A reader recently sent Mr. Old Man an interesting question about quantity tolerance under an L/C. The issue sounds simple at first glance, but in practice it often creates confusion between sales contract terms, the wording of the credit, and the application of UCP 600 Article 30. Here is the question and discussion. Question Dear Mr. Old Man, I would …

One area that occasionally causes confusion under UCP 600 is the relationship between Article 18(b) and Article 30(a). Many practitioners assume that a commercial invoice may exceed the LC amount only where the credit expressly allows a tolerance, or where the words “about” or “approximately” are used in connection with the credit amount under Article 30(a). However, Article 18(b) provides …

Lading (CPBL), and freight notations on the bill of lading. If a credit is issued under CFR terms, should the bill of lading necessarily indicate “Freight Prepaid”? And if the LC instead requires “Freight Payable as per Charter Party”, would that create a discrepancy or inconsistency with the stated Incoterm? This Q&A discusses the difference between documentary compliance under UCP …

A reader recently sent Mr. Old Man an interesting question about trade finance and financial statements. It sounds simple at first… but the topic can actually become quite broad if discussed in detail Here is a short and practical answer. Question Dear Mr. Old Man, This may be a genuine question, but would you kindly explain how to determine whether …

In the old days, documents were usually dispatched by the nominated bank itself. But today, some banks allow customers or overseas units to access trade finance systems, print the covering schedule, and send documents directly to the issuing bank. So what happens if the documents are lost in transit? Does UCP 600 article 35 still protect the nominated bank? An …

INTRODUCTION In documentary credit practice, issuing banks sometimes issue discrepancy notices too quickly, only to later realize that the alleged discrepancies are not valid under UCP 600 or ISBP. But what happens if the applicant has already relied on that first refusal notice and now refuses to reimburse the issuing bank after the bank changes its mind and decides the …

Standby practitioners who move from the world of commercial documentary credits into standby credits governed by ISP98 often encounter an interesting question: Does a “confirmer” under ISP98 operate the same way as a “confirming bank” under UCP 600? At first glance, the concepts appear almost identical. However, Rule 1.11(c)(i) of ISP98 sometimes creates confusion because it states that a confirmer …

In documentary credit practice, a few words in an LC can create major compliance issues — especially in triangular trade transactions where the beneficiary, supplier, and shipment origin are all located in different countries. One such phrase is: “Certificate of Origin issued by the Chamber of Commerce of the country of exportation.” At first glance, this may sound straightforward. But …

In international trade, many exporters and importers casually say: “CIP requires All Risks insurance.” Technically, that is not entirely wrong. But from an insurance and trade finance perspective, “All Risks” and ICC A are not perfectly identical terms. This distinction becomes important when a cargo claim is rejected because of one of the many exclusions hidden in the policy wording. …

A small wording difference between article 20 and article 23 of UCP 600 often raises an interesting technical question among trade finance practitioners. For bills of lading, UCP 600 does not expressly require the document to indicate a date of issuance. However, article 23 clearly states that an air transport document must indicate the date of issuance. Why the difference? …