CASE: SHELLIS Corp.

– Shipping Frozen Food Commodities

SHELLIS Corp., a Jacksonville, USA importer, signed a contract with a Peruvian Exporter named EXPORTS S.A. who would forward
them a lot of Peruvian scallops. Payment was agreed to be done through the issuance of a notified Letter of Credit at sight.
EXPORTS S.A. receives the LC from a bank in Miami/USA for the amount of US$ 130,592.00, by order of SHELLIS Corp, with the
following specifications:

 Notified LC payable at sight

 Documents to be negotiated in Miami (at Issuing Bank counters)
 Goods: Approx. 40,000 pounds of unshelled scallops, frozen (several calipers) en 5 pounds packs – 10 packs per master box.
 B/L consigned to the applicant
 Sale Terms: CFR Halifax, Nova Scotia, Canada
 Goods subject to Canadian Food inspection Agency (Canada) approval
 Last date to present documents: 14 days from B/L
 All expenses are for beneficiary’s account.

At negotiation the bank found the following discrepancies:

 Goods Description in the Invoice differs with LC (unit Price of a size differs from LC, no indication of markings, no indication of
packing in 5 pounds’ bags)
 Invoice doesn’t specify name & address of "packers"
 Number of boxes in the B/L is not in the corresponding column (it is shown right next to the goods description, LC requires to be
shown in the corresponding column)
 Net weight differs between Origin Certificate and B/L.
 A Health Certificate has been presented instead of a Sanitary Certificate.
 The Health Certificate shows shipping date 990307 instead of 990310 and “Paita” is consigned as shipping port instead of “Callao”.
 Health Certificate does not indicate “merchandise good for the human consumption”.

Although the revising bank remarked the discrepancies and notified the beneficiary, he insisted in forwarding the documents to the
Issuing as they were. The beneficiary mentioned to the bank that in the past he had exactly the same situation and the applicant always
accepted the discrepancies.

As instructed the advising bank forwarded the documents by Courier to the Issuing bank with a report of the discrepancies. Later on,
the advising bank requested status of the documents by swift.

QUESTIONS

You are requested to review the case and make your prediction of the possible consequences.
NOTE: IMAGINE THAT THERE WILL BE NO PROBLEM WITH THE CANADIAN FOOD INSPECTION AGENCY TO TAKE THE LOAD
IN.

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Compendium of Cases V – Page 1 of 12

 Case - CHICLAYO
In December, 2000 the Peruvian company Chiclayo SAC celebrates an international sale contract with the Argentine exporter
CARNE GAUCHA LTD where it is found that the mean of payment to be used would be an irrevocable letter of credit, at sight
and confirmed by the Republican Bank of Buenos Aires. The conditions of the Documentary Credit established that the seller
had to, between other documents, present an invoice addressed to the buying company, a Bill of Lading clean on board, freight
prepaid and consigned to the Peruvian company and the corresponding sanitary certificate and origin certificate. The product
to be deliver was 500 kg of first quality Beef.

Nevertheless, these conditions, the seller embarks different merchandise (of minor quality) to the agreed one and it obtains
the documents that the bank was requesting him in agreement to the instructions of the letter of credit and, according to it, the
Republican Bank of Buenos Aires proceeds to pay. When the merchandise arrives to Callao the buyer notices that they had
embarked goods different from those he requested and claims to the Argentine bank and to the Spanish Bank of Lima (issuer
of the letter of credit) the reasons that led them to effect the payment to the seller.

Pregunta: ¿Quién actuó correctamente: el importador Chiclayo SAC o el Banco Republicano de Buenos Aires al haber
dispuesto el pago al vendedor? Argumente su respuesta en base a lo establecido por el folleto 600 de la CCI.
Question: Who acted correctly: the importer Chiclayo SAC or the Republican Bank of Buenos Aires on having arranged to pay
the seller? Prepare your reply based on the articles shown below.

NOTE: Following some of the first articles from UCP 600

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BROCHURE - Publication 600 - ICC

Uniform Customs and Practice for Documentary Credits
Article 1 Application of UCP
The Uniform Customs and Practice for Documentary Credits, 2007 Revision, ICC Publication no. 600 (“UCP”) are rules that apply to any documentary
credit (“credit”) (including, to the extent to which they may be applicable, any standby letter of credit) when the text of the credit expressly indicates
that it is subject to these rules. They are binding on all parties thereto unless expressly modified or excluded by the credit.
Article 2 Definitions
For the purpose of these rules:
Advising bank means the bank that advises the credit at the request of the issuing bank.
Applicant means the party on whose request the credit is issued.
Banking day means a day on which a bank is regularly open at the place at which an act subject to these rules is to be performed.
Beneficiary means the party in whose favour a credit is issued.
Complying presentation means a presentation that is in accordance with the terms and conditions of the credit, the applicable provisions of these rules
and international standard banking practice.
Confirmation means a definite undertaking of the confirming bank, in addition to that of the issuing bank, to honour or negotiate a complying
presentation.
Confirming bank means the bank that adds its confirmation to a credit upon the issuing bank’s authorization or request.
Credit means any arrangement, however named or described, that is irrevocable and thereby constitutes a definite undertaking of the issuing bank to
honour a complying presentation.
Honour means:
a. to pay at sight if the credit is available by sight payment.
b. to incur a deferred payment undertaking and pay at maturity if the credit is available by deferred payment.
c. to accept a bill of exchange (“draft”) drawn by the beneficiary and pay at maturity if the credit is available by acceptance.
Issuing bank means the bank that issues a credit at the request of an applicant or on its own behalf.
Negotiation means the purchase by the nominated bank of drafts (drawn on a bank other than the nominated bank) and/or documents under a
complying presentation, by advancing or agreeing to advance funds to the beneficiary on or before the banking day on which reimbursement is due to
the nominated bank.
Nominated bank means the bank with which the credit is available or any bank in the case of a credit available with any bank.
Presentation means either the delivery of documents under a credit to the issuing bank or nominated bank or the documents so delivered.
Presenter means a beneficiary, bank or other party that makes a presentation.
Article 3 Interpretations
For the purpose of these rules:
Where applicable, words in the singular include the plural and in the plural include the singular.
A credit is irrevocable even if there is no indication to that effect.
A document may be signed by handwriting, facsimile signature, perforated signature, stamp, symbol or any other mechanical or electronic method of
authentication.
A requirement for a document to be legalized, visaed, certified or similar will be satisfied by any signature, mark, stamp or label on the document which
appears to satisfy that requirement.
Branches of a bank in different countries are considered to be separate banks.
Terms such as "first class", "well known", "qualified", "independent", "official", "competent" or "local" used to describe the issuer of a document allow
any issuer except the beneficiary to issue that document.
Unless required to be used in a document, words such as "prompt", "immediately" or "as soon as possible" will be disregarded.
The expression "on or about" or similar will be interpreted as a stipulation that an event is to occur during a period of five calendar days before until five
calendar days after the specified date, both start and end dates included.
The words "to", "until", "till", “from” and “between” when used to determine a period of shipment include the date or dates mentioned, and the words
“before” and "after" exclude the date mentioned.
The words “from” and "after" when used to determine a maturity date exclude the date mentioned.
The terms "first half" and "second half" of a month shall be construed respectively as the 1st to the 15th and the 16th to the last day of the month, all
dates inclusive.
Compendium of Cases V – Page 2 of 12
The terms "beginning", "middle" and "end" of a month shall be construed respectively as the 1st to the 10th, the 11th to the 20th and the 21st to the
last day of the month, all dates inclusive.
Article 4 Credits v. Contracts
a. A credit by its nature is a separate transaction from the sale or other contract on which it may be based. Banks are in no way concerned with or
bound by such contract, even if any reference whatsoever to it is included in the credit. Consequently, the undertaking of a bank to honour, to
negotiate or to fulfil any other obligation under the credit is not subject to claims or defences by the applicant resulting from its relationships with
the issuing bank or the beneficiary.
A beneficiary can in no case avail itself of the contractual relationships existing between banks or between the applicant and the issuing bank.
b. An issuing bank should discourage any attempt by the applicant to include, as an integral part of the credit, copies of the underlying contract,
proforma invoice and the like.
Article 5 Documents v. Goods, Services or Performance
Banks deal with documents and not with goods, services or performance to which the documents may relate.
Article 6 Availability, Expiry Date and Place for Presentation
a. A credit must state the bank with which it is available or whether it is available with any bank. A credit available with a nominated bank is also
available with the issuing bank.
b. A credit must state whether it is available by sight payment, deferred payment, acceptance or negotiation.
c. A credit must not be issued available by a draft drawn on the applicant.
d.
i. A credit must state an expiry date for presentation. An expiry date stated for honour or negotiation will be deemed to be an expiry date for
presentation.
ii.The place of the bank with which the credit is available is the place for presentation. The place for presentation under a credit available
with any bank is that of any bank. A place for presentation other than that of the issuing bank is in addition to the place of the issuing bank.
e. Except as provided in sub-article 29 (a), a presentation by or on behalf of the beneficiary must be made on or before the expiry date.
Article 7 Issuing Bank Undertaking
a. Provided that the stipulated documents are presented to the nominated bank or to the issuing bank and that they constitute a complying
presentation, the issuing bank must honour if the credit is available by:
i. sight payment, deferred payment or acceptance with the issuing bank;
ii. sight payment with a nominated bank and that nominated bank does not pay;
iii. deferred payment with a nominated bank and that nominated bank does not incur its deferred payment undertaking or, having incurred
its deferred payment undertaking, does not pay at maturity;
iv. acceptance with a nominated bank and that nominated bank does not accept a draft drawn on it or, having accepted a draft drawn on it,
does not pay at maturity;
v. negotiation with a nominated bank and that nominated bank does not negotiate.
b. An issuing bank is irrevocably bound to honour as of the time it issues the credit.
c. An issuing bank undertakes to reimburse a nominated bank that has honoured or negotiated a complying presentation and forwarded the documents
to the issuing bank. Reimbursement for the amount of a complying presentation under a credit available by acceptance or deferred payment is due at
maturity, whether or not the nominated bank prepaid or purchased before maturity. An issuing bank's undertaking to reimburse a nominated bank is
independent of the issuing bank’s undertaking to the beneficiary.
Article 8 Confirming Bank Undertaking
a. Provided that the stipulated documents are presented to the confirming bank or to any other nominated bank and that they constitute a complying
presentation, the confirming bank must:
i. honour, if the credit is available by
a. sight payment, deferred payment or acceptance with the confirming bank;
b. sight payment with another nominated bank and that nominated bank does not pay;
c. deferred payment with another nominated bank and that nominated bank does not incur its deferred payment undertaking or,
having incurred its deferred payment undertaking, does not pay at maturity;
d. acceptance with another nominated bank and that nominated bank does not accept a draft drawn on it or, having accepted a draft
drawn on it, does not pay at maturity;
e. negotiation with another nominated bank and that nominated bank does not negotiate.
ii. negotiate, without recourse, if the credit is available by negotiation with the confirming bank.
b. A confirming bank is irrevocably bound to honour or negotiate as of the time it adds its confirmation to the credit.
c. A confirming bank undertakes to reimburse another nominated bank that has honoured or negotiated a complying presentation and forwarded the
documents to the confirming bank. Reimbursement for the amount of a complying presentation under a credit available by acceptance or deferred
payment is due at maturity, whether or not another nominated bank prepaid or purchased before maturity. A confirming bank's undertaking to
reimburse another nominated bank is independent of the confirming bank’s undertaking to the beneficiary.
d. If a bank is authorized or requested by the issuing bank to confirm a credit but is not prepared to do so, it must inform the issuing bank without delay
and may advise the credit without confirmation.
Article 9 Advising of Credits and Amendments
a. A credit and any amendment may be advised to a beneficiary through an advising bank. An advising bank that is not a confirming bank advises the
credit and any amendment without any undertaking to honour or negotiate.
b. By advising the credit or amendment, the advising bank signifies that it has satisfied itself as to the apparent authenticity of the credit or amendment
and that the advice accurately reflects the terms and conditions of the credit or amendment received.
c. An advising bank may utilize the services of another bank (“second advising bank”) to advise the credit and any amendment to the beneficiary. By
advising the credit or amendment, the second advising bank signifies that it has satisfied itself as to the apparent authenticity of the advice it has
received and that the advice accurately reflects the terms and conditions of the credit or amendment received.
d. A bank utilizing the services of an advising bank or second advising bank to advise a credit must use the same bank to advise any amendment thereto.
e. If a bank is requested to advise a credit or amendment but elects not to do so, it must so inform without delay, the bank from which the credit,
amendment or advice has been received.
f. If a bank is requested to advise a credit or amendment but cannot satisfy itself as to the apparent authenticity of the credit, the amendment or the
advice, it must so inform without delay, the bank from which the instructions appear to have been received. If the advising bank or second
advising bank elects nonetheless to advise the credit or amendment, it must inform the beneficiary or second advising bank that it has not been
able to satisfy itself as to the apparent authenticity of the credit, the amendment or the advice.

Compendium of Cases V – Page 3 of 12

 CASE - EXPORT LICENSE
A bank customer made the following questions:

a) With the last export that I had with destination to England I faced the following problem: the Letter of credit required,
among other documents, a copy of the EXPORT LICENSE, which we understood is like a visa for export. We know also
that for England the above mentioned document is not required but It is, the Certificate of Origin, for what we decided to
issue a document with the title EXPORT LICENSE, in a paper with the letterhead of the company. Thinking that the Letter
of credit was not specifying the one who had to issue the above mentioned document and resting on the Art. 14f of the
UCP 600, we proceeded to issue the document.

Documents were negotiated by our bank who proceeded to dispatch them to the Issuing bank. Within a few days the
Correspondent bank notified my bank of a discrepancy with which I was forced to get in touch with my client and to ask
him to accept the discrepancy and that we would pay the discrepancy costs.

b) In other exports it has happened to me that when I present an AirWay Bill or a Bill of Lading, some Banks demand that
the term “Clean on Board” has to be present, either pre printed or added by the shipping company under the justification
that it is required by the LC. We believe that this is required more by a habit or custom than by real need, because it
should be understood that if there is no observation in the A/B or B/L is because the merchandise was delivered in good
order and for that we believe we are covered with Art.27 from the UCP 600.

c) At this point we would like to find out how valid is the UCP 600 from the ICC in regards to banks acting differently or is it
that we are misinterpreting the rules?

QUESTIONS
According to what you have learned in the course and with the help of articles 14f and 27 from UCP 600,
¿What do you consider we should answer the customer for his enquiries a), b) and c)?

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EXTRACT FROM ICC’s PUB 600 – UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS

Article 14 Standard for Examination of Documents

d. Data in a document, when read in context with the credit, the document itself and international standard
banking practice, need not be identical to, but must not conflict with, data in that document, any other
stipulated document or the credit.
e. In documents other than the commercial invoice, the description of the goods, services or performance, if
stated, may be in general terms not conflicting with their description in the credit.
f. If a credit requires presentation of a document other than a transport document, insurance document or
commercial invoice, without stipulating by whom the document is to be issued or its data content, banks will
accept the document as presented if its content appears to fulfil the function of the required document and
otherwise complies with sub-article 14 (d).
g. A document presented but not required by the credit will be disregarded and may be returned to the
presenter.

Article 27 Clean Transport Document

A bank will only accept a clean transport document. A clean transport document is one bearing no clause or
notation expressly declaring a defective condition of the goods or their packaging. The word “clean” need not
appear on a transport document, even if a credit has a requirement for that transport document to be “clean on
board”.

Compendium of Cases V – Page 4 of 12

 CASO EXPORT CON VARIOS EMBARQUES
Following you will find 3 sheets with 2 SWIFT messages of a Letter of Credit in favour of a Peruvian Exporter.
You are asked to identify the following data:
You are requested to identify the data, after making the amendments, to answer the questionnaire:

1. Who is the Issuing Bank and from where? Citybank NY

2. What is the issuing date? 31c 030131

3. What is the validity of the letter of credit and where does it expire? 31D: 030615 4 and half months. ExPIRES AT ANY BANK COUNTER

4. Are there any tolerances in amount and quantity? If yes, do they differ? 45A 5/5 tolerance

5. Who is the advising Bank? BANCO WIESE SUDAMERIS

6. Who is the Negotiating Bank? In what country are the documents negotiated 42D: Citibank, NY, US

7. Are partial shipments allowed? If yes, do you think there might be complications for this reason? 43p: yes, it is allowed, extra

8. Is transshipment allowed? If yes, do you think there might be complications for this reason? 43T: no, it is not allowed,

9. Which is the last date for shipment? 44c 030515

10. Which is the last date for the documents presentation? 48: DOCUMENTS MUST BE PRESENTED FOR NEGOTIATION WITHIN 31
DAYS AFTER TRANSPORT DOCUMENTS/ FORWARDER CARGO RECEIPT ISSUED. (DAYS AFTER TRANSPORT DOCUMENTS) Commented [A1]: Si no se pone los días, asumimos que es 21
11. Graph the terms of the L/C and verify if there is a chance for any complication

12. Is the letter of credit confirmed or notified? 49: notified

13. Who issued the SWIFT message? Citibank, NY,uS

14. Where should the Negotiating Bank send the documents to obtain refund? Citibank

15. What are the terms of payment of the export? 42c at sight , 45A : FOB

16. Review the required documents and mention in the following space your observations:

copy , packing list, 46A: commercial invoice, 3 originals, 1 copy original packing list, inspections certificate
________________________________________________________________

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Compendium of Cases V – Page 5 of 12

------------------------------------------------------ Message Header --------------------------------------------------------
Swift Out : FIN 700 Issue of a Documentary Credit
Sender : CITIHKHXTRD
Receiver : BSUDPEPLXXX
BANCO WIESE SUDAMERIS
LIMA PE
-------------------------------------------------------Message Text ------------------------------------------------------- Commented [A2]: exporting
27: Sequence of Total 1/2
40A: Form of Documentary Credit IRREVOCABLE
20: Documentary Credit Number 6813031011
31C: Date of Issue 030131
31D: Date and Place of Expiry 030615 AT NEGOTIATING BANK COUNTER
51D: Applicant THE DIAMOND KARAT COMPANY, FOR DIVISION DKNY MENS SPORTSWEAR
599 GOTHAM PARKWAY, CARLSTADT NJ 07072
59: Beneficiary – Name & Address TEXTILES FINOS S.A.,
AV. ALBERTO DANSEY 1595, LIMA 01 PERU
32B: Currency Code, Amount Currency : USD (US DOLLAR)
Amount : #325.580.3#
39A: Percentage Credit Amt Tolerance 05/05
41D: Available With...Bv... – Name&Addr ANY BANK, BY NEGOTIATION
42C: Drafts at... SIGHT
42D: Drawee – Name & Address CITIBANK NA, NEW YORK, U.S.A.
43P: Partial Shipments ALLOWED
43T: Transhipment PROHIBITED
44A: On Board/Disp/Taking Charge at/f PERU
44B: For Transportation to... HOLLAND. CALIFORNIA. AND/OR NEW YORK VIA AIR. TRUCK AND/OR VESSEL
44C: Latest Date of Shipment 030515
45A: Description of Goods &/or Services MENS KNIT GARMENTS. SALES TERMS:FOB PERU
STYLE NO. UNITS PRICE EXTENTION
K9950200 2422 USD6.75 USD 16.348.50
K9850749 29015 9.40 272.741.00
K2350042C 632 9.40 5.940.80
K28501120 3250 9.40 30.550.00
QUANTITY VARIANCE OF PLUS OR MINUS 5 PERCENT AT SPECIFIED UNIT PRICE IS ACCEPTABLE
46A: Documents Required
1)SIGNED COMERCIAL INVOICE IN ORIGINAL AND THREE COPIES INDICATING COUNTRY OF ORIGIN.
2)PACKING LIST IN ORIGINAL SHOWING:
FOR FLAT PACK: CONTENTS OF EACH SHIPPING CARTON BY COLOR AND SIZE. SUMARY OF TOTAL
SHIPMENTS BY COLOR AND SIZE.
MEASUREMENT OF SHIPPING CARTONS IN (INCHES OR CM) TOTAL NET AND GROSS WEIGHT IN (LBS OR
KILOS).
3)INSPECTION CERTIFICATE SIGNED BY AN AUTHORIZED REPRESENTATIVE OF REGENT GLOBAL SOURCING
4)FOR SHIPMENT TO THE U.S.A.: COPY OF SINGLE OR MULTIPLE COUNTRY DECLARATION.
5)FOR SHIPMENT TO CALIFORNIA: ORIGINAL FORWARDERS HOUSE AIR WAYBILL AND/OR COPY OF
FORWARDERS CARGO RECEIPT CONSIGNED TO THE DIAMOND KARAT COMPANY. C/O PDSI –2.. 1985 E. VOSTA
BELLA WAY. RANCHO DOMINGUEZ, CA 90220 USA MARKED NOTIFY BARTHCO INTERNATIONAL. INC 11099
SOUTH LA CIENEGA BLVD. SUITE 140, LOS ANGELES, CA 90045, USA INDICATING FREIGHT COLLECT AND
ISSUED BY CAPITAL FREIGHT DEL PERU S.A.
6)FOR SHIPMENT TO NEW YORK. ORIGINAL FORWARDERS HOUSE AIR WAYBILL AND/OR COPY OF
FORWARDERS CARGO RECEIPT CONSIGNED TO THE DIAMOND KARAT COMPANY. 600 GOTHAM PARKWAY.
CARLSTADT. NJ 07072. MARKED NOTIFY BARTHCO INTERNATIONAL. 390 FRANKLIN AVENUE. FRANKLIN
SQUARE. NY 11010. TEL:516.616.2900. INDICATING FREIGHT COLLECT AND ISSUED BY CAPITAL FREIGHT DEL
PERU S.A.
7)FOR SHIPMENT TO HOLLAND: FORWARDERS CARGO RECEIPT CONSIGNED AND SHOWING SHIP TO
DIAMOND KARAT,.HANZEPOORT 30,. 7575 DA OLDENZAAL HOLLAND. ID NUMBER NL 8010.66.566B01. MARKED
NOTIFY SAME. ATTN: ANDREA ZEIMENTZ-KAMP TEL: 31-541-53-1197 INDICATING FREIGHT COLLECT AND
ISSUED BY EXEL GLOBAL LOGISTICS S.A.
8)PHOTOCOPY OF EXPORT LICENSE OR VISAED COMMERCIAL INVOICE (IF APPLICABLE). OTHERWISE.
BENEFICIARY’S SIGNED STATEMENT STATING THAT THE SAME IS NOT APPLICABLE.
9)BENEFICIARY’S SIGNED STATEMENT THAT THE FOLLOWING DOCUMENTS ACCOMPANIED THE SHIPMENT
(FOR AIR SHIPMENTS). 3 COPIES OF THE FORWARDERS HOUSE AIR WAYBILL. ORIGINAL AND 3 OF THE
COMMERCIAL INVOICE AND PACKING LIST, ORIGINAL AND 2 COPIES OF SINGLE MULTIPLE OR NEGATIVE
DECLARATION, ORIGINAL AND 2 COPIES OF QUOTA AND/OR NON-QUOTA CHARGE STATEMENT, ORIGINAL
AND 2 COPIES OF EXPORT LICENSE/VISAED COMMERCIAL INVOICE/SPECIAL CUSTOMS INVOICE (FOR OTHER
THAN HK ORIGIN) (IF APPLICABLE), PHOTOCOPY OF EXPORT LICENSE FOR HK ORIGIN (IF APPLICABLE)
10)BENEFICIARY’S SIGNED STATEMENT THAT THE FOLLOWING DOCUMENTS WERE DELIVERED TO THE
FREIGHT FORWARDER (FOR VESSEL) SHIPMENT: ORIGINAL AND 3 COPIES OF THE COMMERCIAL INVOICE
AND PACKING LIST. ORIGINAL AND 2 COPIES OF THE SINGLE, MULTIPLE OR NEGATIVE DECLARATION,
ORIGINAL AND 2 COPIES OF THE QUOTA AND/OR NON-QUOTA CHARGE STATEMENT, ORIGINAL AND 2 COPIES
OF EXPORT LICENSE/ VISAED COMMERCIAL INVOICE/SPECIAL CUSTOMS INVOICE (FOR OTHER THAN HK
ORIGIN) (IF APPLICABLE). PHOTOCOPY OF EXPORT LICENSE FOR HK ORIGIN (IF APPLICABLE)
47A: Additional Conditions
EXCEPT AS FAR AS OTHERWISE EXPRESSLY STATED. THIS CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS
AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION). INTERNATIONAL CHAMBER OF COMMERCE
PUBLICATION No 500 (UCP) AND AS TO MATTERS NOT ADDRESSED BY THE UCP. SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND APPLICABLE
U.S.FEDERAL LAW.
STANDARD PAYMENT FEES WILL BE DEDUCTED FROM BENEFICIARY’S PROCEEDS
THE COMMERCIAL INVOICE, FORWARDERS HOUSE AIRWAYBILL AND/OR CARGO RECEIPT MUST REFERENCE
THIS L/C NUMBER, STYLE NUMBERS AND DIVISION NAME.
INSURANCE COVERED BY BUYERS

Compendium of Cases V – Page 6 of 12

 FOR SHIPMENT TO HOLLAND, COMMERCIAL INVOICE MUST SHOW ID NUMBER NL8010.66.566B01
1/3 OF ORIGINAL CLEAN OCEAN BILL OF LADING ACCEPTABLE FOR PRESENTATION FOR SHIPMENTS TO
CALIFORNIA, NEW YORK, HOLLAND AND JAPAN AND FCR FOR HONG KONG
AWB/HAWB MARKED FREIGHT PREPAID IS ACCEPTABLE.
PLEASE BE ADVISED THAT A FEE OF USD75.00 (OR EQUIVALENT) WILL BE CHARGED BY US IF DOCUMENTS
THAT CONTAIN DISCREPANCIES ARE PRESENTED FOR PAYMENT/ REIMBURSEMENT UNDER THIS L/C. THE
FEE WILL BE CHARGED FOR EACH SET OF DISCREPANT DOCUMENT AND WILL APPLY WHENEVER WE MUST
OBTAIN APPROVAL FROM OUR CUSTOMER. THE DISCREPANCY FEE WILL BE DEDUCTED BY US FROM
REMITTANCES MADE UNDER THIS L/C EVEN IF THE L/C INDICATES THAT SOME OR ALL CHARGES ARE THE
RESPONSABILITY OF OUR CUSTOMER.
IN THE EVENT THAT DOCUMENTS PRESENTED HEREUNDER ARE DETERMINED TO BE DISCREPANT, WE MAY
SEEK A WAIVER OF SUCH DISCREPANCIES FROM THE APPLICANT. SHOULD SUCH A WAIVER BE OBTAINED,
WE MAY RELEASE THE DOCUMENTS AND EFFECT SETTLEMENT, NOTWITHSTANDING
71B: Charges
ALL BANKING CHARGES OUTSIDE USA ARE FOR THE ACCOUNT OF THE BENEFICIARY
48: Period for Presentation
DOCUMENTS MUST BE PRESENTED FOR NEGOTIATION WITHIN 31 DAYS AFTER TRANSPORT DOCUMENTS/
FORWARDER CARGO RECEIPT ISSUED.
49: Confirmation Instructions
WITHOUT
78: Instr to payg/accptg/negotg Bank
WE HEREBY ENGAGE WITH DRAWERS AND/OR BONA FIDE HOLDERS THAT DRAFTS DRAWN AND NEGOTIATED
IN CONFORMITY WITH THE TERMS OF THIS CREDIT WILL BE DULY HONOURED ON PRESENTATION AND
DRAFTS ACCEPTED WITHIN THE TERMS OF THIS CREDIT WILL BE DULY HONOURED AT MATURITY.
THE AMOUNT OF EACH DRAFT MUST BE ENDORSED ON THE REVERSE OF THIS CREDIT BY THE NEGOTIATING
BANK.
THIS IS THE OPERATIVE INSTRUMENT.
57D: Advise Through' Bank - Name&addr
BANCO WIESE SUDAMERIS, CALLE DIONISIO DERTEANO 102 ESQ. CON MIGUEL SEMINARIO, SAN ISIDRO, LIMA
27, PERU A/C 00014103127203
72: Sender to Receiver Information
WITHOUT ANY RESPONSABILITIES ON OUR PART, WE RELAY ABOVE AUTHENTICATED MESSAGE ON THIS
DOCUMENTARY CREDIT OPENED BY CITIBANK NA NEW YORK
-------------------------------------------------------------- Message Trailer -------------------------------------------------------------

-------------------------------------------------------------- Message Header ------------------------------------------------------------

Swift Out : FIN 701 Issue of a Documentary Credit
Sender CITIHKHXTRD
Receiver : BSUDPEPLXXX
BANCO WIESE SUDAMERIS
LIMA PE
---------------------------------------------------------------Message Text -----------------------------------------------------------
27: Sequence of Total 2/2
20: Documentary Credit Number 5813031011
47B: Additional Conditions
ANY PRIOR COMMUNICATION TO THE PRESENTER THAT WE ARE HOLDING DOCUMENTS AT THE
PRESENTER'S DISPOSAL, UNLESS WE HAVE BEEN INSTRUCTED OTHERWISE BY THE PRESENTER PRIOR TO
OUR RELEASE OF DOCUMENTS.
WHETHER PRESENTED ON A L/C PAYMENT OR APPROVAL AND PAYMENT, ALL DRAFTS AND DOCUMENTS
LISTED HEREIN, MUST BE FORWARDED TO CITIBANK NA, C/O CITIBANK SORT 4000, 3800 CITIBANK CENTRE,
GLOBAL TRADE SERVICE CENTER , FLOOR 1 BUILDING A, TAMPA FL 33510, USA FOR PAYMENT IN A SINGLE
MAILING.
THE NEGOTIATING BANK IS REQUESTED TO SEND DOCUMENTS BY AIRMAIL / COURIER / CABLE NEGOTIATION
DIRECTLY TO CITIBANK NA, C/O CITIBANK SORT 4000, 3800 CITIBANK CENTRE, GLOBAL TRADE SERVICE
CENTER , FLOOR 1 BUILDING A, TAMPA FL 33510, USA.
IN CASE OF ANY CORRESPONDENCE AND / OR ENQUIRIES IN RESPECT OF THIS LETTER OF CREDIT, SUCH AS
AMENDMENT CONSENT, ETC SHOULD BE DIRECTED TO CITICORP FINANCIAL SERVICES LTD. HONG KONG
(C.P.O. BOX 8777. TELEX NUMBER 73243, SWIFT CITIHKHXATRD ) QUOTING L/C REF AND APPROPIATE NAME.
-------------------------------------------------------------- Message Trailer -------------------------------------------------------------

NOTE:
For your information, a HOUSE AIR WAY BILL - HAWB is a document issued by freight forwarders in the case of consolidated goods to be
shipped grouped for air freight. It is considered equivalent to the AWB in documentary operations, whenever it is transparent within the
document that the issuer assumes responsibility as a carrier or is acting as an agent of the appointed carrier.

Compendium of Cases V – Page 7 of 12

 CASE DISCREPANCIES IN HONG KONG

Imagine that you are the Documentary Credit specialist of the Advising Bank. Today you have received a
document presentation from a beneficiary.
Assume that the remittance letter was in order, that all the documents were received in the required amount of
originals and copies and with the proper signatures in those documents that were supposed to be signed.
You are given the Documentary Credit and Bill of Lading and we request that you identify 5 discrepancies with
the help of the checklist shown below:

DISCREPANCIES CHECKLIST Commented [A3]: not the same information

A. Late presentation 

B. Transshipment effected when not allowed 

C. Dirty or claused Bill of Lading  Commented [A4]: es cuando la mercancía presenta daños

D. Late shipment x

E. On board notation missing 

F. Shipped on Deck x

G. Transport Document doesn’t identify the forwarder x Commented [A5]: no especifica la empresa (USA EXPORTER)

H. Unauthenticated Alterations 

I. Not signed as per requirement of the credit or UCP x

J. Ports of shipment not specified in the credit x

MIISSING INFO: DECLARED VALUE OF THE GOODS X

INCOMING SWIFT MT700

FROM ISSUING BANK ASIA ISSUING BANK, 4 HONK KONG PLAZA, H. K.
TO ADVISING BANK USA ADVISING BANK Commented [A6]: advising bank = exporting
27: SEQUENCE OF TOTAL 1/1 issuing bank= importing
40A: FORM OF DOCUMENTARY CREDIT IRREVOCABLE
20: DOCUMENTARY CREDIT NUMBER 2008.BC.208
31C: DATE OF ISSUE 13 SEPTEMBER XXXX
31D: DATE AND PLACE OF EXPIRY 31 DECEMBER XXXX USA
50: APPLICANT ASIAN DEVELOPMENT CO H.K. CENTRAL SQUARE, H.K.
59: BENEFICIARY USA EXPORTER.
NEW YORK, USA
32: CURRENCY AND AMOUNT USD 550,000.00
41A: AVAILABLE WITH/BY USA ADVISING BANK
BY PAYMENT
43P: PARTIAL SHIPMENTS NOT ALLOWED
43T: TRANSHIPMENT NOT ALLOWED
44A: ON BOARD/DISP/TAKING CHARGE NEW YORK, N.Y.
44B: FOR TRANSPORTATION TO HONG KONG
44D: SHIPMENT PERIOD MIDDLE OF NOVEMBER XXXX
45A: DESCRIPTION OF GOODS AND/OR 5 UNITS CONSTRUCTION MACHINERY AND SPARE PARTS
SERVICES PURCHASE ORDER No. 22550. C&F HONG KONG
46A: DOCUMENTS REQUIRED
+SIGNED COMMERCIAL INVOICE IN 3 FOLD INDICATING THE SERIAL NUMBER OF THE MACHINE AND
CERTIFYING THAT THE MACHINE IS NEW AND NOT USED BEFORE.
+FULL SET CLEAN ON BOARD OCEAN B/L TO BUYERS NOTIFY SAME AND MARK FREIGHT PAID
47A: ADDITIONAL CONDITIONS
DOCUMENTS ISSUED PRIOR TO THE ISSUE DATE OF THIS DOCUMENTARY CREDIT ARE ACCEPTABLE
ALL DOCUMENTS MUST SHOW THE NUMBER OF THIS DOCUMENTARY CREDIT.
GOODS MUST BE OF USA ORIGIN
71B: CHARGES ALL BANKING CHARGES AND COMMISSIONS ARE FOR
ACCOUNT OF APPLICANT.
48: PERIOD FOR PRESENTATION 10 DAYS
49: CONFIRMATION INSTRUCTIONS WITHOUT
78: INSTR TO PAYG/ACCPTG/NEGOTG BANK WE SHALL REIMBURSE YOU IN ACCORDANCE WITH
YOUR INSTRUCTIONS
PROVIDED THAT DOCUMENTS IN STRICT CONFORMITY
WITH THE TERMS AND CONDITIONS OF THIS DOCUMENTARY
CREDIT ARE DULY PRESENTED AT YOUR
COUNTERS.
72: SENDER TO RECEIVER INFORMATION PLEASE ACKNOWLEDGE RECEIPT BY SWIFT MT730.

***MESSAGE PASSED AUTHENTICATION***

Compendium of Cases V – Page 8 of 12

 CONFREIGHT MARINE LINE COMBINED TRANSPORT BILL OF
LADING

Shipper B/L No: CFR06/20588

M & M Shipper
NY USA GENERAL AGENTS
Consignee
TO ASIAN DEVELOPMENT CO H.K.
CENTRAL SQUARE, H.K.

Notify ASIAN DEVELOPMENT CO. RECEIVED the goods in apparent good order and as far
as ascertained reasonable means of checking, as specified
H. K. Central Square below unless as specified below unless otherwise stated.
H. K. The carrier, in accordance with the provisions contained in
the document:
a) undertakes to perform or to procure the performance of
the entire transport from the place at which the goods are
taken in charge to the place designated for delivery in this
document, and
b) Assumes liability as prescribed in this document for such
transport. One of the B/Ls must be surrendered duly
endorsed in exchange for the goods or delivery order.
IN WITNESS whereof three (3) original B/Ls have been
signed. If not otherwise stated below, one of which being
accomplished the other(s) to be void.

Intended Vessel Port of loading Place of receipt

MV SKY 33 B YORKTOWN VA

Port of discharge Place of delivery Freight payable at Number of original

B/L’s

HK, HK YORKTOWN 3/THREE

Marks and Numbers Number and Kind or Packages – Gross Volume

Description of Goods Kg. Cbm.

ASIAN DEVELOPMENT CO 5 UNITS CONSTRUCTION MACHINERY AND SPARE PARTS

H. K. CENTRAL SQUARE PURCHASE ORDER No. 22550
H. K.

ORIGINAL
SHIPPED ON BOARD MV
SKY XXXX-11-21

Loaded into container(s) GATU 0357553

No(s) SEAL NO. 22098 For delivery of cargo please apply to:
FREIGHT PAID
ON DECK SHIPMENT

Declared Value of the goods (see clause 11) of Place and date of issue xxxxx-11-24
US$

Shipped on board the vessel AS AGENTS FOR THE CARRIER

Date XXXX-11-21 Signed by J. Smith J.JONAS
NOTE
The merchant’s attention is called to the fact that according to Clauses 11 and 13 of the B/L the liability
Of the Carrier is, in most cases, limited in respect of the loss of or damage to the goods and delay.

Compendium of Cases V – Page 9 of 12

 CASE: PORT OF DISCHARGE - ANY PORT – Locating Discrepancies

In the following 2 pages you will find: a very small SWIFT message as well as a sample of a Bill of Lading.
You are requested to act as a bank employee whose main function is to locate discrepancies in export documents.
Kindly compare each detail of the LC with those on the B/L and write in the space provided below all the discrepancies
that you find.

Missing signature in the B/L

Missing value of the good in the B/L
In 59 says address Los olivos, San Isidro. But in the B/L says Los Castaños
B/L should specify more deatails about the fishmeal.Like

USD 950000 = 3300 MT

TOLERANCE: 5% = 5/5
MAX AMMOUNT= 997500= 3465 MT

3% se paga el balance

Compendium of Cases V – Page 10 of 12

LOC.ID:TABL INCOMING SWIFT MSG-700 TEMPLATE-8888151515 07/05/99
{1:F01BCPLPEPLAXXX4030023685} {2:07001648990707ISSBANKXXX5444444
FROM: THE ISSUING BANK LTD, SHANGHAI, CHINA
** 27 SEQUENCE OF TOTAL 1/1
** 40 FORM OF DOCUMENTARY CREDIT IRREVOCABLE
** 20 DOCUMENTARY CREDIT NUMBER 010101
** 31C DATE OF ISSUE OF THE L/C 990507
** 3ID DATE AND PLACE OF EXPIRY 990707PERU
** 50 APPLICANT EMPRESA X, SHANGHAI, CHINA
** 59 BENEFICIARY EMPRESA Y LOS OLIVOS 1000, SAN ISIDRO - LIMA 27/PERU
** 32B CURRENCY CODE, AMOUNT USD950,000.00
** 39 AMOUNT SPECIFICATION 05/05
** 41 AVAILABLE WITH ... BY... ANY BANK BY NEGOTIATION
** 42C DRAFTS AT... SIGHT FOR FULL INVOICE VALUE OF GOODS.
** 42A OR 42D DRAWEE ISSUING BANK
** 43P PARTIAL SHIPMENTS NOT ALLOWED
** 43T TRANSSHIPMENT NOT ALLOWED
** 44A LOADING ON BOARD/DISPATCH/TAKING IN CHARGE AT/FROM…
CHIMBOTE. PERU,
** 44B FOR TRANSPORTATION TO… ANY CHINA PORT
** 44C LATEST DATE OF SHIPMENT 990607
** 45 SHIPMENT OF (GOODS)
3300 MT PERUVIAN F.A.Q. FISHMEAL FAS CHIMBOTE, PERU
PACKING: IN BULK
** 46 DOCUMENTS REQUIRED
+ SIGNED DRAFT IN DUPLICATE.
+ COMMERCIAL INVOICE IN TRIPLICATE
+ FULL SET OF ORIGINAL SIGNED SHIPPED CLEAN ON BOARD OCEAN BILLS OF LADING CONSIGNED TO
ORDER, BLANK ENDORSED, MARKED FREIGHT PREPAID AND NOTIFY APPLICANT.
+ SIGNED ORIGINAL CERTIFICATE OF SAMPLING/ANALYSIS ISSUED BY SGS SHOWING THE ACTUAL
AVERAGE CONTENT AT THE TIME OF LOADING.
+ BENEFICIARY'S FAX ADDRESSED TO APPLICANT ADVISING FULL SHIPMENT DETAILS WITHIN 2 WORKING
DAYS AFTER SHIPMENT DATE. THE RELATIVE FAX TRANSMISSION REPORT REQUIRED.
** 47 ADDITIONAL CONDITIONS
USD245.00 WILL BE DEDUCTED FROM THE PROCEEDS FOR EACH PRESENTATION OF DISCREPANT
DOCUMENTS UNDER THIS CREDIT.
5 PERCENT MORE OR LESS IN QUANTITY AND AMOUNT ALLOWED.
INSURANCE TO BE COVERED BY ULTIMATE BUYER.
DOCS MUST BE PRESENTED WITHIN 30 DAYS FROM B/L DATE BUT WITHIN THE VALIDITY OF THE CREDIT.
FREIGHT CHARGES TO BE PAID BY APPLICANT OUTSIDE DC TERMS.
ALL BANKING CHARGES INCLUDING ADVISING, NEGOTIATION AND REIMBURSEMENT FEE ARE FOR
BENEFICIARY'S ACCOUNT.
** 49 CONFIRMATION INSTRUCTIONS WITHOUT
** 78 INSTRUCTIONS TO THE PAYING/ACCEPTING/NEGOTIATING BANK
ON RECEIPT OF DOCUMENTS CONFORMING TO THE TERMS OF THIS CREDIT, WE UNDERTAKE TO REIMBURSE
YOU IN THE CURRENCY OF THIS DOCUMENTARY CREDIT IN ACCORDANCE WITH YOUR INSTRUCTIONS. THE
AMOUNT OF EACH DRAFT MUST BE ENDORSED HERE ON. ALL DOCUMENTS ARE TO BE DESPATCHED IN ONE
LOT BY COURIER SERVICE TO US

*** RECORD 188150300000000000 WRITTEN TO FILE LCOLOC ***

Compendium of Cases V – Page 11 of 12

BILL OF LADING NRO. EGG-0010198
BILL OF LADING PORT TO PORT SHIPMENT

COMPAÑIA DE NAVEGACION ALTAMAR DE C.A.

SHIPPER (NAME AND ADDRESS):
EMPRESA Y
LOS CASTAÑOS 1000
SAN ISIDRO- LIMA 27/PERU

CONSIGNEE (NAME AND FULL ADDRESS)

TO ORDER

NOTIFY PARTY (NAME AND FULL ADDRESS)

EMPRESA X
SHANGHAI - CHINA

PORT OF LOADING / CHIMBOTE-PERU PORT OF DISCHARGE / SHANGHAI-CHINA

OCEAN VESSEL: SS/ MARINERO

MARKS AND NUMBERS DESCRIPTION OF PACKAGES AND GOODS WEIGHT

XXXX SAID TO CONTAIN: GROSS/NET/WEIGHT

FISHMEAL FISHMEAL 3300 MT
CHINA

CONTAINER CLEAN ON BOARD

CCU-SNA111000 FREIGHT PREPAID
FCL/FCL

SHIPPED ON BOARD
06/07/99
EGG COMPAGNIES PERU AS AGENT
ON BEHALF OF COMPAÑIA DE NAVEGACION
ALTAMAR DE C A. AS CARRIER

FREIGHT CHARGES: PREPAID

PLACE ISSUED : CHIMBOTE/PERU

DATE ISSUED : JUN. 07, 1999

EGG COMPAGNIES PERU AS AGENT

ON BEHALF OF COMPAÑIA DE NAVEGACION
ALTAMAR DE C A. AS CARRIER

Compendium of Cases V – Page 12 of 12