Chapter 17: DOCUMENT CHECKLISTS

CHAPTER 17

Document Checklists

THE FOLLOWING IS a series of checklists for document preparation and examination by the buyer, seller, and advising and issuing banks. They are not fully comprehensive as there are an almost infinite number of transaction variations possible, some of which require specialized procedures and documentation. Therefore, they should be viewed only as a general guide.

SELLER / EXPORTER / BENEFICIARY The seller/exporter/beneficiary has the responsibility of preparing and presenting documents in accordance with the terms of the documentary credit or collection. If the documents are incorrect or inconsistent there is a risk of having them refused, wasting time and money, and possibly imperiling the transaction itself.

ISSUING ( BUYER ’ S ) BANK The issuing (buyer’s) bank has the responsibility of examining the documents package presented by the seller/beneficiary to make certain they are consistent with the documentary credit or collection.

ADVISING BANK The advising bank (often the confirming bank as well) has the responsibility of examining the documents presented by the issuing bank to determine if they are consistent with the requirements of the documentary credit or collection.

BUYER / IMPORTER / APPLICANT The buyer/importer/applicant first has the responsibility of listing documents that are required of the seller in the documentary credit. Upon presentation by the bank the buyer examines documents for consistency and accuracy. Problems with documents often lead to problems securing goods from the shipping company or customs or receiving unwanted or incorrect goods.

General Consistency Checklist

SELLER BUYER ADVISING BANK ISSUING BANK

The following is a list of points of consistency the seller, buyer, and banks should be aware of when preparing or examining documents for documentary transactions. Does information on all the documents agree as to the following: 1.Name and address of seller/shipper/exporter/beneficiary? ❑ 2.Name and address of buyer/consignee/importer? ❑ 3.Issuer name and address? ❑ 4.Quantities and description of the goods? ❑ 5.Country of origin of the goods? ❑ 6.Country of destination of the goods? ❑ 7.Invoice numbers, documentary credit numbers? ❑ 8.Certifications? ❑ 9.Legalizations? ❑ 10.Shipping marks and numbers? ❑ 11.Net weight, gross weight, volume? ❑ 12.Number of crates, cartons, or containers? ❑ 13.Documents that so require are legally certified or legalized? ❑ 14.All documents are in complete sets and of the number specified in the credit? ❑

Letter of Transmittal

ISSUING BANK ADVISING BANK

TO WHICHEVER BANK(S) RECEIVE THE DOCUMENTS. 1.Is the documentary credit addressed to your bank? ❑ 2.Does the documentary credit have a current date? ❑ 3.Are the instructions in the letter clear? ❑ 4.Are all the listed documents enclosed? ❑ 5.Do the values of the documents correspond? ❑ 6.Have any discrepancies been noted? ❑

The Documentary Credit

SELLER

1.Is the documentary credit consistent with the contract or agreement between the buyer and seller? ❑ 2.Are the terms of the documentary credit acceptable? ❑ 3.Is the documentary credit valid? ❑ 4.Is there enough time to satisfy the terms of the documentary credit? ❑ 5.Is it reasonably possible to obtain all the documentation required by the documentary credit within the time allotted? ❑ 6.Are the quantities of the goods specified in the documentary credit available in time to meet the ship date? ❑ 7.Is the documentary credit irrevocable? ❑ 8.Is the documentary credit confirmed by a trusted bank? ❑

The Draft

SELLER BUYER ADVISING BANK ISSUING BANK

1.Is the name of the drawee correct? ❑ 2.Is the name of the payee correct? ❑ 3.Does the draft contain the “to the order of” notation? ❑ 4.Does the draft contain an expiration date? ❑ 5.Does the draft contain an unconditional instruction to pay? ❑ 6.Are the amounts in words and figures identical? ❑ 7.Is the draft drawn on the party named in the documentary credit? ❑ 8.If the draft is made out to own order (ourselves), is it endorsed? ❑ 9.Does the draft contain any and all notations as stipulated in the credit? (i.e., drawn under credit number ___)? ❑ 10.Does the draft name the place and date of issue? ❑ 11.Does the draft bear the signature of the issuer? ❑ 12.Are the values of the draft, invoices, and the credit consistent? ❑

Commercial Invoice

SELLER BUYER ADVISING BANK ISSUING BANK

1.Is the invoice issued by the seller/beneficiary as named in the credit? ❑ 2.Is the invoice issued to the buyer/applicant as named in the credit? ❑ 3.Is the invoice issued to the correct address of the buyer/applicant as stated in the documentary credit? ❑ 4.Does the description of the goods in the invoice correspond exactly to their description in the documentary credit? ❑ 5.Does the quantity of the goods in the invoice correspond exactly to the quantities specified in the documentary credit? ❑ 6.Does the value of the goods (unit price and total price) correspond exactly to the values specified in the documentary credit? ❑ 7.Does the invoice amount not exceed the amount of the documentary credit? ❑ 8.Is the invoice free of any unauthorized charges? ❑ 9.Does the currency used in pricing in the invoice match that of the documentary credit? ❑ 10.Does the invoice state the delivery terms (e.g., CIF, EXW)? ❑ 11.Do the delivery terms stated in the invoice match those specified in the documentary credit? ❑ 12.If required by the documentary credit, is the invoice signed? ❑ 13.If required by the documentary credit, does the invoice bear proper certifications, authorizations, or legalizations? ❑ 14.If required by the documentary credit, does the invoice contain any special marks, numbers, or other notations? ❑

The Transport Document(s)

SELLER BUYER ADVISING BANK ISSUING BANK

1.Does the transport document contain the correct consignee name and address as specified in the credit? ❑ 2.Does the transport document contain an “on board” notation? ❑ 3.Does the transport document contain a notation naming the vessel? ❑ 4.Does the transport document contain a notation of the on board date? ❑ 5.Does the transport document name the correct port of loading and port of destination as stipulated in the documentary credit? ❑ 6.Is the transport document “clean” (without notations for shortage, loss, or damage)? ❑ 7.If the transport document states “on deck” stowage, it is allowed by the credit? ❑ 8.If required by the documentary credit, is the “notify address” listed? ❑ 9.Was the transport document issued within the period specified in the documentary credit? ❑ 10.Is the full set of originals being presented? ❑ 11.Is the transport document not a charter party document, unless authorized by the documentary credit? ❑ 12.Is the transport document not a forwarder’s transport document, unless authorized by the documentary credit? ❑ 13.Is the quantity and description of the goods consistent with that contained in the documentary credit? ❑ 14.Are the marks and numbers on the transport document consistent with those on other documents? ❑ 15.Are the freight payments terms consistent with those stipulated in the documentary credit? ❑ 16.Does the transport document meet the stipulations of the documentary credit with regard to transshipment? ❑ 17.Does the transport document meet all other stipulations of the documentary credit? ❑

Certificate of Origin

SELLER BUYER ADVISING BANK ISSUING BANK

1.Is the name and address of the seller as specified in the credit? ❑ 2.Is the name and address of the buyer as specified in the credit? ❑ 3.Is the date of issuance correct? ❑ 4.Is the quantity and description of the goods in conformity with the documentary credit? ❑ 5.Is the country of origin named and in conformity with the documentary credit? ❑ 6.Is the issuer named and in conformity with the documentary credit? ❑ 7.Does the document bear the signature, stamp, or authentication of the issuer? ❑ 8.Is any other information included as required in the documentary credit? ❑

Inspection Certificate

SELLER BUYER ADVISING BANK ISSUING BANK

1.Does the inspection certificate contain key details of the consignor, consignee, and inspection entity? ❑

2.Does the inspection certificate contain a description of the goods that is consistent with the description of goods in the credit? ❑ 3.Does the inspection certificate contain the date of the inspection? ❑ 4.Does the inspection certificate contain a statement of the sampling methodology? ❑ 5.Does the inspection certificate contain a statement of the results of the inspection? ❑ 6.Does the inspection certificate contain the name, signature, and/or stamp or seal of the inspecting entity? ❑

Insurance Document

SELLER BUYER ADVISING BANK ISSUING BANK

1.Was the insurance document issued as either a policy or as a certificate as stipulated in the credit? ❑

2.Is the insurance document issued and signed by an insurance carrier, underwriter, or their agent (not by a broker)? ❑ 3.Does the insurance document cover all the risks specified in the credit? ❑ 4.Does the insurance document cover the risks resulting from a) the particular mode of shipment, b) the transport route, or c) reloading or “on deck” storage, etc.? ❑ 5.Does the insurance document indicate that cover is effective at the latest from the date of loading of the goods on board or the taking in charge of the goods by the carrier, as indicated by the transport document? ❑ 6.Is the information in the insurance document concerning mode of transport and transport route consistent with the documentary credit? ❑ 7.Does the document specify coverage for at least 110 percent of either a) the CIF or CIP value of the shipment, or, if that information is not provided, b) the amount of the payment, acceptance or negotiation specified in the documentary credit, or c) the gross amount of the invoice? ❑ 8.Is the currency of the insurance document consistent with the credit? ❑ 9.Have all issued originals of the document been presented? ❑ 10.If endorsement is required, is the document properly endorsed? ❑

Packing List

SELLER BUYER ADVISING BANK ISSUING BANK

1.Is the name and address of the seller as specified in the credit? ❑ 2.Is the name and address of the buyer as specified in the credit? ❑ 3.Is the date of issuance correct? ❑ 4.Are the invoice numbers, contract numbers, order numbers, and any other numbers correct and in conformity with the documentary credit? ❑ 5.Is the quantity and description of the goods in conformity with the credit?❑ 6.Are all shipping details correct including: weight of the goods, number of packages, and shipping marks and numbers? ❑ 7.Is other information included as required (e.g., country of origin)? ❑

156 A SHORT COURSE IN INTERNATIONAL PAYMENTS