
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MORE COMMENTS
From Ghubshawi
Why some times to order

Dear Nguyen,
Why some times some traders, specially commodities traders, insist in using to order and blank endorse?
According to the sensitivity and volatile nature of some commodities, some traders insist to use to order and blank endorse at least to have some control over the goods in case of documents are rejected by the L/C applicant to avoid asking the issuing bank, which in most cases in a foreign country, retransfer the title of the goods to them.

Best,
Ghubshawi

———————————-
Tue, 06/03/2008 – 15:16 — nhduc.dng

Hi Ghubshawi

You’re correct. Appreciated.

If the documents including B/L made out to the order of the issuing bank are discrepant and have to be returned to the presenter, the issuing bank is not obliagted to endorse the B/L back to the shipper or to any party. This will, to some extent, cause inconvenience to the beneficiary regarding the transfer of the title of the goods under the B/L. In this scenario, it’s true that B/L made to order blank endorsed is more convenient.

Best regards,
Nguyen Huu Duc
————————————–

Tue, 06/03/2008 – 13:09 — sivasmiles

Thanks for clarification-Siva

Never expected this much quick reply.Thank you very much.I hope i will get a great knowledge about L/c from you.Take care and thank you so much.i am gonna make the B/L Consinee part as just "To order" and on back side we will sign the B/L.I can understand that its unsafe.but i hope documentary credit bank wont have any problems in making the payment after receiving the documents irrespective of the discrepancies.Please let me know,if there is any discrepancies in documents,will the issuing bank hand over the document to the buyer without making any payment?

————————-

Tue, 06/03/2008 – 15:22 — nhduc.dng New
Documents against payment

Dear Siva,

Once the documents, whether complying or discrepant, have been delivered to the applicant, the issuing bank must honour. The issuing bank’s payment obligation under the L/C is released only when:1/ The payment has been effected to the presenter; or2/ The documents are discrepant and/or have been returned to the presenter; or3/ The presenter has instructed the issuing bank to deliver the discrepant documents to the applicant without payment (rarely).

Best regards,
Nguyen Huu Duc

————————————–
Tue, 06/03/2008 – 03:25 — ghubshawi
Except when

Dear Nguyen,

Thank you for my appreciation.

But I think when the issuing bank agreed for the goods to be consigned to his name as mentioned in UCP he will be obligated in case of rejection of documents by applicant of L/C by the way of discrepancies either to take up the goods in his name and wave discrepancies or to endorse back the Bs/L.

Best,
Ghubshawi
————————————–
Wed, 06/04/2008 – 02:32 — nhduc.dng

Further comments are needed

Dear Ghubshawi,

Your reasoning seems logical but I think the issuing bank may, if required, but not obligated to endorse the B/L in the event it has to return the discrepant documents to the presenter. As far as I remember, ICC Banking Commission seems to have given the same opinion on this matter.

Best regards
Nguyen Huu Duc …

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31 Comments

  1. anonymous

    July 11, 2013 at 9:07 am

    prasanna writes:Hi There What is the blank endorse mean ( what are the wording comes back side of the B/L for blank endorsement if my company name xxx

    Reply

    • Mr Old Man

      April 19, 2023 at 9:42 am

      If an LC requires a blank endorsed BL, the shipper can sign on the reverse of the BL without mentioning the name of any party or to the order of any party. In this case the BL holder in due course is entitled to the goods shipped.

      Reply

  2. anonymous

    July 11, 2013 at 10:07 am

    Anonymous writes:Hi there I am xxx company (exporter )set a straight BL and insert YYY accompany name as consignee (instead of “to order” ) and can I endorsed applicant bank name in the back side of BL with my company name and signature – I have not received payments yet ? not a regular importer How can I make sure my payments received when documents are delivered Thanks heaps

    Reply

    • Mr Old Man

      April 19, 2023 at 9:45 am

      A straight BL is not a document of title, hence not negotiable. You cannot endorse a straight BL to other consignee or to the order of another party.

      Reply

  3. mroldmanvcb

    July 11, 2013 at 7:07 pm

    Blank endorsement means an endorsement without indicating the transferee. That is to say, any bona fide holder of this BL can take delivery of the cargo.

    Reply

  4. mroldmanvcb

    July 11, 2013 at 7:07 pm

    Sorry but a straight BL is a non-negotiatble BL that cannot be transferred by endorsement.Where BL is consigned straight to the applicant, full set (3/3) of original BLs should be presented to the issuing bank. Once the issuing bank has released the documents including original BL to the applicant to enable him to take delivery of the cargo, it must pay.However, please note that according to some practice, the carrier may release the cargo to the consignee named in a straight BL without production of original BL provided the consignee is identified as the consignee named in the BL.So,a wise exporter should not accept BL consigned straight to the applicant.

    Reply

  5. anonymous

    July 12, 2013 at 6:07 am

    prasanna writes:Mr old man you are a legend

    Reply

  6. anonymous

    July 12, 2013 at 6:07 am

    Anonymous writes:Thanks Mr.old man you are a legend

    Reply

  7. mroldmanvcb

    July 12, 2013 at 10:07 pm

    Wow! Thank you. I'm not a legend but a man who would always try to answer questions as soon as possible.

    Reply

  8. anonymous

    July 15, 2013 at 1:07 pm

    Anonymous writes:Hi Mr old man Is it require a BL to be endorsed? ( at least blank endorsed )if we sent a "to order" BL without any endorsement what are the consequences to the exporter and importer Thanks

    Reply

  9. mroldmanvcb

    July 15, 2013 at 2:07 pm

    The carrier would release the cargo against a duly endorsed BL. That is to say, if the BL is made out to order, it must be endorsed to enable the holder in due course to take delivery of the cargo. The importer cannot receive the cargo if the BL is not endorsed to his order or in blank. The exporter can ask the importer to return all BLs for endorsement or have a special arrangement with the carrier to release the cargo to the importer. Payment to the exporter may be delayed due to this circumstances.

    Reply

  10. anonymous

    July 18, 2013 at 10:07 am

    Anonymous writes:Thanks lot

    Reply

  11. anonymous

    November 15, 2013 at 5:11 am

    Easy Ed writes:Please advise Ocean on board Bill of Lading to be endorsed to whom ? Terms of Sale:DDP Factory aka AAA pays prepays shipping door-to-door, cargo insurance 110%. Seller aka SSS, is an Intermediary and Original Beneficiary. Customer of SSS is aka CCC,with their (CCC) bank as Issuing Bank with L/C payment due 15 days receipt of container by CCC. Transferable/confirmed/irrevocable documentary L/C. AAA is 2nd Beneficiary. SSS is Importer of Record responsible for Customs Entry, pay duty and pay taxes through a Customs Broker. To effect payment SSS required to submit 1/3 original B/L, Freight Forwarder's Delivery Receipt + commercial invoice/packing list 1)Is it correct to best to have SSS as Shipper and endorse To Order? 2) I would appreciate any other comments since I may not ask all of the questions out of ignorance and inexperience.Thank you very much Mr. Old Man and Readers.

    Reply

  12. mroldmanvcb

    November 15, 2013 at 3:11 pm

    In fact DDP is not suitable to LC transactions. Under DDP terms the beneficiary must contract at his own expense for carriage of the goods to the named place of destination and the documents requires to be presented under the LC would not include a transport document but a delivery receipt signed applicant or Freight Forwarder’s Delivery Receipt as in your case..If 1/3 BL is required to be presented as in your case, for convenience to all parties concerned, BL should be made to order blank endorsed.

    Reply

  13. nguyentanluan2810

    November 16, 2013 at 9:11 am

    Anh Đức ơi, anh vui lòng tư vấn giúp em về vấn đề này nhé: HÀNG XUẤT KHẨU ĐI NƯỚC BỊ CẤM VẬN Nhà NK ở Jordan mua 1 lô hàng thanh toán theo phương thức L/C at sight , ngân hàng mở L/C là ARAB JORDAN INVESTMENT BANK, ngân hàng thông báo: HSBC Viet Nam . Thức tế, lô hàng này đến nước cuôi cùng là IRAQ nhưng nhà NK muốn dấu do IRAQ bị cấm vận và vì thế họ quy định trên L/C:PORT OF LOADING: HOCHIMINH PORT, VIETNAMPORT OF DISCHARGE: AQABA PORT, JORDANVà trên L/C, không có bất cứ chi tiết nào liên quan tới IRAQ cả. Nhưng họ chỉ dẫn riêng phải bắt buộc thể hiện trên B/L: "CARGO FROM AQABA PORT TRANSIT TO IRAQ UNDER CONSIGNEE'S RISK AND COST" (Phải có câu này họ mới nhận hàng ở Jordan và làm thủ tục kéo containerqua IRAQ được).Trong tình huống này: em làm các chứng từ thể hiện :POL, POD theo đúng như L/C và trên B/L thể hiện câu đó . Anh cho em hỏi vậy điều đó có làm cho chứng từ bị bất hợp lệ không ? Em đã trình chứng từ HSBC và họ từ chối không nhận chứng từ (do liên quan đến IRAQ). Trường hợp khách hàng thanh toán và tiền về thông qua các ngân hàng trung gian của Mỹ sẽ như thế nào ? Trong tình huống này mình nên giải quyết ra sao ?Em cám ơn anh trước nhé !

    Reply

  14. anonymous

    November 16, 2013 at 8:11 pm

    Vasant P. writes:Consider III is importer, BBB is bank opening irrevocable LC, EEE is exporter. BBB has established LC on EEE as applied by III with following BL conditions:1. Complete Set of three bills of lading (negotiable), clean on board, made to order and blank endorsed plus two non negotiable copies indicating LC no. and date, marked freight to pay up to destination port.2. BL should show port consignee as "Officer Transport & Shipping, III", PO no. LC no., Weight etc.3. BL should shipper as "EEE". BL should not show value of consignment.With above conditions, what should be BL instruction from EEE to the shipping line/FF to prepare BL in such a way that there shall not be any issues with LC payment?i.e. exact how the BL should be made and presented to BBB that there shall not be any issues with LC payment?

    Reply

  15. mroldmanvcb

    November 17, 2013 at 8:11 pm

    Originally posted by nguyentanluan2810:

    Anh Đức ơi, anh vui lòng tư vấn giúp em về vấn đề này nhé: HÀNG XUẤT KHẨU ĐI NƯỚC BỊ CẤM VẬN Nhà NK ở Jordan mua 1 lô hàng thanh toán theo phương thức L/C at sight , ngân hàng mở L/C là ARAB JORDAN INVESTMENT BANK, ngân hàng thông báo: HSBC Viet Nam . Thức tế, lô hàng này đến nước cuôi cùng là IRAQ nhưng nhà NK muốn dấu do IRAQ bị cấm vận và vì thế họ quy định trên L/C:PORT OF LOADING: HOCHIMINH PORT, VIETNAMPORT OF DISCHARGE: AQABA PORT, JORDANVà trên L/C, không có bất cứ chi tiết nào liên quan tới IRAQ cả. Nhưng họ chỉ dẫn riêng phải bắt buộc thể hiện trên B/L: "CARGO FROM AQABA PORT TRANSIT TO IRAQ UNDER CONSIGNEE'S RISK AND COST" (Phải có câu này họ mới nhận hàng ở Jordan và làm thủ tục kéo containerqua IRAQ được).Trong tình huống này: em làm các chứng từ thể hiện :POL, POD theo đúng như L/C và trên B/L thể hiện câu đó . Anh cho em hỏi vậy điều đó có làm cho chứng từ bị bất hợp lệ không ? Em đã trình chứng từ HSBC và họ từ chối không nhận chứng từ (do liên quan đến IRAQ). Trường hợp khách hàng thanh toán và tiền về thông qua các ngân hàng trung gian của Mỹ sẽ như thế nào ? Trong tình huống này mình nên giải quyết ra sao ?Em cám ơn anh trước nhé !

    Loi khuyen tot nhat la khong dinh dang den cac quoc gia bi cam van.

    Reply

  16. mroldmanvcb

    November 18, 2013 at 10:11 am

    Originally posted by anonymous:

    Vasant P. writes:Consider III is importer, BBB is bank opening irrevocable LC, EEE is exporter. BBB has established LC on EEE as applied by III with following BL conditions:1. Complete Set of three bills of lading (negotiable), clean on board, made to order and blank endorsed plus two non negotiable copies indicating LC no. and date, marked freight to pay up to destination port.2. BL should show port consignee as "Officer Transport & Shipping, III", PO no. LC no., Weight etc.3. BL should shipper as "EEE". BL should not show value of consignment.With above conditions, what should be BL instruction from EEE to the shipping line/FF to prepare BL in such a way that there shall not be any issues with LC payment?i.e. exact how the BL should be made and presented to BBB that there shall not be any issues with LC payment?

    The BL must be prepared based on the related terms and conditions of the LC:

    – Shipper box: to indicate “EEE”
    – Consignee box: to indicate “TO ORDER”
    – Blank endorsement: EEE just signs and stamps on the back of the BL
    – The body of the BL (Description of goods, special marks and exceptions): to indicate:
    + LC No, Date
    + Freight to pay up to destination port.
    + Port consignee: Office Transport & Shipping, III, PO No

    Reply

  17. srigandaya

    December 6, 2013 at 9:12 am

    Hi Mr old Mani got an LC IRREVOCABLE and underneath it says without our confirmation what does this mean secondly we LC terms are CIF so my supplier going to arrange insurance in this case insurance policy needed to be addressed to the name of my company beneficiary of LC My customer (applicant)or for my supplier( who supply goods and obtain insurance policy from a insurance provider in his country )Thanks

    Reply

  18. mroldmanvcb

    December 6, 2013 at 2:12 pm

    1) WITHOUT (OUR CONFIRMATION) means the advising bank does not add its confirmation to the LC. Where the beneficiary does not believe that the issuing bank can pay, he may insist on an LC confirmed by a reputable bank in his country. The confirming bank will honour or negotiate without recourse upon receipt of complying documents. Confirmed LC helps the beneficiary to eliminate the risk of non-payment by the issuing bank, the applicant's country risk.2) If import is at CIF terms, insurance document is required to be issued in assignable form, i.e., the assured party (beneficiary) would endorse the insurance document to transfer the right to claim compensation for any loss or damaged goods under the insurance document to the applicant.

    Reply

  19. srigandaya

    December 8, 2013 at 10:12 am

    thanks Old Man

    Reply

  20. srigandaya

    December 8, 2013 at 11:12 am

    HI old man as we arrange with our supplier if this insurance policy has been issued by our supplier and the insurance company( in sypplier country ) has addressed the policy to our supplier name it will be a discrepancy to the LC document when we presented this documents to the applicant bank can you kindly suggest solution if anyThanks heaps

    Reply

  21. mroldmanvcb

    December 8, 2013 at 8:12 pm

    The insurance policy should be issued in accordance with the LC requirement. Assuming the LC requires the insurance policy be issued in assignable form, the insurance policy can indicate the beneficiary as the assured party. The beneficiary has to endorse the insurance policy to pass the interest under the insurance policy to the applicant or the holder of the issurance policy.

    Reply

  22. srigandaya

    December 11, 2013 at 9:12 am

    thanks lot for your help

    Reply

  23. anonymous

    December 14, 2013 at 6:12 am

    prasanna malli writes:hI OLD MAN I AM A EXPORTER AND BIT CONFUSED WITH FOLLOWING TERMS SET OUT WITH ONE OF MY LC OPEN IN FAVOR OF US THIS LC WAS ESTABLISHED BY BANK IN SRILANKA ADVISED THROUGHT A BANK IN ITALY BY NEGOTIATION IN ONE OF THE UK BANK (XYZ) IN Uk TO OUR BANK IN UK ( ABC) ACCORDING TO THIS LC PRESENTATION GOES TO ITALYFORM OF D/C : IRREVOCABLE WITHOUT OUR CONFIRMATION (WRITTEN BY NEGOTIATION BANK ( XYZ ) IN UK )DRAFT AT : BANCA UBAE SPA, ROMA.IT- ITALY BY NEGOTIATION180 DAYS FROM SIGHTADDITIONAL CONDITION : (QUOTE) THE CONFIRMING BANK SHOULD DISCOUNT AND PAY BENEFTCIARY ATSIGHT AND CLAIM 180 DAYS AT SIGHTUNDER THIS CONDITION WILL I GET THE MONEY AT SIGHT THNAKS

    Reply

  24. mroldmanvcb

    December 14, 2013 at 10:12 am

    Hi,I guess it is a type of UPAS (Usance Paid At Sight)LC. I ever answered a similar question. Please see the below attachment.Regards,Mr. Old Man———- QUESTIONDear Mr Old Man,I offered to ship goods to Korea stating payment ‘’by irrevocable L/C by sight payment” (to my understanding: cash against documents) and my bank received a L/C with fields: 41D: Available with .. by … ANY BANK BY NEGOTIATION42C: Drafts at ….90 DAYS AFTER SIGHT42A: Drawee – FI BICCHASUS33XXXSuspecting that I will be paid with a Draft payable after 90 days, I asked the buyer to amend L/C, delete above three fields and insert field:41A available with … by … THE NAME OF MY BANK BY PAYMENTwhich was not done. The buyer insists that the Draft at … 90 days refers to his agreement with the issuing bank and that I will be paid upon presentation of docs to the issuing bank.Can you tell me which interpretation is correct?Thanks in Advance and Kind Regards,Tany—————————————————-ANSWERDear Tanny,I cannot give a firm answer without reading the L/C. However, I would like to note you that this type of L/C which is popularly issued by Korean banks is called UPAS L/C (Usance Paid at Sight). By appearance, it looks like an acceptance L/C as it requires time drafts (90 days sight). However, it is in fact a sight L/C as it allows the beneficiary to negotiate the time drafts on at sight basis. That is to say, notwithstanding the fact that the L/C requires a time draft, e.g., 90 days sight, the beneficiary/negotiating bank still receives payment/reimbursement on at sight basis from the nominated reimbursing bank. There has been an arrangement between the issuing bank and the reimbursing bank on UPAS refinancing.The UPAS L/C would indicate in Field 78 (Instructions to the Paying/Accepting/Negotiating Bank) the following instructions:Quote+ BENEFICIARY TIME DRAFT SHALL BE NEGOTIATED ON AT SIGHT BASIS AND SHOULD BE FORWARDED TO THE DRAWEE BANK (i.e., BANK indicated in F.42A ).+ ALL DOCUMENTS MUST BE FORWARDED DIRECTLY TO US (ISSUING BANK) IN ONE LOT BY COURIER SERVICESUnquoteI ever wrote a detailed article about UPAS L/C, but I cannot provide you as it is in Vietnamese. So, please find hereunder LC Sam’s detailed description of the process of UPAS L/C (http://letterofcreditforum.com/content/under-letter-credit ):Quote 1. The applicant and the beneficiary agree on terms of sale where the beneficiary will be paid at sight. 2. The applicant approaches their bank requesting a letter of credit and asking that they be able to finance the transaction for 180 days sight. 3. The issuing bank issues the UPAS letter of credit requiring the draft at 180 days sight drawn on the reimbursing bank and stating that the beneficiary is to be paid at sight with all interest charges for the account of the applicant. The letter of credit will also state the reimbursing bank which is normally the local branch of the issuing bank. The issuing bank will also send a reimbursement authorization with the same payment terms as the letter of credit to the reimbursing bank. The authorization will also request the reimbursing bank to accept and discount the draft as per an agreement between the issuing bank and the reimbursing bank. 4. Given that the beneficiary will be paid on a sight basis, they ship the goods and present the required documents to their local bank. 5. The local bank examines the documents and if the documents are in order proceeds with the reimbursement claim as follows: A. The original documents except for the draft are forwarded to the issuing bank B. The draft plus a cover letter is sent to the reimbursing bank. 6. The reimbursing bank will receive the draft and act in accordance to the reimbursement authorization by accepting and discounting the draft. The face amount of the draft is then sent to the beneficiary's bank (less possible minimal reimbursing fees [usually around USD100.00]) Funds for the payment will come from a long term suspense account of the reimbursing bank. The reimbursing bank will then contact the issuing bank and let them know that the draft was presented, accepted and discounted. They will also let them know the maturity date of the draft and all fees associated with the acceptance and discount of the draft. 7. The issuing bank receives the message from the reimbursing bank and the documents from the beneficiary's bank. The issuing bank examines the documents, and provided the documents comply, advises the applicant of the maturity date and all fees. The issuing bank also provides the applicant with the documents so that the applicant can obtain the goods. 8. The beneficiary's bank, having received the funds from the reimbursing bank deducts any fees and remits payment to the beneficiary. 9. 180 days after sight, the issuing bank provides the reimbursing bank funds to cover the payment of the letter of credit plus the fees for the UPAS draft (the UPAS draft fees may be paid up front, depending on the agreement between the issuing bank and the reimbursing bank). 10. 180 days after sight, the issuing bank collects the draft amount plus all fees from the applicant (the fees may be collected up front depending on the agreement between the issuing bank and the applicant. – It is important to note that the payment from the issuing bank to the reimbursing bank is separate from the payment from the applicant to the issuing bank, as the reimbursing bank is taking on the risk of the issuing bank, and it is the obligation of the issuing bank to pay the reimbursing bank from its own funds even if payment is never received from the applicant. UnquoteHope it is helpful.Best regards,Mr. Old Man

    Reply

  25. anonymous

    December 16, 2013 at 9:12 am

    Anonymous writes:WOW that is the best answer for UPAS process I ever head Thanks lot

    Reply

  26. Jen

    June 3, 2015 at 6:01 pm

    Hi,

    My customer issue an LC with BL stating consigned to applicant and blank endorse. Is this right?
    Does it mean that after we endorse at the back of the BL, issuing bank dont have to do any endorsement at the back of the bl since its is not “TO ORDER OF ISSUING BANK” and my customer will not have any problem with clearing the custom with this BL? A little confuse.

    Reply

    • mroldman

      June 3, 2015 at 9:09 pm

      Hi,

      A BL consigned to a named party is a straight BL that is non-negotiable. Only the consignee indicated in the BL can take up the delivery of the cargo. As it is non-negotiable therefore, it is not transferrable by endorsement.

      Please also note that where the BL is consigned to a named consignee, the carrier may agree to deliver the cargo to that consignee without requesting for submission of original BL provided that the consignee is identified to be the consignee indicated in the BL. So, the beneficiary bears the risk of non-payment when the documents contain discrepancies while the applicant has received the cargo.

      Assuming that the LC requires presentation of BL consigned to the applicant or to the order of the applicant, the issuing bank is not required to endorse the BL.

      Kind regards,
      Mr. Old Man

      Reply

  27. Zahara

    April 19, 2023 at 7:55 am

    Hi Mr Old Man. Big fan here from Malaysia. May I know what could perhaps pose as a risk to Issuing Bank in case BL made out to their (Issuing Bank) order? I see an increasing trend of some banks refusing to have their name under consignee column and rather issue the LC where BL is to be made out to order and endorsed to order of Issuing Bank.??

    Reply

    • Mr Old Man

      April 19, 2023 at 10:32 am

      Not true. As said in my posted answer, in LC transactions the issuing bank would still insist the BL be consigned to its order to control the title to the goods until the applicant has fulfilled his obligations under the agreement between the issuing bank and the applicant for issuing the L/C.
      The issuing bank may be exposed to risks in case the presented documents are complying while the applicant fails to fulfil his obligations for whatever reasons, e.g., going collapse.
      If this is the case, the issuing bank must ask for the court order allowing it to take delivery of the goods or endorse to the order of another party who wishes to buy the goods.

      Reply

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