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934 - Case laws - Miscellaneoous
Typographical errors in a credit; missed weight on packing list; notify details on AWB that are different from L/C terms |
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Parties Initiator: Company P Respondent: Bank B Summary of the representations 1) An irrevocable documentary credit (L/C) was issued by Bank B's office in Country K (Respondent) on 6 November 1997 via SWIFT MT 700 under reference M123 on behalf of Company S, Country K in favour of Company P, Country C (Initiator). The L/C was advised through Bank D in Country C and available with any bank for negotiation at sight, subject to UCP 500 with reimbursement subject to URR 525. 2) The L/C was acknowledged by Bank D on 10 November 1997 via SWIFT MT 799 with a request for clarification of the content of field 47a (Additional Conditions) which stated: "Shipment to be made on Mr A: 5-678 Attn.: Mr. X only". 3) Subsequently, on 12 November 1997, a SWIFT MT 799 was received by Bank D from Bank B stating: "Pls note additional conditions 47a clause you mentioned means the goods should be shipped by Mr A only." 4) An amendment to the L/C was issued by Bank B on 13 November 1997 and received via SWIFT MT 707 by Bank D on 15 November 1997 stating: "Partial shipments are now prohibited". An explanation for the reasons for this amendment stated, in essence, that the attachment tests with the Initiator's sample had resulted in failure to pass the qualification on three occasions 5) Amendment refused by Company P on 16 December 1997. Bank D passed on this refusal to Bank B via SWIFT MT 799 on 16 December 1997. 6) Documents for the full amount of the L/C, i.e. US$ 82,998.00, forwarded to Bank B by Bank D on 23 December 1997 for payment. 7) SWIFT MT 799 sent by Bank B to Bank D on 29 December 1997, stating that the applicant did not consent to beneficiary's refusal of the amendment referred to above. 8) SWIFT MT 799 sent by Bank D to Bank B on 30 December 1997, advising that the beneficiary still refused the amendment as per UCP 500 sub-Articles 9(d)(i) and 9(d)(iii). 9) SWIFT MT 799 sent by Bank D to Bank B on 31 December 1997, requesting fate of the documents. 10) SWIFT MT 734 (Advice of Refusal) sent by Bank B to Bank D on 5 January 1998, noting the discrepancies below and stating that documents were being held at the disposal of Bank D pending further instructions: - different beneficiary's address on invoice and AWB - missed weight on packing list - notify details on AWB are different from L/C terms - carrier details on AWB are different from L/C terms 11) SWIFT MT 799 sent by Bank D to Bank B on 5 January 1998, stating their disagreement with the discrepancies and outlining specific reasons. Payment again requested. 12) SWIFT MT 799 sent by Bank B to Bank D on 9 January 1998, refuting the reasons given by Bank D and outlining specific reasons. Re-confirmation that documents were still being held at the disposal of Bank D pending further instructions. 13) SWIFT MT 799 sent by Bank D to Bank B on 13 January 1998, stating that Bank D still considered discrepancies invalid but were in contact with the beneficiary, Company P, on the matter. 14) SWIFT MT 799 sent by Bank B to Bank D on 19 January 1998, informing that Bank B still considered the discrepancies as valid. Further advised that goods were now in a customs warehouse and that documents still held under Bank D liability. 15) SWIFT MT 799 sent by Bank D to Bank B on 27 January 1998, requesting fate of documents. 16) Further chaser sent on 28 January 1998. 17) Further SWIFT MT 799 sent by Bank D to Bank B on 30 January 1998, reiterating the fact that although a commercial dispute existed between the parties, the discrepancies were considered as not valid. A further outline of specific reasons was provided. 18) Final SWIFT MT 799 chaser sent by Bank D to Bank B on 5 February 1998, requesting response regarding: - status of merchandise - warehousing and insurance - waiver of discrepancies - date of payment. 19) Documents returned by mail on 3 February 1998 by Bank B to Bank D, stating that applicant refused the documents. 20) SWIFT MT 799 sent by Bank D to Bank B on 20 February 1998, acknowledging receipt of the documents. Determination of the issues with reasons
Invoice and AWB state St. Blass, whereas L/C states St. Glass. The remainder of the address, including street name and number, town and country, and zip / postal code is correct as per L/C details. This is an obvious typographical error in the L/C and makes no material difference to the documentation. In this respect, reference can be made to ICC Publication No. 565, Opinions of the ICC Banking Commission 1995-1996, page 32, Query 209 concerning Invoice and AWB reproduced below: "Sub-Article 13(a) R 209 Typographical errors under sub-Article 13(a) Please advise whether the following minor typographical errors can be deemed as discrepancies in the light of Article 13(a) of UCP 500: a) Invoice shows the postal district code under beneficiary's address as '0256' instead of '2056'. b) AWB shows the surname of an 'Attention Party' named in the AWB as 'Chai' instead of 'Chan'. c) AWB Shows beneficiary's address as 'Industrial Parl' instead of 'Industrial Park'. Can the said invoice and AWB be rejected as discrepant documents? Issue The issue is whether the following typographical errors can be deemed as discrepancies in the light of UCP 500 sub-Article 13(a) and be a reason for documents to be rejected. a) Invoice shows the postal district code under beneficiary's address as '0256' instead of '2056'; b) AWB shows the surname of an 'Attention Party' named in the AWB as 'Chai' instead of 'Chan'; c) AWB shows beneficiary's address as 'Industrial Parl' instead of 'Industrial Park'. Analysis Item a) a postal district code, being for postal use only, under these conditions (reference as to who has issued the invoice) should not be a reason for rejection of the invoice. Item b) a surname, with the understanding that indeed there might be someone else with exactly this name ("Chai"), even at the same address, can be deemed a reason for rejection of the AWB. Item c) as there is no danger of an address actually reading 'Industrial Parl', this obvious typing error should not be treated as a discrepancy and be a reason for rejection of the AWB. Conclusion Given that this conclusion is only applicable to this specific query, under UCP 500 sub-Article 13(a), items a) and c) cannot be considered as discrepancies. Item b) can be deemed as a discrepancy. The AWB should be rejected for discrepancy in item b)." Although it is mentioned that the conclusion is only applicable to the specific query, the logic applied to query c) in R209 above clearly has relevance to the DOCDEX case under consideration. Sub-Article 37(a)(i) of UCP 500 states that: "Commercial Invoices are Unless otherwise stipulated in the Credit, commercial invoices; i. must appear on their face to be issued by the Beneficiary named in the Credit (except as provided in Article 48) " Obvious typographical errors can not be interpreted as valid reasons for refusal. Discrepancy no. 2 Missed weight on packing list There is no requirement either in the L/C, in UCP 500, or in the packing list document itself for the "weight" to appear. The requirement for insertion of this data is not in compliance with nor consistent with "international standard banking practice". Article 21 UCP 500 is quite clear in this regard, as follows: "Unspecified Issuers or Contents of Documents When documents other than transport documents, insurance documents and commercial invoices are called for, the Credit should stipulate by whom such documents are to be issued and their wording or data content. If the Credit does not so stipulate, banks will accept such documents as presented, provided that their data content is not inconsistent with any other stipulated document presented." (emphasis added) Additionally, reference can be made to ICC Publication no. 565 Opinions of the ICC Banking Commission 1995-1996, page 41, Query 218 reproduced below: "Article 21 and miscellaneous R 218 Weight units on packing list and B/L; rounding up/down of gross weight on B/L; difference in number of containers between B/L and packing list Documents were presented under Issuing Bank D/C (I/B) on 19/7/95 and rejected by I/B for the following reasons: * packing list and B/L do not mention weight units (kilos). Negotiating bank (N/B) argued that all the amounts tied in with the other documents and were consistent with each other when compared. D/C did not call for weight units to be mentioned. * Gross weight differs in B/L from other documents. N/B argued that the B/L rounded off the weight and that the B/L was not a statement of weight but rather evidence of shipment. * B/L shows goods packed in one container, P/L shows goods packed in three containers. N/B argued that the B/L stated 'packed in three containers' and provided three container numbers. Packing list and bill of lading do not mention the weight units (kilos). Analysis There is nothing in the UCP 500 that would substantiate the position of the issuing bank that the packing list and the bill of lading need to indicate the weight as required. In the absence of any requirement in the credit or inconsistency amongst the documents, then UCP Article 21 applies. The fact that the packing list and bill of lading do not mention the weight units is not a discrepancy unless the documentary credit required such information to appear on the documents. Second gross weight differs in B/L from other documents. Rounding-off the gross weight in this case (bill of lading showing gross weight 44.595 and other documents showing 44,595.2) cannot be considered as an inconsistency amongst the documents. The bill of lading shows goods packed in one container; the packing shows goods packed in three containers. The bill of lading presented showed three separate container numbers but the shipping company placed the combined weight against only one of them. The fact that three container numbers were shown on the bill of lading provides conformity with the container numbers shown on the packing list. The issue cannot be considered a discrepancy." Issue 1 is quite clear in its conclusion that inclusion of the weight units is not required unless specified by the L/C. Discrepancy no. 3 Notify details on AWB are different from L/C terms Requirement of L/C is for AWB marked "Notify Accountee". AWB actually states "Notify Accountee: Company S". Analysis No. 1 The omission of the details is a discrepancy justifying rejection. The Additional Condition in the Letter of Credit required "Shipment to be made Mr A: 5-678 attn: Mr X only" without stating the document(s) to be presented in compliance therewith. Furthermore, in its clarification to the advising bank's inquiry, the issuing bank stated that the shipment should be made by the named carrier only, without stating further details. Discrepancy no. 1: invalid |