CHAPTER 16
Documents with issues related to the documents used in international payments. By extension, these are also the most common documents used in international trade. Each document will be defined, key elements listed, and cautions offered concerning important issues and common problems associated with each. It is important to once again mention that the technical name for letters of credit is documentary credits and, along with documentary collections, that documents are at the heart of all forms of international payment. As with all matters involving money and payments, the form and content of these documents is of great importance to all parties to the transaction. Subtle differences between forms and subtle changes in wording can mean the difference between a successful and an unsuccessful transaction. The documents called for by a payment type will differ somewhat according to the nature of the goods and the countries of export and import. Some documents, however, such as the commercial invoice and a bill of lading, are specified in all transactions. Before specifying the required documents the buyer should ensure that the seller is willing and able to provide the documents called for and that they can be provided in the form and with the details stipulated.
THIS CHAPTER DEALS
Consistency Among Documents One of the major issues in the preparation, presentation, and verification of documentation by sellers, buyers, and banks in payment transactions is consistency among documents. All parties have the obligation to check the documentation to make certain it is in order. E X A M P L E : In examining the documentation for a transaction involving the sale of five pieces of machinery, the buyer noticed that the commercial invoice listed the net weight as 12,140 kilograms and the gross weight as 12,860 kilograms. The bill of lading, however, listed the gross weight as 9,612 kilograms. What happened to the other 3,248 kilograms? Did the seller make a mistake in preparing the commercial invoice? Did the shipping company make a mistake in preparing the bill of lading? Did the seller forget to ship one or more pieces of machinery? Did the shipping company misplace some machinery? Did someone steal the machinery?
In the above example, the seller should have noticed the inconsistency before forwarding the documents to the advising bank. The advising bank should have noticed the inconsistency before forwarding the documents to the issuing bank. The issuing bank should have noticed the inconsistency before forwarding the documents to the buyer. The buyer will most certainly reject this documentation.
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