Uncategorized BL MADE OUT TO ORDER BLANK ENDORSED By Mr Old Man Posted on March 7, 2010 13 min read 31 0 16,063 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr QUERY FROM SIVASMILESMADE TO ORDER AND BLANK ENDORSED.NEED CLARFICATION Lets make the following assumptionxxx 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 —————————————COMMENT FROM MR. OLD MANB/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 ———————— 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 AAAAAConsignee: TO ORDER And at the backside of EACH B/L there to be endorsement made by Company AAAA in the way COMPANY AAAASIGNATURE 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 ————————— MORE COMMENTSFrom 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 …
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
CAN THE ISUING BANK CITE “LATE PRESENTATION” AS A DISCREPANCY SOLELY BASED ON THE DATE OF THE COVER LETTER?
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
CAN THE ISUING BANK CITE “LATE PRESENTATION” AS A DISCREPANCY SOLELY BASED ON THE DATE OF THE COVER LETTER?