1. The document set
Commercial invoice.
Packing list.
Bill of lading.
Certificate of origin.
Certificate of insurance where applicable.
2. Where the requirement is stated
The contract, the letter of credit, the buyer’s order, and the destination’s customs requirements.
In practice, the letter of credit is the most specific and the customs requirement is the most variable.
3. The bank’s approach
The bank applies the principle of strict compliance.
4. The bank’s checks
Presentation period
Documents presented within the credit’s validity and the presentation period.
Amount
Drawing not exceeding the credit amount.
Description
Where the credit describes the goods, the invoice description must correspond.
5. The bank’s reading of the bill of lading
Shipped on board
The date of shipment is the on-board date.
Ports and vessel
As specified in the credit.
Consignee and endorsement
As specified.
Freight notation
Freight prepaid or collect, consistent with the trade term.
Full set
Unless the credit allows otherwise.
6. The trap with a “general” description
A credit describing goods in general terms permits the bill of lading to use a general description, provided it does not conflict with the invoice’s more specific one.
That is one of the few places where differing descriptions are tolerated. It applies to the bill of lading, not to the invoice.
7. The presentation period
Documents must be presented within the period the credit states, or within the default period if the credit is silent.
Late presentation is a discrepancy even where the documents are perfect.
8. A working method
List the credit’s requirements as a field-by-field checklist.
Complete the documents against the checklist.
Ask the bank for a pre-check before presentation.
Record each discrepancy that occurs, with its cause.
9. Closing view
Under a letter of credit, the three documents do not have to be consistent with each other as much as they have to be consistent with the credit.
Those are different tests.
*This article is based on the Uniform Customs and Practice for Documentary Credits and international standard banking practice. Exporters should confirm requirements with the advising bank and the credit terms.*