Finance of International Trade
that cover is for the CIF value of the consignment plus 10%
that it is issued in the same currency as the credit
the name of the agent responsible for handing any claims.
Finally, it must be in a form which enables it to be transferred by
To transport goods around the world by sea, air, road, rail and inland
waterways involves numerous types of carriers who issue a variety of
documents evidencing receipt and detailing points of despatch, destination
and mode of transport. The main documents which are regularly presented
under documentary credits are:
bills of lading
marine or ocean
short form (blank back)
received for shipment
non-negotiable sea waybills
rail, road and inland waterway consignment notes
parcel post receipts.
Of greatest importance to banks financing the movement of goods is their
ability to obtain a title to them during transport and to transfer that title to
a buyer upon liquidation of the finance. Only one transport document
provides that security and that is the bill of lading.
The marine or ocean bill of lading performs a number of functions. It is
a receipt for the goods detailed on its face, a contract of carriage, a
negotiable document and evidence of the shipment of certain goods from
The irrevocable documentary credit
a named port to a named port of destination. It should incorporate the
following additional details:
shipping company’s name
carrying vessel’s name
marks and numbers of packages
general description of goods
name of consignee
date of loading on board
name of notify party
number of original bills in the set
signature of ship’s master or shipping company’s agent
an indication of whether freight has been paid or is to be paid at
contractual conditions of carriage (on reverse).
The bill of lading, because of its protective properties, is the most likely
document to be rejected by banks due to faults in its issue, detrimental
clauses which carriers add when packages appear damaged and presenta-
tion of incomplete sets (2 out of 3 originals). It is only a clean bill of lading
if no detrimental clause appears on its face.
Multimodal bills of lading are issued to cover the transport of goods by at
least two different modes from a point of departure by road, rail, barge or
sea-going vessel for carriage to their destination. The essential feature of
this document, required to make it acceptable within the terms of UCP500,
is that at least one stage of the journey must be by sea.
Container bills of lading: nowadays many consignments by sea are made
in containers. The container is packed at a port or an inland place of
reception and may include goods from more than one exporter consigned
to several buyers at destination. This is a very secure method as containers
are specially sealed and coded to prevent theft and pilferage. The bill of
lading is a receipt for the container at place of receipt and operates on a
port-to-port basis, except that it can cover the goods from port of
destination to an inland container depot; it is a full document of title.