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What if the documents are inconsistent with the customs clearance?
Apr 01, 2024|
View:84In actual export business, it is a general rule that the contents of the negotiation documents must be in strict accordance with the provisions of the relevant L/C. When meeting documents inconsistent, customs clearance can not do?
What is document consistency
Consistency of documents All documents provided by the exporter shall be in strict conformity with the requirements of the L/C issued by the issuing bank of the importer, or all documents made and provided by the exporter in connection with the sale of the goods shall be in complete conformity with the requirements of the L/C to be issued by the importer without contradiction.
Key points of document consistency
In order to achieve the consistency of documents, the bank must examine all documents with reasonable care to ensure that the type, content and number of copies of documents submitted by the beneficiary, and even the wording, must be completely consistent with the provisions of the credit. Even if the actual shipment of goods or the content of the contract and confirmation letter are inconsistent with the provisions of the credit, the credit must prevail. Therefore, If the documents negotiated by the bank appear to be in conformity with the credit and the goods are not in conformity with the credit, the bank shall not be liable because it is not aware of them; On THE contrary, IF THE ACTUAL goods are correct and the documents appear to be inconsistent with the provisions of the credit, the bank shall be liable and the applicant may refuse to pay for the redemption of the documents.
How to effectively achieve document consistency
It is very common to settle by L/C at present in international trade. Therefore, Chinese enterprises should strictly abide by the principle of consistency of documents in export business. After receiving the L/C issued by foreign buyers, they should carefully examine the L/C to determine whether the provisions of the L/C are consistent with the contract, whether there are soft clauses in the L/C, and whether the seller has the ability to fulfill all provisions of the L/C.
Once any problem is found, the buyer should be informed to amend the L/C in time, and should not take any chances. If you think there is no problem after examination, you should carefully make documents in accordance with the provisions of the letter of credit, so that the documents are strictly consistent, so as to avoid the occurrence of adverse situations, prevent them from happening before they happen, and effectively protect your rights.
Case study on document consistency
In actual export business, it is a general rule that the contents of the negotiation documents must be in strict accordance with the provisions of the relevant L/C. However, it is sometimes very difficult for the seller to make sure that each negotiation document is exactly in accordance with the contents of the relevant credit.
The following case reflects the fact that the exporter has refused to pay due to the discrepancy in the documents: A company in China and B Company in West Africa have entered into A contract for the sale of cloth. A company sells a batch of cloth to B Company at CIF price, and both parties agree to pay by letter of credit. After the conclusion of the contract, Company B will open A letter of credit in accordance with the contract, which stipulates that the quantity of delivery by Company A is "approximately 50 000 yards" and requires Company A to provide an insurance policy covering W.P. A. and WAR RISK. As it is customary for Company A to insure against all risks and war risks when exporting such goods, Company A has insured against all risks and war risks without careful examination and proof. After Company A has shipped the goods, it will submit documents to the bank for payment. After examining the documents, the bank found them inconsistent and refused to pay.
There are two discrepancies raised by the bank:
1. The coverage in the insurance policy is not in conformity with the provisions of the credit;
2. The bill of lading indicates that the quantity of goods delivered by Company A is 44.800 yards, which is not in conformity with the approximately 50.000 yards stated in the credit. Company A is of the opinion that the coverage of all risks is greater than that of WPA, which is in favor of Buyer B.
As for the quantity of the goods, as the letter of credit states "approximately 50 000 yards" without specifying the amount of increase or decrease, the quantity of 44 800 yards in the bill of lading is also in accordance with the letter of credit. In this case, Company A has covered all risks and war risks, while the letter of credit requires WPA and war risks. Although the coverage of all risks is greater than WPA, which is favorable to Company B, the bank only cares whether the appearance of the documents conforms to the letter of credit, regardless of the rights and obligations of the parties. The bank has the right to refuse payment because the coverage of the insurance policy submitted by Company A does not conform to the provisions of the credit.
As for the discrepancy between the quantity r of goods in the bill of lading proposed by the bank and the provisions of the L/C, according to Article 39 of (UCP500), the words "approximately", "da CAI", "diao" or similar words, when applied to the amount, quantity and unit price of the L/C, shall be interpreted as an increase or decrease of not more than 10% of the relevant amount, quantity or unit price. Therefore, if the quantity of goods in the bill of lading submitted by Company A is between 55.000 and 45.000 yards, it will be consistent with the L/C. But in fact, the quantity of goods indicated in the bill of lading submitted by Company A is 44.800 yards, which is not in accordance with the provisions of the letter of credit, and the bank has the right to refuse to pay.
It shows that in export business, documents are inconsistent due to various reasons, and the beneficiary cannot correct them within the prescribed time limit due to time constraints, thus being at a disadvantage in international trade.
