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Theme 6
Commercial Documents Adopted by International Organisations (UN, ECE
etc.)
Study UnitsProduction, Purchase and Sales DocumentsFinancial/Banking, Insurance and Transport Documents
Aims:
Locating the use and importance of different categories of international commercial documents
Identification of different categories of international documents according to the different types of activities in connection to international trade.
Developing the essential skills and knowledge compulsory in the field of international trade and in working with international commercial documents
References: Nicolae, M. (coordonator), Commercial Correspondence, Editura Universitară, Bucureşti, 2005 Ashley, A., Handbook of Commercial Correspondence, Oxford University Press, 2006 Victor, A., David, International Business Communication, Oxford University Press, 2003 Tănasie A, Business English Communication and Commercial Correspondence (Comunicare de
afaceri şi corespondenţă comercială), Ed. Universitaria, Craiova, 2007, (2009, ediție revizuită)Allocated Time: 4 hours
Documents and descriptions adopted by:
WCO - World Customs Organization (1952 - Customs Co-operation Council)
ICC - International Chamber of Commerce (and Banking Commission)
UNCTAD
FIATA - International Federation of Freight Forwarders Associations
IATA – International Air Transport Association
UPU - Universal Postal Union
Documents are grouped according to their usage domain, the place and moment of their
issuing.
6.1. Production, Purchase and Sales Documents
Production documents
a. The purchase order (PO)
Definition
PO= a commercial document issued by a buyer to a seller, indicating the type, quantities
and agreed prices for products or services the seller will provide to the buyer.
Sending a PO to a supplier constitutes a legal offer to buy products or services.
Acceptance of a PO by a seller usually forms a once-off contract between the buyer
and seller so no contract exists until the PO is accepted.
POs usually specify terms of payment, INCOTERMS for liability and freight
responsibility, and required delivery date.
Structure
A purchase order usually contains:
PO number,
shipping date,
billing address,
shipping address,
terms of payment (usually in the form of NET 30)
NET 30 - a form of trade credit which specifies payment is expected to be received in
full 30 days after the goods are delivered.
There are several reasons why companies use POs.
They allow buyers to clearly and explicitly communicate their intentions to
sellers, and to protect the seller in the event of a buyer's refusal to pay for
goods or services.
- For example, say Alice works for Company A and orders some parts from
Company B. There could be a problem if Alice wasn't actually authorized to
issue this purchase order - perhaps due to a miscommunication, she
mistakenly thought that she had the boss's permission to place the order.
Once this error is discovered the order is cancelled. Depending on the type of
product being ordered, and at what stage the PO was cancelled, Company B
may incur manufacturing costs (labour, raw material, etc.) as well as shipping
and packing costs. They might also lose the product entirely (for example, if it
is perishable).
In order to prevent such problems, sellers often request purchase orders from
buyers. This document represents the buyer’s intent to purchase specific
quantities of product at specified prices.
Net 30 terms are often coupled with a credit for early payment;
e.g. the notation "2% 10, net 30" indicates that a 2% discount is provided
if payment is received within 10 days of the delivery of goods, and that
full payment is expected within 30 days.
For example, if "$1000 2/10 net 30" is written on a bill, the buyer
can take a 2% discount ($1000 x .02 = $20) and make a payment of $980
within 10 days) NET 45 and NET 60 depending on requirements set by the
seller), and a list of services/products, often including specifications and
reference or part numbers of the items to be purchased, with quantities
and prices. When accepted by the seller, it forms an agreement between
the buyer and seller.
In the event of non-payment, the seller can use the PO as a legal document in
a court of law to demonstrate the buyer’s intent and to facilitate collection
efforts.
Companies usually request POs when doing business with other companies
for orders of significant size, as the PO reduces the risks involved.
In the course of the accounts payable process, purchase orders are matched
with invoices and packing slips before the invoices are paid.
2. Manufacturing instructions
Document issued by a production firm (supplier) in order to start the production
process for goods to be sold or supplied to foreign clients.
3. Stores requision
Document issued by a supplier aiming to order release of merchandise ordered by a
foreign client.
4. Invoicing data sheet
Document issued by a firm containing relative data concerning merchandise and
destined to represent basis for the commercial invoice.
5. Packing instructions
Document issued by a firm containing information concerning the established
manner in which merchandise is to be packed.
6. Packing list
Document indicating merchandise distribution and placement into different packing
parcels.
Purchase documents
1. Enquiry
Document issues by a potential buyer (importer) to a potential supplier in search of
an offer, where he describes the products he wishes to by and certain necessary
conditions concerning the delivery
2. Order
Document engaging a buyer (importer) with a seller (exporter) in a transaction
involving the delivery of specific products according to stated conditions mentioned
in an offer, or known to the buyer (UN/ECE/FAL).
3. Delivery instructions
Document issued by the buyer (importer) concerning the delivery details of the
ordered products. (UN/ECE/FAL).
The document contains Directions to an inland carrier by a shipper about the delivery
of a shipment to a particular carrier or pier for export. Not to be confused with
delivery order document which pertains to the release of a shipment to a specified
party.
4. Delivery (order) release
D/O is the abbreviation for the term Delivery Order.
A delivery Order is a document from a consignee, a shipper, or an owner of
freight which orders the release of the transportation of cargo to another
party.
Usually the written order permits the direct delivery of goods to a
warehouseman, carrier or other person who in the course of their ordinary
business issues warehouse receipts or bills of lading.
According to the Uniform Commercial Code (UCC) a delivery order refers to an
"order given by an owner of goods to a person in possession of them (the
carrier or warehouseman) directing that person to deliver the goods to a
person named in the order”.
A Delivery Order which is used for the import of cargo should not to be
confused with delivery instructions.
Delivery Instructions provides "specific information to the inland carrier
concerning the arrangement made by the forwarder to deliver the
merchandise to the particular pier or steamship line.
A delivery order was not regarded as a document of title at common law with
the result that the transfer of the delivery order did not effect transfer of
constructive possession of the goods.
Attornment on the part of the bailee was required (i.e., an acknowledgement
that the bailee held the goods on behalf of the transferee).
The Uniform Documents of Title Act permits the use of negotiable delivery
orders (if the order directs delivery to a named person or order). However, it
is still necessary to single out delivery orders for special treatment. Until the
delivery order is accepted by the bailee, there is no basis for imposing
obligations on the bailee.
Sales documents
1. Offer/quotation
Document stating the conditions under which the merchandise is offered to a
potential client in respect of a future contract. (UN/ECE/FAL).
2. International sales contract
Document certifying the existence of an agreement between the seller (exporter) and
the buyer (importer) for supplying certain products; it has the commercial and legal
effects of an order followed by an acknowledgement. (UN/ECE/FAL).
3. Pro-forma invoice
In foreign trade, a pro forma invoice is a document that states a commitment from
the seller to provide specified goods to the buyer at specific prices. It is often used to
declare value for customs.
It is not a true invoice, because the seller does not record a pro forma invoice as an
accounts receivable and the buyer does not record a pro forma invoice as an
accounts payable.
A pro forma invoice is not issued by the seller until the seller and buyer have agreed
to the terms of the order.
pro forma invoice is issued for obtaining advance payments from buyer, either for
start of production or for security of the goods produced.
The term pro forma (Latin "as a matter of form") is a term applied to practices that
are perfunctory, or seek to satisfy the minimum requirements or to conform to a
convention or doctrine. It has different meanings in different fields.
4. The commercial external invoice
An invoice or bill is a commercial document issued by a seller to the buyer, indicating
the products, quantities, and agreed prices for products or services the seller has
provided the buyer.
An invoice indicates the buyer must pay the seller, according to the payment terms.
From the point of view of a seller, an invoice is a sales invoice.
From the point of view of a buyer, an invoice is a purchase invoice.
The document indicates the buyer and seller, but the term invoice indicates money is
owed or owing.
In English, the context of the term invoice is usually used to clarify its meaning, such
as "We sent them an invoice" (they owe us money) or "We received an invoice from
them" (we owe them money).
Credit memo - If the buyer returns the product, the seller usually issues a
credit memo for the same or lower amount than the invoice, and then
refunds the money to the buyer, or the buyer can apply that credit memo to
another invoice.
Commercial invoice - a customs declaration form used in international trade
that describes the parties involved in the shipping transaction, the goods
being transported, and the value of the goods. It is the primary document
used by customs, and must meet specific customs requirements, such as the
Harmonized System number and the country of manufacture. It is used to
calculate tariffs.
Debit memo - When a company fails to pay or short-pays an invoice, it is
common practice to issue a debit memo for the balance and any late fees
owed. In function debit memos are identical to invoices.
Self-billing invoice - A self billing invoice is when the buyer issues the invoice
to himself (e.g. according to the consumption levels he is taking out of a
vendor-managed inventory stock).
Evaluated receipt settlement (ERS) - ERS is a process of paying for goods and
services from a packing slip rather than from a separate invoice document.
The payee uses data in the packing slip to apply the
payments.
In an ERS transaction, the supplier ships goods based
upon an Advance Shipping Notice (ASN), and the
purchaser, upon receipt, confirms the existence of a
corresponding purchase order or contract, verifies the
identity and quantity of the goods, and then pays the
supplier.
Timesheet - Invoices for hourly services such as by lawyers and
consultants often pull data from a timesheet.
Invoicing - The term invoicing is also used to refer to the act of
delivering baggage to a flight company in an airport before taking a flight.
Statement - A periodic customer statement includes opening balance,
invoices, payments, credit memos, debit memos, and ending balance for the
customer's account during a specified period. A monthly statement can be
used as a summary invoice to request a single payment for accrued monthly
charges.
Progress billing used to obtain partial payment on extended contracts, particularly in the construction industry.
Collective Invoicing is also known as monthly invoicing in Japan. Japanese businesses tend to have many orders with small amounts because of the outsourcing system, or of demands for less inventory control. To save the administration work, invoicing is normally processed on monthly basis.
Some invoices are no longer paper-based, but rather transmitted electronically over
the Internet.
It is still common for electronic remittance or invoicing to be printed in order
to maintain paper records. Standards for electronic invoicing varies widely
from country to country. Electronic Data Interchange (EDI) standards such as
the United Nation's EDIFACT standard include message encoding guidelines
for electronic invoices. But the most common continues to be PDF over email.
The United Nations standard for electronic invoices ("INVOIC") includes
standard codes for transmitting header information (common to the entire
invoice) and codes for transmitting details for each of the line items (products
or services). The "INVOIC" standard can also be used to transmit credit and
debit memos.
The "IFTMCS" standard is used to transmit freight invoices.
Use of the XML message format for electronic invoices has begun in recent
years. There are two standards currently being developed. One is the cross
industry invoice under development by the United Nations standards body
UNCEFACT and the other is UBL (Universal Business Language) which is issued
by [Oasis]http://www.oasis-open.org.
Implementations of invoices based on UBL are common, most importantly in
the public sector in Denmark. Further implementations are under way in the
Scandinavian countries as result of the NES (North European Subset) project
http://www.nesubl.eu. Implementations are also underway in , Italy, Spain,
Holland and with the European Commission itself.
Bills from utility companies are based on measured (metered) use of electricity, natural gas or other utilities at a residence or business.When an individual or business applies for service from the utility (opens an account), he signs an agreement (contract) to pay for his metered use of the utility.
The NES work has been transferred to [CEN]http://www.cen.eu, (the
standards body of the European Union) workshop CEN/BII, for public
procurement in Europe. The result of that work is a pre-condition for PEPPOL,
pan European pilots for public procurement, financed by the European
commission. There UBL procurement documents will be implemented in
cross border pilots between European countries.
Agreement has been made between UBL and UN/CEFACT for convergence of
the two XML messages standards with the objective of merging the two
standards into one before end of 2009 including the provision of an upgrade
path for implementations started in either standard.
5. Booking request (Cerere pentru rezervare (spaţiu de transport) = Dispoziție de transport
şi vămuire, cod 12-3-6/Cerere de tonaj – export, cod 12-3-7 (CEE/ONU))
Document in which, according to the delivery conditions, the supplier
demands to a transporter, carrier or broker, the booking of the transport
space for a certain products’ expedition, indicating: the means of transport,
the time, etc. (UN/ECE/FAL).
6. Shipping instructions
Document describing in detail the products and the requirements imposed by
the exporter for the transport.
7. Shipper’s letter of instructions (air)
Document issued by the exporter containing the details concerning certain
products delivery, that allows the airway company or the specialised carrier to
establish and issue an airway bill. AWB (UN/ECE/FAL).
Shipper’s Letter of Instructions is a document, which provides shipping instructions to the
shipper’s freight forwarder to ensure accurate and correct movement of their products
across borders. Often this document will include billing terms regarding the freight and other
charges as well as documentation preparation instructions in cases where the shipper is not
providing those documents. In some cases product distribution instructions are also
included.
Required Information - The following items below are required to be filled out. Any required
information that is left out may result in a delay in processing the form.
Enter the exporter’s Internal Revenue Service Employer Identification Number
(EIN).
FREIGHT CHARGES (IN “CHECK APPLICABLE BOX” AREA)
Select either “Prepaid” or “Collect”.
1. PARTIES TO TRANSACTION – Indicate if this is a RELATED or NON-RELATED party
transaction is a transaction between a USPPI and a foreign consignee, (e.g., parent
company or sister company), where there is at least 10 percent ownership of each by
the same U.S. or foreign person or business enterprise.
2. DATE OF EXPORTATION – Enter the date the merchandise is scheduled to leave
the country for all methods of transportation. If the actual date is not known, report
the best estimate of departure. The date format should be indicated by
MM/DD/YYYY.
3. TRANSPORTATION REFERENCE NO. – Report the booking number for ocean
shipments. The booking number is the reservation number assigned by the carrier to
hold space on the vessel for the cargo being shipped. For air shipments the airway bill
number must be reported. For other methods of transportation leave blank.
4a. ULTIMATE CONSIGNEE – Enter the name and address of the foreign party actually
receiving the merchandise for the designated end-use or the party so designated on
the export license.
4b. INTERMEDIATE CONSIGNEE – Enter the name and address of the party in a
foreign country who makes delivery of the merchandise to the ultimate consignee or
the party so named on the export license.
5a. FORWARDING AGENT – Enter the name and address of the forwarding or other
agent authorized by a principal party in interest.
5b. FORWARDING AGENT’S EIN (IRS) NO. – Enter the Forwarding Agent's (EIN) or
Social Security Number (SSN). Report the 9-digit numerical code.
6. POINT OF ORIGIN OR FTZ NO. – If from a FTZ enter the FTZ number for exports
leaving the FTZ, otherwise enter the Postal Service abbreviation of the state in which
the merchandise actually starts its journey to the port of export, or State of the
commodity of the greatest value, or State of Consolidation.
7. COUNTRY OF ULTIMATE DESTINATION – Enter the country in which the
merchandise is to be consumed, further processed, or manufactured; the final
country of destination as known to the exporter at the time of shipment; or the
country of ultimate destination as shown on the export license. Two-digit (alpha
character) International Standards Organization (ISO) codes may also be used.
8. LOADING PIER (Vessel only) – (For vessel shipments only) Enter the number or
name of the pier at which the merchandise is laden aboard the exporting vessel.
9. METHOD OF TRANSPORTATION – Enter the method of transportation by which
the merchandise is exported (or exits the border ). Specify the method of
transportation by name such as: vessel, air, rail, truck, etc. Specify “own power” if
applicable.
10. EXPORTING CARRIER – Enter the name of the carrier transporting the
merchandise out of the country. For vessel shipments, give the name of the vessel.
11. PORT OF EXPORT – (a) For Overland Shipments: Enter the name of the Customs
port at which the surface carrier (truck or railcar) crosses the border. (b) For Vessel
and Air Shipments: Enter the name of the Customs port where the merchandise is
loaded on the carrier (airplane or ocean vessel) that is taking the merchandise out of
the country. (c) For Postal (mail) Shipments: Enter the Post Office from which the
merchandise is mailed.
12. PORT OF UNLOADING – For vessel shipments between the United States and
foreign countries, enter the foreign port and country at which the merchandise will
be unloaded from the exporting carrier.
13. CONTAINERIZED – (For vessel shipments only) Check the “YES” box for cargo
originally booked as containerized cargo and for cargo that has been placed in
containers at the vessel operator’s option.
14. CARRIER IDENTIFICATION CODE – Enter the 4-character Standard Carrier Alpha
Code (SCAC) of the carrier for vessel, rail and truck shipments, or the 2- or 3-
character International Air Transport Association (IATA) Code of the carrier for air
shipments. In a consolidated shipment, if the ultimate carrier is unknown, the
consolidators carrier ID code may be reported. The National Motor Freight Traffic
Association (703) 838-1831 or www.nmfta.org issues the SCAC’s for ocean carriers,
trucking companies and consolidators. The International Air Transportation
Association
(IATA) issues the air carrier codes.
15. SHIPMENT REFERENCE NO. – Enter the unique reference number assigned by the
filer of the SED for identification purposes. This shipment reference number must be
unique for five years. For example, report an invoice number, bill of lading or airway
bill number, internal file number or so forth.
16. ENTRY NUMBER – Enter the Import Entry Number when the export transaction is
used as proof of export for import transactions, such as In-Bond, Temporary Import
Bond or Drawback’s and so forth.
17. HAZARDOUS MATERIALS – Check the appropriate “Yes” or “No” indicator that
identifies the shipment as hazardous as defined by the Department of
Transportation.
18. IN BOND NUMBER – Report one of the 2- character In-Bond codes listed in Part
IV of Appendix C of the FTSR (15 CFR Part 30) to include the type of In-Bond or not In-
Bond shipment.
19. ROUTED EXPORT TRANSACTION – Check the appropriate “Yes” or “No” indicator
that identifies the transaction as a routed export transaction. A routed export
transaction is where the foreign principal party in interest authorizes a forwarding or
other agent to export the merchandise out of the country.
20. SCHEDULE B DESCRIPTION OF COMMODITIES – Use columns 22 - 24 to enter the
commercial description of the commodity being exported, its schedule B number, the
quantity in schedule B units, and the shipping weight in kilograms. Enter a sufficient
description of the commodity as to permit verification of the Schedule B Commodity
Number or the commodity description as shown on the validated export license.
Include marks, numbers, or other identification shown on the packages and the
numbers and kinds of packages (boxes, barrels, baskets, etc.).
21. D/F OR M – DOMESTIC EXPORTS (D): merchandise that is grown, produced, or
manufactured in the country (including imported merchandise which has been
enhanced in value or changed from the form in which imported by further
manufacture or processing in the United States). FOREIGN EXPORTS (F): merchandise
that has entered the country and is being re-exported in the same condition as when
imported. FOREIGN MILITARY SALES (M): exports of merchandise that are sold under
the foreign military sales program.
22. QUANTITY (SCHEDULE B UNITS) – Report whole unit(s) as specified in the
Schedule B commodity
classification code. Report also the unit specified on the export license if the units
differ.
23. SHIPPING WEIGHT (kilograms) – (For vessel and air shipment only) Enter the
gross shipping weight in kilograms or each Schedule B number, including the weight
of containers but excluding carrier equipment. To determine kilograms use pounds
(lbs) Multiplied by 0.4536 = kilograms (report whole units).
24. VIN/PRODUCT NUMBER/ VEHICLE NUMBER – (For used self-propelled vehicles
only). Report the following items of information for used self-propelled vehicles as
defined in Customs Regulations 19 CFR 192:1 (1) Report the unique Vehicle
Identification Number (VIN) in the proper format; (2) Report the Product
Identification Number (PIN) for those used self propelled vehicles for which there are
no VINs; and (3) the Vehicle Title Number.
25. VALUE – Enter the selling price or cost if not sold, including freight, insurance,
and other charges to port of export, but excluding unconditional discounts and
commissions (nearest whole monetary unit, omit divisions). The value to be reported
is the exporter’s price or cost if not sold, to the foreign principal party in interest.
26. LICENSE NO./LICENCE EXCEPTION SYMBOL/AUTHORIZATION – Whenever a
Shipper’s Export Declaration (SED) or Automated Export System (AES) record is
required
27. EXPORT CONTROL CLASSIFICATION NUMBER (ECCN) – You must enter the
correct Export Control Classification Number (ECCN) on record for all exports
authorized under a license or License Exception, and items being exported under the
“No License Required” (NLR).
28. DULY AUTHORIZED OFFICER OR EMPLOYEE – Provide the signature of the
exporter authorizing the named forwarding or agent to effect the export when such
agent does not have a formal power of attorney or written authorization.
29. SIGNATURE/CERTIFICATION – Provide the signature of the exporter (U.S.
principal party in interest) or authorized forwarding or other agent certifying the
truth and accuracy of the information on the Shipper’s Export Declaration (SED) the
title of exporter (U.S. principal party in interest) or authorized agent, the date of
signature, the telephone number of the exporter (U.S. principal party in interest) or
authorized agent preparing the SED and who can best answer questions for resolving
problems on the SED, and the email address of the exporter (U.S. principal party in
interest) or authorized agent.
30. AUTHENTIFICATION – For Customs Use Only.
8. Ready for dispatch advice
Document issued by the supplier (exporter) informing the buyer (importer)
that the demanded products or representing the object of the contract are
ready for expedition. (UN/ECE/FAL).
9. Despatch order
Document issued by the supplier (exporter) that initiates the products’
expedition process to the destination indicated by their buyer (importer).
(UN/ECE/FAL).
10. Despatch advice
A message specifying details for goods despatched or ready for despatch
under agreed conditions.
o The message enables a hierarchical description of the shipment, starting with
the highest level (shipment) and ending with the lowest level (items).
o One can for example describe a container comprising 5 pallets, a pallet being
composed of several large despatch units which themselves contain smaller
despatch units.
o The traded units (any level of packaging agreed by the trading partners) are
then specified.
o It is however not mandatory to describe the hierarchical structure of the
shipment.
o A simple and probably most frequent use of the message consists in specifying
the items to be despatched and the relevant information per item (quantity,
additional identification ...).
2 PN1 SN1-SN2 3 PN3 SN6-SN8
3 PN2 SN3-SN5
PALLET SNP1
3 PN1 SN9-SN11 4 PN3 SN12-SN15
PALLET SNP2
SHIPMENT
The following example is used to illustrate the different descriptive options of the Despatch
Advice message. Options 1 through 4 are presented in an ascending order of complexity or
completeness.
A shipment consists of 2 pallets.
- The first pallet, identified by the serial number SNP1, contains 8 cartons. 2 cartons of
product number PN1, 3 cartons of PN2 and 3 cartons of PN3. The cartons are
individually identified by serial numbers ranging from SN1 through SN8.
- The second pallet identified by the serial number SNP2, contains 3 cartons of product
number PN1 and 4 cartons of product number PN3. The cartons are individually
identified by serial numbers ranging from SN9 through SN15.
The shipment can be represented like this:
NOTE!
Please note that for easy reading, the product numbers (PN's) and the serial numbers
(SNP's, SN's) have been shortened. In real transactions, standard EAN product numbers
and the Serial Shipping Container Code should be used. The message structure has been
simplified with only the functional segments of the detail section presented.
Option 1: Only product numbers and total shipment quantities are provided, no carton
specific serial numbers are provided and no description of the shipment
structure is given.
This option allows for the description of the shipment composition only in terms of products and total quantities per product. In this case the shipment is described as being composed of 5 units of PN1, 3 units of PN2 and 7 units of PN3. Using this option, the message will provide no information regarding individual despatch carton serial numbers or the way they are organised hierarchically in the shipment, i.e. the shipment consists of two pallets, the first containing..., the second pallet containing...,.
Option 1 Detail Section of the Despatch Advice Message:
CPS+1' "Dummy" CPS segment
LIN+1++PN1:EN' First line item; PN1
QTY+12:5' Quantity Despatched 5
LIN+2++PN2:EN' Second line item; PN2
QTY+12:3' Quantity Despatched 3
LIN+3++PN3:EN' Third line item; PN3
QTY+12:7' Quantity Despatched 7
Option 2: Product numbers and total quantities of the shipment are provided.
Additionally, each carton is uniquely identified by a serial number. No
description of the structure of the shipment is given.
Option 2 Detail Section of the Despatch Advice Message:
CPS+1' "Dummy" CPS segment
LIN+1++PN1:EN' First line item; PN1
QTY+12:5' Quantity Despatched 5
PCI+33E' Marked packaging with SSCC
GIN+BJ+SN1:SN2+SN9:SN11' Serial numbers of 5 cartons PN1
LIN+2++PN2:EN' Second line item; PN2
This option allows for the description of the shipment composition but ignores any hierarchical structure of the shipment. In this case the shipment is described as being composed of 5 units of PN1, 3 units of PN2 and 7 units of PN3. Additionally, each carton is uniquely identified by a serial number so as to distinguish cartons with the same product number, so that for example cartons PN1 will be identified with the serial numbers SN1, SN2, SN9, SN10 and SN11. This option does not provide information on how the groups of cartons are organised in the shipment, (i.e. in terms of pallets).
QTY+12:3' Quantity Despatched 3
PCI+33E' Marked packaging with SSCC
GIN+BJ+SN3:SN5' Serial numbers of 3 cartons PN2
LIN+3++PN3:EN' Third line item; PN3
QTY+12:7' Quantity Despatched 7
PCI+33E' Marked packaging with SSCC
GIN+BJ+SN6:SN8+SN12:SN15' Serial numbers of 7 cartons PN3
Option 3: Description of the shipment hierarchical structure in terms of pallet content,
with pallets uniquely identified.
Option 3 Detail Section of the Despatch Advice Message:
CPS+1' 1st CPS; no parent
PAC+2++201' Number of packages = 2 pallets type ISO 1
CPS+2+1' 2nd CPS; first pallet; parent = shipment
PAC+1++201' Outer packaging level, pallet type ISO 1
PCI+33E' Marked packaging with SSCC
GIN+BJ+SNP1' Serial number of 1st pallet
PAC+8++CT' Pallet contains 8 cartons
LIN+1++PN1:EN' First line item; PN1
QTY+12:2' Quantity Despatched 2
LIN+2++PN2:EN' Second line item; PN2
QTY+12:3' Quantity Despatched 3
This option allows to describe the composition of the shipment in terms of the pallets it contains, each pallet uniquely identified by a serial shipping container code (SNP1 and SNP2). The message describes the composition of each pallet in terms of the cartons contained and in what quantity, per pallet.
LIN+3++PN3:EN' Third line item; PN3
QTY+12:3' Quantity Despatched 3
CPS+3+1' 3rd CPS; second pallet; parent = shipment
PAC+1++201' Outer packaging level, pallet type ISO 1
PCI+33E' Marked packaging with SSCC
GIN+BJ+SNP2' Serial number of 2nd pallet
PAC+7++CT' Pallet contains 7 cartons
LIN+4++PN1:EN' Fourth line item; PN1
QTY+12:3' Quantity Despatched 3
LIN+5++PN3:EN' Fifth line item; PN3
QTY+12:4' Quantity Despatched 4
Option 4: Description of the shipment hierarchical structure in terms of the pallets and
their content. Both pallets and cartons contained are uniquely identified by
serial numbers.
Option 4 Detail Section of the Despatch Advice Message:
CPS+1' 1st CPS; no parent
PAC+2++201' Number of packages = 2 pallets type ISO 1
CPS+2+1' 2nd CPS; first pallet; parent = shipment
PAC+1++201' Outer packaging level, pallet type ISO 1
This option allows to describe the composition of the shipment in a hierarchical nature. The shipment is identified as being composed of two pallets each identified by a serial shipping container code (SNP1 and SNP2). The message describes the composition of each pallet in terms of the units contained and their serial shipping container codes. Following the same hierarchical logic the message could go on to describe the composition of each carton in terms of its traded or consumer units.
PCI+33E' Marked packaging with SSCC
GIN+BJ+SNP1' Serial number of 1st pallet
PAC+8++CT' Pallet contains 8 cartons
LIN+1++PN1:EN' First line item; PN1
QTY+12:2' Quantity Despatched 2
PCI+33E' Marked packaging with SSCC
GIN+BJ+SN1:SN2' Serial numbers of 2 cartons PN1
LIN+2++PN2:EN' Second line item; PN2
QTY+12:3' Quantity Despatched 3
PCI+33E' Marked packaging with SSCC
GIN+BJ+SN3:SN5' Serial numbers of 3 cartons PN2
LIN+3++PN3:EN' Third line item; PN3
QTY+12:3' Quantity Despatched 3
PCI+33E' Marked packaging with SSCC
GIN+BJ+SN6:SN8' Serial numbers of 3 cartons PN3
CPS+3+1' 3rd CPS; second pallet; parent = shipment
PAC+1++201' Outer packaging level, pallet type ISO 1
PCI+33E' Marked packaging with SSCC
GIN+BJ+SNP2' Serial number of 2nd pallet
PAC+7++CT' Pallet contains 7 cartons
LIN+4++PN1:EN' 4th line item; PN1
QTY+12:3' Quantity Despatched 3
PCI+33E' Marked packaging with SSCC
GIN+BJ+SN9:SN11' Serial numbers of 3 cartons PN1
LIN+5++PN3:EN' 5th line item; PN3
QTY+12:4' Quantity Despatched 3
PCI+33E' Marked packaging with SSCC
GIN+BJ+SN12:SN15' Serial numbers of 4 cartons PN3
11. Advice for distribution of documents
Document in which, the side required to issue a set of international
commercial documents states the different consignees of the originals and
copies of certain commercial documents, also indication the number of copies
to be transmitted to each of them. (UN/ECE/FAL).
12. Commission note
Document issued by the seller (exporter) stating the value of the commission,
the percentage of the invoice value or any other basis for calculating the
commission owed to a commercial representative. (UN/ECE/FAL).
TEST
1. What is the purchase order?Answer:
2. What is the NET 30 value?
Answer:
ExercisesSolved example:
1. Which of the following are purchase documents?a. The delivery orderb. The orderc. The invoiced. The purchase ordere. None of the above
Key
O O O To solve:
2. The Commission note is:a. Document issued by the seller (exporter) stating the value of the commission, the
percentage of the invoice value or any other basis for calculating the commission owed to a commercial representative
b. Document in which, the side required to issue a set of international commercial documents states the different consignees of the originals and copies of certain commercial documents
c. Document issued by the supplier (exporter) informing the buyer (importer) that the demanded products or representing the object of the contract are ready for expedition
PO= a commercial document issued by a buyer to a seller, indicating the type, quantities and agreed prices for products or services the seller will provide to the buyer.
d. Document issued by the supplier (exporter) that initiates the products’ expedition process to the destination indicated by their buyer (importer).
e. None of the above.
O O O O O6.2. Financial/Banking, Insurance and Transport Documents
Financial And Banking Documents
1. Instructions for bank transfer
Document used by a client in order to give his bank instructions for a certain
payment of an amount, in a certain currency, to a certain person or firm from
a foreign country using a specified method or using a method chosen by the
bank. (UN/ECE/FAL).
2. Application for banker’s draft
Form used by a client towards his bank requiring the issuing of a draft and
indicating the value and the issuing currency for the draft, the beneficiary’s
name, the place and country of the payment. (UN/ECE/FAL).
3. Collection payment advice
Document issued by a bank and informing its client about the results of
covering or remitting a letter of credit. (UN/ECE/FAL).
4. Documentary credit payment advice
Document issued by a bank and notifying one of its clients concerning a
payment using a letter of credit. (UN/ECE/FAL).
5. Documentary credit acceptance advice
Document issued by a bank and notifying one of its clients concerning the
acceptance of a letter of credit. (UN/ECE/FAL).
6. Documentary credit negotiation advice
Document issued by a bank towards its clients notifying them concerning the
negotiation of a letter of credit. (UN/ECE/FAL).
7. Application for banker’s guarantee
Document containing a clients application to his bank for the issuing of a
guarantee in favour of a person or a firm from a foreign country, stating the
amount, the currency and the special conditions of a guarantee.
(UN/ECE/FAL).
8. Banker’s guarantee
Document committing a bank for the payment of a certain amount to a firm
or a person, under special conditions (others than the ones indicated in
Uniformous rules and usages) (UN/ECE/FAL).
9. Documentary credit letter of indemnity
Document issued by the beneficiary of a letter of credit, in which he accepts
the responsibility of the un-execution of clauses or conditions of the letter of
credit and commits to pay the amount received as credit, and also additional
taxes or interest rates. (UN/ECE/FAL).
10. Documentary credit application
Document in which a bank is requested to issue a letter of credit according to
certain conditions. (UN/ECE/FAL).
11. Documentary credit
Document issued by a bank declaring to have issued such a document based
on which, the beneficiary can get payment, acceptance or denial under
certain conditions and after presenting the stated documents and eventually
of the indicated drafts. The documentary credit can be confirmed or not by an
another bank. (UN/ECE/FAL).
Letter Of Credit
- is a document issued mostly by a financial institution,
used primarily in trade finance, which usually provides
an irrevocable payment undertaking (it can also be
revocable, confirmed, unconfirmed, transferable or
others e.g. back to back: revolving but is most
commonly irrevocable/confirmed) to a beneficiary
against complying documents as stated in the Letter of
Credit.
- is abbreviated as an LC or L/C, and often is referred to as
a documentary credit, abbreviated as DC or D/C,
documentary letter of credit, or simply as credit (as in
the UCP 500 and UCP 600). Once the beneficiary or a
presenting bank acting on its behalf, presents to the
issuing bank or confirming bank, if any, on or before the
expiry date of the LC, documents complying with the
terms and conditions of the LC, the applicable UCP and
international standard banking practice, the issuing
bank or confirming bank, if any, is obliged to honour
irrespective of any instructions from the applicant to
the contrary. In other words, the obligation to honour
(usually payment) is shifted from the applicant to the
issuing bank or confirming bank, if any. Non-banks can
also issue letters of credit, however beneficiaries must
balance the potential risk of payment default.
- can also be the source of payment for a transaction,
meaning that redeeming the letter of credit will pay an
exporter. Letters of credit are used primarily in
international trade transactions of significant value, for
deals between a supplier in one country and a customer
in another. They are also used in the land development
process to ensure that approved public facilities
(streets, sidewalks, stormwater ponds, etc.) will be
built. The parties to a letter of credit are usually a
beneficiary who is to receive the money, the issuing
bank of whom the applicant is a client, and the advising
bank of whom the beneficiary is a client. Almost all
letters of credit are irrevocable, i.e., cannot be
amended or cancelled without prior agreement of the
beneficiary, the issuing bank and the confirming bank, if
any.
- incorporate functions common to giros and Traveler's
cheques. Typically, the documents a beneficiary has to
present in order to receive payment include a
commercial invoice, bill of lading, and documents
proving the shipment was insured against loss or
damage in transit. However, the list and form of
documents is open to imagination and negotiation and
might contain requirements to present documents
issued by a neutral third party evidencing the quality of
the goods shipped, or their place of origin.
NOTE!
The English name “letter of credit” derives from the French word “accreditation”, a power
to do something, which in turn is derivative of the Latin word “accreditivus”, meaning
trust.
‘The Application of the Letter of Credit Form of Payment in International Business
Transactions’ (2001) 10 Int’l Trade L.J. p. 37. In effect, this reflects the modern understanding
of the instrument.
When a seller agrees to be paid by means of a letter of credit, the creditor/seller is looking at
a reliable bank that has an obligation to pay the amount stipulated in the credit
notwithstanding any defence relating to the underlying contract of sale. This is as long as the
seller performs their duties to an extent that meets the requirements contained in the LC.
1. One of the primary peculiarities of the documentary credit is that the
payment obligation is abstract and independent from the underlying contract
of sale or any other contract in the transaction. Thus the bank’s obligation is
defined by the terms of the credit alone, and the sale contract is irrelevant.
The defences of the buyer arising out of the sale contract do not concern the
bank and in no way affect its liability. Article 3(a) UCP states this principle
clearly. Article 4 the UCP further states that banks deal with documents only,
they are not concerned with the goods (facts). Accordingly, if the documents
tendered by the beneficiary, or his or her agent, appear to be in order, then in
general the bank is obliged to pay without further qualifications.
2. The policies behind adopting the abstraction principle are purely commercial
and reflect a party’s expectations:
a. firstly, if the responsibility for the validity of documents was thrown
onto banks, they would be burdened with investigating the underlying
facts of each transaction and would thus be less inclined to issue
documentary credits as the transaction would involve great risk and
inconvenience.
b. Secondly, documents required under the credit could in certain
circumstances be different from those required under the sale
transaction; banks would then be placed in a dilemma in deciding
which terms to follow if required to look behind the credit agreement.
c. Thirdly, the fact that the basic function of the credit is to provide the
seller with the certainty of receiving payment, as long as he performs
his documentary duties, suggests that banks should honour their
obligation notwithstanding allegations of misfeasance by the buyer.
d. Finally, courts have emphasised that buyers always have a remedy for
an action upon the contract of sale, and that it would be a calamity for
the business world if, for every breach of contract between the seller
and buyer, a bank were required to investigate said breach.
NOTE!
The “principle of strict compliance” also aims to make the bank’s duty of effecting payment
against documents easy, efficient and quick. Hence, if the documents tendered under the
credit deviate from the language of the credit the bank is entitled to withhold payment even
if the deviation is purely terminological. The general legal maxim de minimis non curat lex
has no place in the field of documentary credits.
All the charges for issuance of Letter of Credit, negotiation of documents,
reimbursements and other charges like courier are to the account of applicant
or as per the terms and conditions of the Letter of credit.
If the LC is silent on charges, then they are to the account of the Applicant.
The description of charges and who would be bearing them would be
indicated in the field 71B in the Letter of Credit.
Although documentary credits are enforceable once communicated to the
beneficiary, it is difficult to show any consideration given by the beneficiary to
the banker prior to the tender of documents. In such transactions the
undertaking by the beneficiary to deliver the goods to the applicant is not
sufficient consideration for the bank’s promise because the contract of sale is
made before the issuance of the credit, thus consideration in these
circumstances is past. In addition, the performance of an existing duty under
a contract cannot be a valid consideration for a new promise made by the
bank: the delivery of the goods is consideration for enforcing the underlying
contract of sale and cannot be used, as it were, a second time to establish the
enforceability of the bank-beneficiary relation.
Legal writers have analyzed every possible theory from every legal angle and failed to
satisfactorily reconcile the bank’s undertaking with any contractual analysis. The theories
include:
the implied promise,
assignment theory,
the novation theory,
reliance theory,
agency theories,
estoppels and trust theories,
anticipatory theory,
the guarantee theory.
NOTE!
Davis, Treitel, Goode, Finkelstein and Ellinger have all accepted the view that documentary
credits should be analyzed outside the legal framework of contractual principles, which
require the presence of consideration. Accordingly, whether the documentary credit is
referred to as a promise, an undertaking, a chose in action, an engagement or a contract, it
is acceptable in English jurisprudence to treat it as contractual in nature, despite the fact
that it possesses distinctive features, which make it sui generis.
Even though a couple of countries and US states (see eg Article 5 of the
Uniform Commercial Code) have tried to create statutes to establish the
rights of the parties involved in letter of credit transactions, most parties
subject themselves to the Uniform Customs and Practices (UCP) issued by the
International Chamber of Commerce (ICC) in Paris.
The ICC has no legislative authority, rather, representatives of various industry
and trade groups from various countries get together to discuss how to revise
the UCP and adapt them to new technologies.
The UCP are quoted according to the publication number the ICC gives them.
The UCP 600 are ICC publication No. 600 effective July 1, 2007. The previous
revision was called UCP 500 and became effective 1993.
Since the UCP are not laws, parties have to include them into their
arrangements as normal contractual provisions. It is interesting to see that in
the area of international trade the parties do not rely on governmental
regulations, but rather prefer the speed and ease of auto-regulation.
Documents that may be required for the documentary credit are:
- commercial documents of quantitative, qualitative and value identification of the
merchandise – external invoice, pro-forma invoice etc.
- transport documents: bill of leading, airway bill, expedition document etc.
- insurance documents: insurance certificate or policy
- documents proving quality, quantity and origin of the goods: quality certificate,
warranty, certificate of origin etc.
Denial of payment can be explained and motivated by presenting incomplete or incorrect
documents, documentary credit expiral, delayed document presentation to the bank or
delays in goods expedition.
Documentary credit types:
1. according to the banking engagement:
- revocable – it is a simple promises of payment, not committing
the issuing bank. It can be modified or cancelled by the issuing bank at any
time and without the obligation of a previous notification. The reason of such
a payment is the importer’s wish to eventually reconsider his decisions in case
there is reason for that. The issuing bank will act accordingly to the
instructions given by the issuer. The essential condition is that the revocation
should be executed before the goods’ expedition to the exporter.
- irrevocable – the documentary credit involves the ferm
commitment from the issuing bank to make the payment for the beneficiary,
conditioned by the fact that the presented documents are strictly conform to
the terms and conditions in the documentary credit. The irrevocable
documentary credit has a widely spread use due to the low risk for the parties
that cannot modify it unilaterally and cannot cancel it. This type of
documentary credit can be confirmed or unconfirmed.
2. according to the confirmation, an irrevocable documentary credit can be:
- confirmed – the firm commitment of the issuing bank is doubled
by the commitment of a third bank – confirming bank. In case of the letter of
credit modification, the confirming bank may or not accept the extension of
the confirmation to the new modified documentary credit.
- un-confirmed – the issuing bank is the only one firmly
committed to payment, the other banks intervene as mandataries in the
name of the issuing bank without engaging to any ferm payment.
3. according to the moment of the payment:
- immediate payment – the payment is performed at the moment of
the documents’ presentation to the bank. Banks do not pay documents that
do not comply to terms and conditions in the letter of credit.
- term payment
- delayed payment – it is performed at a future date mentioned
precisely in the documentary credit document. Usually, it takes 30 to 60 days
from the moment of the documents presentation.
- negotiating – envisaging to avoid certain disadvantages for the
exporter, the issuing bank based on the instructions of the issuer, may
authorize an other bank to negotiate the documents. in this respect, the
negotiating bank is paid a commission, usually by the beneficiary of the
documentary credit.
- accepting – used for credit exports. At the same time with the
documents, the exporter presents to the bank a draft or a set of drafts on a
bank indicated in the letter of credit with certain deadlines. The bank accepts
the drafts becoming principal debtor, returns them to the exporter and sends
the documents to the importer. At deadline, the exporter presents the drafts
to the bank and the bank pays them.
4. according to the location:
- the country of the exporter
- the country of the importer
- a third country.
NOTE!
The location of the documentary credit, meaning the establishment of the paying
bank is important due to the promptness, the commission and other taxes. Normally, the
documentary credit must be located in the exporter’s country. The commission and other
taxes of a documentary credit located in a foreign country are due to the beneficiary,
excepting the notification and confirmation commission supported by the importer.
5. according to its clauses:
- transferable – the documentary credit may give the beneficiary the
right to require the bank to make the document payable completely or
partially for one or more beneficiaries. Such a documentary credit is used in
intermediation where the beneficiary of the documentary credit is an
intermediary and the second beneficiary is the real exporter.
- red clause – the paying bank is authorized to make the payment in
favor of the beneficiary before this one presents the documents proving the
goods expedition. Payment may be in advanced or may be equal to the
documentary credit amount. The amount thus obtained can be used by the
exporter to buy the goods or certain components. At the deadline stated in
the documentary credit, the beneficiary delivers the goods and presents the
documents to the bank being paid the difference.
- revolving – the value of the documentary credit revolves
automatically as the payments are performed according to a certain level
according to each delivery. It is used for large value contracts, with scheduled
deliveries. The value of the documentary credit is given by a certain delivery
and consequently, the banking taxes are lower.
6. according to combined usage:
- back-to-back – two types of letters of credit: an export one and an
import one correlated in value and in time by an intermediary. There are to
types of back-to-back letters of credit:
- accordant – when the issuing of a subsidiary documentary credit
requires the same documents as the original one.
- unaccordant – when the original documentary credit, after the
change of the invoice or the draft, can not be used with the necessary
documents for the subsidiary one.
- of compensation – containing a clause that does allows the use of
the exporting documentary credit only in correlation to the import one. The
combination of the to letters of credit containing such clauses, partners
involved in compensation operations make sure that if one of them will not
deliver the goods in compensation, the other one will receive from the bank
the difference in an amount of money.
- leased – the beneficiary of a documentary credit is entitled that a
part or to the whole value to be leased to a third – the lease beneficiary, most
often the real exporter.
From the exporter’ point of view, the best documentary credit – lowest in risk – is:
- irrevocable – not to be modified or cancelled;
- confirmed – beneficiates of a another bank’s guarantee;
- located in the exporter’s country;
- paid immediately.
12. Documentary credit notification (Notificarea acreditivului)
Document issued by a bank as notification of receipt, transmission of the
documentary credit to a beneficiary or bank that gives notification of receipt.
(UN/ECE/FAL).
13. Documentary credit transfer advice (Aviz de transferabilitate al acreditivului)
Document issued by a bank and notifying the parties of a contract that a
documentary credit (or part of it) will or has been transferred in favor of a a
second beneficiary. (UN/ECE/FAL).
14. Documentary credit amendment advice (Aviz de modificare a acreditivului)
Document issued by a bank and notifying that certain clauses or documentary
credit conditions have been changed. (UN/ECE/FAL).
15. Banker’s draft (Trata)
A banker's draft (also called a bank cheque) is a cheque (or check) where the
funds are taken directly from the financial institution rather than the
individual drawer's account.
NOTE!
A normal cheque represents an instruction to transfer a sum of money from the drawer's
account to the payee's account.
- When the payee deposits the cheque into their account, the cheque is verified as
genuine (or 'cleared', a process typically taking several days) and the transfer is
performed (usually via a clearing house or similar system). Any individual or
company operating a current account (or checking account) has authority to draw
cheques against the funds stored in that account.
- it is impossible to predict when the cheque will be deposited after it is drawn.
Because the funds represented by a cheque are not transferred until the cheque
is deposited and cleared, it is possible the drawer's account may not have
sufficient funds to honour the cheque when the transfer finally occurs. This
dishonoured or 'bounced' cheque is now worthless and the payee receives no
money, which is why cheques are less secure than cash.
NOTE!
By contrast, when an individual requests a banker's draft they must immediately transfer
the amount of the draft (plus any applicable fees and charges) from their own account to
the bank's account.
- An individual without an account at the issuing bank may request a banker's draft
and pay for it in cash, subject to applicable anti-money laundering law and the bank's
issuing policies,
- Because the funds of a banker's draft have already been transferred they are proven
to be available; unless the draft is a forgery or the bank issuing, the draft goes out of
business before the draft is deposited and cleared, the draft will be honoured.
- a draft must still be cleared and so it will take several days for the funds to become
available in the payee's account. (UN/ECE/FAL).
16. Bill of exchange (Cambie)
NOTE!
A bill of exchange or "Draft" is a written order by the drawer to the drawee to pay money
to the payee.
The most common type of bill of exchange is the cheque, which is defined as a
bill of exchange drawn on a banker and payable on demand.
Bills of exchange are used primarily in international trade, and are written
orders by one person to his bank to pay the bearer a specific sum on a specific
date sometime in the future.
Prior to the advent of paper currency, bills of exchange were a more
significant part of trade.
They are a rather ancient form of instrument (UN/ECE/FAL).
17. Promissory note (Bilet la ordin)
NOTE!
A promissory note is a written promise by the maker to pay money to the payee.
The most common type of promissory note is a bank note, which is defined as a
promissory note made by a bank and payable to bearer on demand.
Through promissory note a person i.e. maker (drawer) promise to pay the payee
(beneficiary) a specific amount on a specified date without any condition.
the important points in a promissory note are:
1) it is unconditional order
2) a specific amount
3) payable to the order of a person or on demand
4) payable on a specified date.
Insurance Documents
1. Insurance certificate (Certificat de asigurare)
Document issued by an insurance firm (agent) confirming the agreement unpon an
insurance and the issuing of an insurance policy. This is especially applicable to
special cargos and when the cargo is insured using a floating or opened policy; at the
request of the insured firm, this can be exchanged against a policy. (UN/ECE/FAL).
2. Insurance policy (Poliţa de asigurare)
Document issued by an insurance agent as proof of the acceptance to insure. It
contains the agreement through which the insurance firm commits to compensate
with a determined amount the other parties for the loss derived from risks and
accidents mentioned in the insurance contract. (UN/ECE/FAL).
3. Insurance declaration sheet. (Borderou sau foaie de declarare pentru asigurare)
Document used by an insurance agent in ordert o communicate the insurance firm
the detailed description of different shippings (deliveries) that are covered by the
insurance contract – or a floating policy between the parties. (UN/ECE/FAL).
4. Insurer’s invoice (Factura asiguratorului)
Document issued by the insurer in order to indicate the price of the contracted
insurance and soliciting the payment of the insurance (UN/ECE/FAL).
5. Cover note (Notă de acoperire)
Document issued by an insurer (broker, insurance agent) in order to notify the
insured that his instructions for the execution of the insurance have been executed
(UN/ECE/FAL).
Transport documents
1. Universal (multipurpose) transport document (Document de transport universal
(polivalent))
Transport document consisting in a contract for goods transport using a certain
transport mode, on the territory of one or more countries based on international
conventions or national legislation applicable according to the transport conditions of
the carrier or transport operator. (UN/ECE/FAL).
2. Goods receipt, carriage (Confirmare de primire a mărfurilor (pentru transport) = Proces-
verbal de predare-primire) 12-10-5
Document issued by a carrier or by the carrier’s agent in order to confirm the
reception of the goods, in order to be transported in the conditions mentioned in the
document, and that allow the carrier to issue a transport document. (UN/ECE/FAL).
3. Sea way bill (Liner way bill, Ocean way bill) (Scrisoare de transport maritim (nave de
linie, transport oceanic))
Negociable document consisting in a seaway transport contract for goods and that
states the reception of the goods by the carrier, document engaging the carrier to
deliver them to the specified recipient (UN/ECE/FAL).
NOTE!
Sinonimous „the direct sea way bill” or „negociable” used under certain circumstances (eg:
Canada and the USA).
4. Bill of lading (Conosament 12-3-11 (CEE/ONU))
NOTE!
Document consisting in a contract for sea transport of goods and confirming the reception
and the loading of the goods by the carrier. Through this document, the carrier commits to
deliver the goods to the destination against document remission.
The specification in the document of a clause stating that goods must be delivered at
the demand of a certain person or of the carrier also represents an engagement
(Conference of the United Nations for Seaway Transport).
The Bill of leading is decisively important in the payment of the goods this document
represent. It makes certain proof of the loading of goods on-board of the vessel and
symbolically represents the cargo, the possessions of the bill of leading is equivalent
to the possession of this cargo.
The Bill of leading is usually issued in several originals (minimum 2) and several
negotiable copies. Indifferent of the number of originals of a bill of leading, only one
of them can produce the legal effects of the cargo release – the one first presented
to the captain of the vessel in the off-loading port. From that moment on, all the
originals become null. From the point of view of the transfer of the property right, bill
of leading can be nominal, at carrier or at order.
5. Mate’s receipt (Chitanţa căpitanului (pentru primirea mărfurilor la bord) = Chitanţa
căpitanului) (CEE/ONU)
Document issued by the captain of a vessel and certifying that a certain quantity of a
cargo has been loaded and describing the apparent state of the goods. This allows
the carrier to issue the bill of leading (UN/ECE/FAL).
6. Rail consignement note (generic term) (Scrisoare de trăsură feroviară (termen generic))
Transport document constituting an un-signed contract between the shipper and the
carrier (railway agent) for the transport of goods.
NOTE!
In international railway traffic, this document must be in accordance to the model in
international conventions for railway transport of goods: CIM Convention and SMGS (GTI)
convention.
7. Road list – SMGS (Lista de însoţire SMGS)
Accounting document accompanying the cargo throughout the transport (one copy
for every railway consignment note). (UN/ECE/FAL).
TEST
1. What is the documentary letter of credit?Answer:
2. Describe the essential Documentary credit types according to the banking engagement
Answer:
ExercisesSolved example:
1. Legal writers have analyzed every possible theory from every legal angle and failed to satisfactorily reconcile the bank’s undertaking with any contractual analysis. The theories include: a. the implied promise, b. assignment theory, c. the innovation theory, d. legal theory, e. none of the above
Key
O O O
The documentary letter of credit is a document issued mostly by a financial institution, used primarily in trade finance, which usually provides an irrevocable payment undertaking (it can also be revocable, confirmed, unconfirmed, transferable or others e.g. back to back: revolving but is most commonly irrevocable/confirmed) to a beneficiary against complying documents as stated in the Letter of Credit.
To solve:2. The Bill of lading is:
a. Document consisting in a contract for sea transport of goods and confirming the reception and the loading of the goods by the carrier.
b. Negociable document consisting in a seaway transport contract for goods and that states the reception of the goods by the carrier
c. Transport document consisting in a contract for goods transport using a certain transport mode, on the territory of one or more countries based on international conventions or national legislation applicable according to the transport conditions of the carrier or transport operator
d. Document issued by a carrier or by the carrier’s agent in order to confirm the reception of the goods, in order to be transported in the conditions mentioned in the document, and that allow the carrier to issue a transport document
e. None of the above
O O O O O
Theme abstract
An international shipment requires many different types of documents.Each of these documents must be filled in a very specific fashion, often depending of
the country of destination of the goods, the type of goods, the method of transportation, the method of payment chosen by the exporter and importer, the bank(s) involved, and so on.
Each of these documents must also contain very detailed information and specific statements, and must be often be filed in a certain time frame with a specific administration.It is common to have to issue more than one original for some of these documents, as well as a multitude of copies.International commercial documents and descriptions are adopted by: WCO - World Customs Organization (1952 - Customs Co-operation Council) ICC - International Chamber of Commerce (and Banking Comission) UNCTAD FIATA - International Federation of Freight Forwarders Associations IATA – International Air Transport Association UPU - Universal Postal Union Documents are grouped according to their usage domain, the place and moment of their
issuing: production documents, purchase documents, sales documents, financial and banking documents, insurance documents, transport documents.