Document credit is an International trade procedure in which the credit worthiness of an importer is substituted by the guaranty of a bank for a specific transaction. Under documentary credit arrangement (also called letter of credit arrangement) an issuing bank (usually in the importer’s or buyer’s country) undertakes to pay for a shipment, provided the exporter (beneficiary) submits the required documents. These documents almost always include a clean bill of lading or air waybill, certificate of insurance, certificate of origin commercial invoice, and certificate of origin. To establish a letter of credit in favor of the seller or exporter (called the beneficiary) the buyer (called the applicant or account party) either pays the specified sum (plus service charges) up front to the issuing bank, or negotiates credit within a specified period. In the US this arrangement is called “commercial letter of credit.”
RATIONALE OF DOCUMENTARY CREDIT
Documentary Credit
Document credit is a crucial international trade procedure where a bank guarantees the creditworthiness of an importer for a specific transaction This arrangement, known as a letter of credit, involves an issuing bank in the buyer's country committing to pay the exporter, or beneficiary, upon receipt of required documents Essential documents typically include a clean bill of lading or air waybill, insurance certificate, commercial invoice, and certificate of origin To establish this letter of credit, the buyer, referred to as the applicant or account party, either pays the specified amount along with service charges upfront to the issuing bank or negotiates credit within a designated timeframe In the United States, this type of arrangement is referred to as a "commercial letter of credit."
- A letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount.
In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.
+ A legal document: any letters of credit which are not in documents are invalid A credit must be made by telegram, telex, SWIFT.
+ A credit is a commitment of payment or an acceptance of payment, not a promise.
+ Payment basis of a credit is documents.
+ 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 whatever to it is included in the credit.
1.2 Type of letter of credit:
Letters of credit are available in several types, catering to both international trade and local transactions Understanding the different kinds of letters of credit is essential for selecting the right option and grasping their functionalities.
- Stand-by Letter of Credit
A stand-by letter of credit differs from traditional letters of credit by providing payment in the event of a failure to fulfill a contractual obligation, rather than facilitating a transaction It serves as a form of compensation when the beneficiary can demonstrate that they did not receive what was promised These letters are useful for guaranteeing payment and ensuring satisfactory performance of services.
- Confirmed (and Unconfirmed) Letters of Credit
When a buyer secures a letter of credit, it is typically arranged through their issuing bank To ensure the legitimacy of the letter of credit, the seller often seeks verification from a bank located in their own country.
To enhance security in transactions, sellers often request that letters of credit be 'confirmed' by a second bank This confirmation means that the second bank guarantees payment, ensuring that the seller receives funds even if the issuing bank defaults Consequently, a confirmed letter of credit offers greater protection compared to an unconfirmed one.
A confirmed letter of credit involves a trusted bank guaranteeing payment to the exporter, addressing concerns about the reliability of the issuing bank Exporters often prefer confirmation from a bank in their home country to ensure payment security, especially if they are unfamiliar with the issuing bank If the issuing bank defaults on payment despite the exporter fulfilling all letter of credit conditions, the confirming bank is obligated to pay the exporter and will seek reimbursement from the issuing bank afterward.
- Back to Back Letters of Credit
A back-to-back letter of credit facilitates transactions between buyers and sellers by utilizing two separate letters of credit, ensuring that each party is compensated individually In this arrangement, the intermediary receives payment from the buyer, while the supplier is paid by the intermediary The first irrevocable credit serves as collateral for the second, with the advising bank of the first letter acting as the issuing bank for the second This structure allows the final buyer and the intermediary to utilize the initial letter of credit, while the intermediary and supplier operate under the subsequent letter of credit linked to the first.
A revolving letter of credit facilitates multiple payments between a buyer and seller engaged in ongoing transactions, eliminating the need for a new letter for each deal This financial instrument enables businesses to utilize a single letter of credit for various transactions until its expiration, which typically lasts up to one year.
- At Sight Letter of Credit
Payment via a sight letter of credit is initiated immediately when the beneficiary presents the required documents to the designated bank The bank then has a limited timeframe to verify that these documents comply with the stipulations outlined in the letter of credit This method of payment is the fastest for sellers, often allowing exporters to receive their funds within 7 to 10 business days.
- Deferred Payment Letter of Credit
A deferred payment letter of credit allows for a delay in payment after document acceptance, benefiting buyers more than sellers This type of credit, also referred to as term or usance letters of credit, ensures that sellers receive cash only after an agreed-upon period, making it a more advantageous arrangement for buyers.
- Red Clause Letter of Credit
A red clause in a letter of credit allows the beneficiary to receive cash upfront, enabling them to access an unsecured loan as part of the credit arrangement This advance facilitates the seller or beneficiary in purchasing, manufacturing, or shipping goods to the buyer, ensuring a smoother transaction process.
A credit that is only effective when its counter credit is opened Reciprocal Letter of credit is often used in barter, and process method.
A revocable letter of credit can be altered or canceled by the issuing bank at any time and without the seller's consent, offering no protection to the beneficiary Due to this lack of security, revocable letters of credit are seldom utilized, as all letters of credit under UCP600 are irrevocable.
An irrevocable letter of credit (ILOC) is a bank-issued document that guarantees payment for goods and services on behalf of the requester Unlike other types of letters of credit, an ILOC cannot be altered or canceled without the explicit consent of all parties involved, ensuring security and trust in financial transactions.
Irrevocable letters of credit (ILOCs) have become the standard in financial transactions, as they offer the security that beneficiaries require, unlike revocable letters of credit With ILOCs, the issuing bank cannot alter the terms even if the requester has second thoughts It is important to remember that ILOCs are valid only for a specific duration and will expire at a predetermined time.
- Irrevocable without recourse Letter of credit
An irrevocable letter of credit (L/C) issued by a bank ensures that once an organization has paid for the export, it cannot reclaim the funds for any reason When utilizing this type of L/C, the exporter must include the phrase "Without recourse to drawers" in the documentation.
- Irrevocable Transferable Letter of Credit
Transferable letters of credit are particularly well adapted to the requirements of international trade A transferable letter of credit can be passed from one
Commercial documents in documentary credit method
A commercial invoice serves as the central document in a transaction, issued by the seller to the buyer following the delivery of goods This invoice acts as a payment request, detailing the total amount due for the goods provided.
It is the primary document used by most foreign customs agencies for import control, valuation, and duty determination.
- The purpose of a commercial invoice:
In fact, one of the main purposes of the commercial invoice is for payment documents: the seller claiming the buyer.
According to function, commercial invoices can be classified into:
+ Provisional Invoice: is used for preliminary payment for goods in some cases such as: temporary price, partial payment (for partial delivery contract).
+ Final Invoice: the last invoice, usually sent after a project or order is completed, which includes the total amount of money that is still owed.
+ Detailed Invoice: is an invoice to analyze in detail all parts of the price.
A proforma invoice is a preliminary document issued by a seller to a buyer before the shipment or delivery of goods, outlining the type and quantity of items, their estimated value, weight, and transportation costs Often utilized for customs purposes or as an initial quotation, proforma invoices differ from standard invoices as they do not serve as a request for payment.
+ Name and addresses of the seller and the buyer.
+ Name of the goods or the services.
+ Precise denomination and quantity of the goods.
+ Unit price and total amount of the goods in the agreed currency.
+ Means and conditions of payment.
+ Number and kind of packages, marking.
The delivery terms of goods are governed by the Incoterms established by the International Chamber of Commerce, with the current version being from 2010 In addition to the required information specified in the prevailing regulations, this document must also encompass additional pertinent details.
+ Seller´s and buyer´s identification for VAT purposes (in intra-communitarian operations).
+ Tariff code of the goods.
+ A signature by an authorized person at the seller´s company, if required by the buyer´s government.
+ Used to check a draft (if accompanied with that draft)
+ Substitute a draft to claim money (if not accompanied with the draft)
+ A basis to calculate the customs duty
+ Supply the goods details to do statistic and compare with the contract
Article 19 is applicable even when a credit does not explicitly require a multimodal transport document If the credit specifies an inland location as the port of loading or discharge, it is clear to all parties involved that multiple modes of transport will be necessary, thus invoking UCP Article 19.
A multimodal transport document serves as a bill of lading that encompasses the movement of goods across two or more modes of transport, including combinations like rail and sea, rail and road, or sea and road This document is essential for facilitating the seamless transfer of cargo between different transportation methods, ensuring efficient logistics and supply chain management.
Article 19 of UCP 600 pertains to instances where a credit requires multimodal or combined transport documents This article may also apply in situations where the credit does not explicitly demand a transport document that encompasses multiple modes of shipment or transport.
+ Place of receive for shipment and place of delivery are started clearly on the B/L; the issuer of this B/L must be carrier or business of multi- modal transport.
+ It must be started on the B/L that transhipment is allowed, involve means of transport, and place of transhipment.
The issuer of the Bill of Lading (B/L) holds responsibility for the goods from the point of receipt, which may be situated in the hinterland of the departure country, to the final place of delivery, potentially located in the hinterland of the destination country.
Multimodal Transport Documents operate under a network liability system, where the applicable rules for unimodal transport govern liability based on the mode of transport involved in loss or damage For instance, if a container is lost at sea, the carrier's liability is determined by the Hague/Hague Visby Rules, whereas if it is lost in a road accident, the CMR Convention applies Thus, liabilities for goods lost or damaged during sea transport under a Multimodal Transport Document align with those under a Bill of Lading, while liabilities during road transport correspond to those under a CMR Consignment Note.
A packing list is a detailed document created by the shipper or exporter that outlines the items included in each shipping package It specifies the quantity, description, and weight of the contents, ensuring that the consignee can accurately verify the delivered goods.
A packing list is essential for organizing goods during packaging, ensuring that buyers can easily locate their items Packing slips should be included within the packaging or placed in an accessible pocket on the exterior for convenience.
- Packing list is issued into 3 copies:
The consignee has the right to inspect the goods upon shipment to verify their condition and ensure they match the seller's description This process is essential for confirming that the actual items received correspond with what was agreed upon in the sale.
+ One accompanies commercial invoice and other documents made in the documents presented to the bank as the basis for payment for goods.
+ Name of the seller, name of goods
+ Weight (Net weight & Gross weight)
+ Port of Loading and Destination
- Besides the usual format, we have:
+ Detailed packing list (Detailed packing list) if goods are complexly packaged and shipped by more container.
+ Neutral packing list (Neutral packing list) if its content does not indicate the name of the seller.
+ Packing slips statements cum weight (Packing and Weight list).
A Certificate of Origin (CO) is a crucial document in international trade that verifies the origin of goods in an export shipment, confirming they are fully obtained, produced, manufactured, or processed in a specific country Additionally, COs serve as a declaration from the exporter, as the country of origin significantly influences the duties imposed on imported goods and can even affect their legality for importation.
A Certificate of Origin (C/O) is typically issued by the entity specified in the credit, commonly a Chamber of Commerce In cases where the credit does not name an issuer, various entities, including Chambers of Industry and Industry Associations, are authorized to issue a Certificate of Origin.
+ Name and address of the buyer, the seller
+ The Chamber of Commerce’s authentication on the origin of the goods.
C/O levels directly by the country of origin, country of origin which can also be exporter.
+ Certified of Origin back (back-to-back C/O):
C/O levels indirectly by the exporting country is not the country of origin Exporter in this case called hybrid origin countries.
+ Preferential Tariffs: identify the origin of goods that can distinguish between imported goods preferential treatment to apply the preferential regime under the trade agreement was signed between the countries.
To address the issue of goods being dumped in foreign markets, countries can implement anti-dumping duties and subsidies This approach allows for the effective determination of the origin of products, making it feasible to apply anti-dumping measures and countervailing duties on the pricing of these goods.
Trade statistics play a crucial role in maintaining the quota system, as they facilitate the determination of origin for goods within a country or region This accurate compilation of trade data enables trade authorities to effectively manage and uphold the quota system, thereby promoting trade efficiency and compliance.
- Many types of Certified of Origin:
+) Certificate of Origin granted under non-preferential rules of origin: + Form B: used for all countries.
+ Form X: used for exporting coffee to other countries not of the World Coffee Association.
+) Certificate of Origin granted under preferential rules of origin:
+Form A: apply for GSP (General System of Preferences).
+Form D: used for CEPT (Common Effective Preferences Tariff).
+Form T: used for exporting Vietnamese textile products into EU.
+Form O: used for exporting coffee to other countries of the World Coffee Association.
+ Form AK (ASEAN - Republic of Korea).
+ Form VJ (the Vietnam - Japan).
+ Form AANZ (ASEAN - Australia - New Zealand).
+ Form VC (the Vietnam - Chile).
+ Form S (Vietnam - Laos, Vietnam - Cambodia).
Irrevocable Letter of Credit
An irrevocable letter of credit (ILOC) is a bank-issued document that guarantees payment for goods and services on behalf of the requester Unlike revocable letters of credit, which can be altered or canceled without consent, an ILOC cannot be modified without the agreement of all parties involved, providing a higher level of security for beneficiaries Due to this reliability, most letters of credit issued today are irrevocable, ensuring that all parties feel protected in their transactions.
An issuing bank cannot alter the terms of an Irrevocable Letter of Credit (ILOC) merely due to the letter requester's reconsideration It's important to highlight that ILOCs are valid only for a specific duration and will expire at a predetermined time.
An irrevocable letter of credit is a bank-issued guarantee that enhances business confidence for companies and individuals By providing a secure means of transaction, these letters mitigate risks associated with deals, benefiting both buyers and sellers.
3.2 Some notices upon use of this credit:
- A credit is irrevocable even if there is no indication to that effect
- Amendment must be subject to Article 10 UCP 600
INTERNATIONAL CHAPTER 2: ANALYSING PAYMENT PROCESS BY DOCUMENTARY CREDIT OF HN CO., LTD
Overview of HN CO., LTD
1.1 The formation and development process:
Company Name HOANG NAM CONSTRUCTION SERVICE
TRADING PRODUCTION COMPANY LIMITED Founded Date 01/15/2001
Transaction Name HN CO., LTD
Registry District tax department District 1
Registered Office 81 Nguyen Thi Minh Khai Street, Ben Thanh Ward, District
1, Ho Chi Minh City, Vietnam
Business G4649 - Wholesale of other household appliances products
S96200 - Laundry, Cleaning of textile and Fur products C32900 - Other uncategorized production
F42900 - Building other civil engineering works G4633 - Wholesale of beverages
G4662 - Wholesale of metals and ore
G4663 - Wholesale of construction materials, installing equipment
INTERNATIONAL SETTLEMENT ThS Nong Thi Nhu Mai
I5610 - Restaurants and mobile food services
I56210 - Provision of food services under temporary contracts for clients (serving food for banquets, meetings, weddings, etc.)
G4752 - Retail of gold, silver, copper, iron and tin, and of paint, glass and other construction installing appliances in specialized stores
N82990 - Other uncategorized business assistant services N81290 - House and other works cleaning services
Banker Joint Stock Commercial Bank for Investment and
INTERNATIONAL SETTLEMENT ThS Nong Thi Nhu Mai
1.1.2 The Branch of Hoang Nam Company:
Registered Users: Branch of Hoang Nam construction service trading production Company Limited
Ad: Me Linh Plaza Block, Me Linh District, Hanoi
No Tax Code Company Name Address
Store Branch Banch Construction Service Trading Production company limited X
Trade centre Me Linh Plaza Ha Dung, Tu Hieu St., Hanoi
Store No.1– Banch Construction Service Trading Production company limited X
L4-95 Department, Vincom center Ba Trieu, Hanoi
3 0302202186 Pho Xinh Furniture Store II
4 0302202186 Pho Xinh Furniture Store 2 3/2 Street, 10 Ward,
5 0302202186 Stock company limited 1 Ba To St., 10 Ward,
1.1.3 The formation and development process:
The formation and development process:
- Results of production and business activities
1 Gross profit before income taxes 1.475.999.704
2 Revenue from sales and services 32.677.548.077
11 Total profit before income tax 1.475.999.704
=> According to statistics table about 2014, we can say that the company has no loss because the total profit is positive.
- Results of production and business activities
1 Gross profit before income taxes 303.472.643
2 Revenue from sales and services 39.835.737.507
11 Total profit before income tax 303.472.643
=> According to statistics table about 2015, we can say that the company has no loss because the total profit is positive.
- Results of production and business activities
Value and VAT of the goods and services purchased 4.441.196.303 5.497.573.295 3.869.380.962 VAT taxable goods and services sold 3.362.822.731 3.875.097.278 2.112.235.795
=> We can see VAT taxable goods and services Sold in 3 moth recently is approximately equal to Value and VAT of the goods and services purchased.
- The chart of the value of the goods and services
In conclusion, an analysis of the company's economic activities in 2014, 2015, and the first three months of 2016 indicates that the company has maintained a stable financial position with no losses, thereby reinforcing the bank's confidence in the company's solvency.
Analysing documents used in Documentary Credit of HN Co., LTD
2.1 Why are documents utilized in foreign trade activities:
Letters of credit play a crucial role in both international and domestic trade by serving as a bank's promise to pay a beneficiary upon the fulfillment of specific conditions.
+ A customer fails to pay on time
+ A contractor does not complete a project
+ Somebody, somehow, does not perform whatever obligation they agreed to
Engaging in business with foreign partners or new customers requires a certain level of trust, especially when you have never met them or lack detailed knowledge about their company When selling to a foreign entity, concerns about payment arise, while purchasing goods necessitates confidence that the supplier will deliver as promised.
- Without some type of guarantee, doing deals is risky Irrevocable letters of credit can reduce risks for both buyers and sellers.
Letters of credit are financial agreements between a buyer and their bank, ensuring that the seller receives payment once specific conditions are fulfilled Typically, these conditions require the seller to ship the goods on time and comply with any additional stipulations outlined in the letter.
- This agreement provides security to both parties – the buyer and seller: + The buyer knows that she won't pay anything until goods have been shipped or services have been performed.
+ The seller knows that she will get paid as long as she does everything specified in the letter.
Letters of credit provide significant advantages for sellers by allowing them to depend on the bank's reliability rather than the buyer's financial strength When entering a new business relationship, particularly with overseas customers, sellers often face uncertainty regarding payment Even if sellers trust their buyers' intentions, unforeseen circumstances may arise, leading to potential payment issues when the time comes to settle the transaction.
An irrevocable letter of credit provides assurance regarding the buyer's financial stability, as it guarantees payment from the issuing bank once the specified conditions are met This allows sellers to focus on the bank's reputation rather than assessing each buyer's reliability across various countries For a deeper understanding, refer to the comparison between Letters of Credit and Open Accounts.
To ensure payment, it is crucial to meet the letter's requirements with 100% accuracy, as any discrepancies can lead to the bank refusing payment This includes significant issues like shipping delays or early shipments, as well as minor errors such as typographical mistakes in the agreement or incorrect terminology in your address The bank's primary focus is on verifying documents, and they will not consider any other factors.
Letters of credit provide buyers with assurance that a transaction has been completed, ensuring that the seller has shipped the goods rather than absconding with the payment However, an irrevocable letter of credit focuses solely on the documentation and does not guarantee the quality of the shipped items Payment is made by your bank once the seller submits the necessary documents confirming shipment, leaving you unaware of the shipment's contents until it arrives To mitigate risk, it is advisable to include an inspection certificate among the required documents.
+ Sally, in Country X, wants to buy widgets from George, in Country Z.
+ Sally does not want to pay up front, and George does not want to build the widgets until he’s confident that he’ll get paid.
+ Sally and George agree on price, quantity, shipment date, and other terms.
+ Sally asks her bank for a letter of credit, and provides details about her agreement with George to the bank.
+ Sally's bank forwards the letter to a bank in Country Z (we’ll call that bank George’s bank).
+ George’s bank provides the letter of credit to George, who reviews it to make sure he can meet the requirements.
+ George produces the widgets, and ships them to Sally.
+ George provides documents to his bank to prove that he has made shipment.
George's bank carefully examines the documents to ensure compliance with the letter of credit requirements before sending them to Sally’s bank At this stage, George may receive payment or may need to wait for further processing.
+ Sally’s bank reviews the documents to make sure they meet the requirements,and if they do, Sally’s bank sends payment to George’s bank.
+ Sally’s bank provides the documents to sally, including documents she’ll need to claim the shipment when it arrives in Country X.
Sally's payment to her bank varies based on her financial situation She may need to provide funds upfront, allowing the bank to hold the money until the necessary documents arrive Alternatively, if she possesses adequate credit and collateral, the bank might defer payment until the letter of credit is received with the required documents Lastly, the bank could issue a loan to Sally as part of the letter of credit, which she would then repay over time.
• Field 40A: FORM OF DOCUMENTARY CREDIT
- And in Commercial Contract is similar to the L/C
- All the documents (Certificate of Origin, Invoice, Packing List) below are comply with the number of documentary credit
- All the documents (Certificate of Origin, Invoice, Packing List) below are comply with The date of issue of documentary credit
The Uniform Customs and Practice for Documentary Credits (UCP) were established nearly 80 years ago, with the first international letter of credit rules published in 1933 Since then, these rules have undergone regular revisions by the International Chamber of Commerce (ICC) to adapt to changing trade practices Below, we explore the history of the UCP.
+ 1933 – Uniform Customs and Practice for Commercial Documentary Credits
+ 1951 Revision - Uniform Customs and Practice for Commercial
+ 1962 Revision - Uniform Customs and Practice for Documentary Credits + 1974 Revision – Uniform Customs and Practice for Documentary Credits + 1983 Revision – Uniform Customs and Practice for Documentary Credits (UCP 400)
+ 1993 Revision – Uniform Customs and Practice for Documentary Credits (UCP 500)
+ 2007 Revision – Uniform Customs and Practice for Documentary Credits (UCP 600)
The 2007 Revision of the Uniform Customs and Practice for Documentary Credits (UCP) represents the latest standards for letters of credit To avoid any ambiguity, banks should explicitly state that the letters of credit they issue are governed by the "UCP LATEST VERSION." Failing to reference the specific version may lead one party to seek the application of an alternative UCP version when fulfilling their obligations.
- The Importer’s (Applicant’s) name and address spelled correctly
- The Exporter’s (Beneficiary’s) name and address spelled correctly+ In the L/C:
- Check the value of the credit: The amount according to the L/C is the same with amount in the agreed sales contract.
• Field 39A: PERCENTAGE CREDIT AMOUNT TOLERANCE
A tolerance of up to 5% more or 5% less than the specified quantity of goods is permitted, as long as the credit does not specify the quantity in terms of a fixed number of packing units or individual items, and the total amount drawn does not exceed the credit limit.
- It means the L/C can be payable in any bank by negotiation.
- The payment term in the L/C agree with the Commercial Contract
- Name and address of the bank on which the Drafts are to be drawn.
- According to the L/C, partial shipments is not allowed.
- According to the L/C, transhipments is allowed.
• Field 44E: LOADING ON BOARD/ DISPATCH/ TAKING IN
- The L/C specifies any port of loading of departure in India to be indicated on the transport document.
- In the Multimodal Transport Document have appear to indicate that the goods have been shipped on board a vessel at the port of loading stated in the credit.
- The L/C specifies any port of discharge of destination in Ho Chi MinhCity to be indicated on the transport document
- In the Multimodal Transport Document have appear to indicate shipment from the port of loading to the port of discharge stated in the credit.
• Field 44C: LATEST DATE OF SHIPMENT
- In L/C, lastest date of shipment is 10/11/2012
- In all documents, the date which expires is 10/12/2012
- Therefore, the Latest date of shipments in L/C is right.
• Field 45A: DESCRIPTON OF GOODS AND/OR SERVICES
Commodity Handmade carpets and furnishing articles. a/ Description of goods
- The Description of Goods includes design and color in the Contract is suit for the claim in the L/C. b/ Quantity
- Check the amount of quantity: The quantity of goods in the contract (358PCS) and the Commercial Invoice (343PCS) are the similar to the amount following the L/C (358PCS) (+/- 5% is allowed)
+ According to the L/C: c/ Tolerance in quantity
- The payment and the quantity are within the tolerance limit for the letter of credit (+/- 5%)
Verify the pricing details: The total contract price of $34,399.12 and the amount on the Commercial Invoice of $33,111.26 closely align with the Letter of Credit amount of $34,399.12, with an acceptable variance of +/- 5%.
+ According to the L/C: e/ Method transport
- Terms of the sale regarding insurance and freight charges as agreed: FOB any port of India (Incoterms 2000)
1 Signed commercial invoice in 03 copies
2 Signed detailed packing list in 03 copies
The L/C had the same Requested Documentary with the Commercial Contract
3 Full (3/3) set of original clean on board ocean Bill of lading made out to order of VPBank – Sai Gon Branch, Market freight collect and notify the applicant Following the UCP 600 – Article 27
A transport document does not necessarily need to include the term "clean" to meet credit requirements for being "clean on board." Even in cases where the Bill of Lading lacks the phrase "clean on board," it can still be deemed invalid if it does not contain any negative remarks.
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.
4 Certificate of origin Form AI issued by department of foreign trade government of India in 03 copies The C/O Form AI must be showed the value of the contract.
5 Quality and quantity certificate issued by the manufacturer in 3 copies (missing)
6 Beneficiary’s certificate certifying that one set of non-negotiable documents has been sent directly to the applicant by courier within 07 working days after shipment (courier receipt attached)