Glossar Trade & Export Finance
Freight document that indicates goods have been received for shipment by rail. A
duplicate is given to the shipper as a receipt for acceptance of the goods (also
called duplicate waybill). See UCP Art. 28. See also under «CIM».
The bank must examine all stipulated documents with reasonable care to
determine whether or not they appear on their face to be in compliance with the
terms and conditions of the documentary credit. The documents may not be
inconsistent with one another. Banks do not assume any liability or responsibility
for the form, sufficiency, accuracy, genuineness, falsification or legal effect of any
documents nor do they assume any liability or responsibility for the description,
quantity, weight, quality, condition, packing, delivery, value or existence of the
goods represented by any documents. See UCP Art. 13 and 15.
The advising bank is required to take reasonable care to check the apparent
authenticity of the documentary credit which it advises. See UCP Art. 7.
Confirms only receipt of the goods but not their actual loading on board. This type
of bill of lading can be accepted under documentary credits only if this is expressly
permitted or if the credit stipulates a document covering multimodal transport.
Otherwise, «received for shipment» bills of lading must show an additional «On
board» notation in order to be accepted as an ocean bill of lading. See UCP Art. 23
In documentary transactions the negotiating bank reserves the right of recourse to
the presenter of the documents if the issuing bank does not reimburse it, provided
that the negotiating bank has not confirmed the credit.
Clauses in letters of credit which allow advances to the beneficary prior to the
shipment of goods. The wording of the clauses stipulates the conditions of such
In guarantees, this clause states the pre-conditions for the reduction of the
guarantor's (bank's) liability. Example: With each payment under this guarantee
our liability will be reduced."
An advising bank has the right to refuse the request by the issuing bank to add its
confirmation to the documentary credit but must advise the issuing bank of its
decision. See UCP Art. 9 c i.+ ii.
If the issuing, confirming or nominated bank, following examination, decides to
refuse the documents, it must inform the presenter without delay, but not later than
seven bank working days following receipt of the documents. See UCP Art. 13 b
The bank named in the documentary credit from which the paying, accepting or
negotiating bank may request cover after receipt of the documents in compliance
with the documentary credit. The reimbursing bank usually does not have a
commitment to pay unless it has confirmed the reimbursement instruction. The
issuing bank is not released from its commitment to pay through the nomination of
a reimbursing bank. If cover from the reimbursing bank should not arrive in time,
the issuing bank is obliged to pay (also any accrued interest on arrears). See UCP
Goods are often consigned to the bank of the importer/buyer. In order that these
shipments can be delivered to the importer/buyer, the bank instructs the
forwarder/carrier accordingly. In such cases, the importer/buyer should be aware
of his obligation to honour the relative documents when presented, as the goods
are already in his possession.
Variant 1 (bank guarantee):
Guarantee to secure compliance with the rental agreement by the tenant. Takes
the form of an abstract guarantee or surety (domestic).
Variant 2 (so-called rental surety or blocked account):
Cash deposit to secure compliance with the rental agreement by the tenant. The
tenant has the right to dispose of the net interest on the deposit.
Duplication and copying systems. The UCP contain explanations on the
acceptability of documents which were prepared using reprographic systems. See
under «Original documents».
Documentary credit where availability is restricted to a designated bank.
This type of documentary credits must be clearly marked by the issuing bank as
«revocable». They may be revoked at any time until their utilisation (see under
«Availability under documentary credits»). Due to the low level of security they are
extremely rare in practice. See UCP Art. 6 and 8.
With a revolving documentary credit the issuing bank undertakes to reinstate the
credit after each drawing or time period (e.g. monthly). The number of utilisations
and the period of time within which these must take place are specified in the
documentary credit. The revolving documentary credit is used when a purchaser
wishes to have certain partial quantities of the ordered goods delivered at
specified intervals (multiple delivery contract). Such credit may be cumulative or
non-cumulative. See UCP Art. 41.
Risk of loss or delay of documents, letters, small packages, etc. in transit. If a
documentary credit is available at the issuing bank, the beneficiary of the
documentary credit (exporter) bears the risk of loss in transit of the documents
sent to the issuing bank. This also applies even if the documents are forwarded
via the advising bank. Possible consequences:
costs for preparing duplicates
delays in payment
expiry of the period for presentation of documents (loss of payment under the documentary credit).
The exporter can exclude this risk by requiring the documentary credit to be available for payment, negotiation or acceptance at the counters of the advising bank.
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