The Use of “Issued or Endorsed” vs. “Made Out or Endorsed” in Bills of Lading under Letters of Credit”

QUESTION

Dear Mr. Old Man

Hope you are doing well. 

I would like to seek your advice for the following:

I am quite confused with “Issued or Endorsed” and “Made Out or Endorsed” both are the same meaning? 

One of my bank prefer the wording to mention as “made out or endorse”. I prefer to be mentioned “Issued or Endorsed”

 Example clause:

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FULL SET OF THREE SIGNED ORIGINAL NEGOTIABLE AND THREE NON-NEGOTIABLE CLEAN ON BOARD OCEAN BILLS OF LADING 

ISSUED OR ENDORSED TO THE ORDER OF XYZ BANK, MARKED ‘FREIGHT PAYABLE AS PER CHARTER PARTY’

++++

Thank you. 

Angeline Tan

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ANSWER

Hi Angeline,

Good and very professional question. Let’s go through it carefully:

Yes, in most cases for letters of credit (L/C), “issued or endorsed” and “made out or endorsed” can be used interchangeably without causing a discrepancy, because:

• “Issued to order” means the bill is created (issued) in negotiable form.
• “Made out to order” is just another way of describing the form of how it is filled out (same meaning).

In L/C practice under UCP 600 rules (especially articles 19-25), what matters for a bill of lading is that it must be either:

• made out “to order” (negotiable from the start), or
• endorsed to make it negotiable.

In reality, it doesn’t matter much because banks checking documents only care if:

• the bill shows “To order” (or “To order of XYZ Bank”) at issuance (made out that way),
• or if not, it has been properly endorsed later to make it negotiable.

=> So, no discrepancy would arise just because you used one phrase or the other, as long as the document meets the negotiability requirement.

Example in your wording:

• “FULL SET 3/3 ORIGINAL OCEAN BILLS OF LADING ISSUED OR ENDORSED TO THE ORDER OF XYZ BANK”
• or “FULL SET 3/3 ORIGINAL OCEAN BILLS OF LADING MADE OUT OR ENDORSED TO THE ORDER OF XYZ BANK”

Both are acceptable and would be interpreted the same way by banks under UCP 600.

Extra tips for practice:

Some banks prefer “made out or endorsed” because it sounds more “document-driven” (how the B/L appears), while “issued or endorsed” sounds a bit more “carrier action-driven.”

But in SWIFT MT700 L/C formats, both expressions are commonly accepted.

Hope that the issue has been clarified.

Best regards,

Mr. Old Man