ICC Pakistan

V. M. House
West Wharf Road
PO Box 4050
Karachi 74000
Pakistan

25 August 2014

Subject: Document 470/TA.810

Dear Sirs,

Thank you for your query regarding UCP 600. Please find below the opinion of the ICC
Banking Commission Technical Advisers and Officers.

QUOTE

Bank K in country P opened a documentary credit for US$ 54,000 CFR Karachi Port,
for the import of 6000 SFT cow leather in hides, available by acceptance at the counter of
Bank U in country I. The tenor of the documentary credit was 90 days from the bill of lading
date. The date and place of expiry was February 19, 2014 in country I. The latest date of
shipment was February 5, 2014 and the period for presentation was 15 days from date of
shipment.

Documentary credit prohibited partial shipment.

Field 46A (documents required) included the following documents:

Invoice
Bill of Lading
Packing List
Beneficiary Certificate
Copy of Shipment Advice sent to the insurance company on Fax no. ---------------- and
to the opener on Fax no. ----------------- within 3 working days of all shipment referring
cover note no. ------------ dt --------- issued by NH Insurance Company -------------.
Shipment Advice must accompany the documents.

Series of Events:

Bank U sent compliant documents on Jan 8, 2014 for US$54,000 for payment on the
maturity date i.e. March 24, 2014, calculated 90 days from shipped on board bill of
lading stamp dated December 24, 2013.

Bank K sent a refusal message (MT734) on January 13, 2014 citing the following
discrepancy:

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Document 470/TA 810
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 “Invoice  amount  is  incorrect  in  shipment  advice.  Shipment  advice  shows  
invoice  amount  USD  54,00.00  instead  of  54,000.00.”  

Bank U replied on January 16, 2014 that this is a typing error that does not affect the
insurance and there is no requirement in the documentary credit for the invoice
amount to be mentioned on the shipment advice.

Bank K returned original documents on January 18, 2014.

Bank U although not convinced with the discrepancy, but at the request of Bank K
over the telephone, made a re-presentation including a corrected shipment advice
(showing the correct amount). The forwarding letter was dated February 10, 2014
and received at the counter of Bank K on February 12, 2014.

On February 12, 2014 Bank K refused the presentation citing the following
discrepancy:

“Late  Presentation”  

There were messages exchanged between Bank U and Bank K on this discrepancy.
Bank U considered that there was no discrepancy in the original presentation, but
sent an adjusted shipment advice at the request of Bank K. Bank K maintained that
the presentation with the corrected shipment advice was made too late.

UCP 600 sub-article 14(d) Standard for Examination of Documents reads:

Data in a document, when read in context with the credit, the document itself and
international standard banking practice, need not be identical to, but must not conflict with,
data in that document, any other stipulated document or the credit.

ISBP 745 paragraph A23 reads:

A misspelling or typing error that does not affect the meaning of a word or the sentence in
which it occurs does not make a document discrepant. For example, a description of the
goods  shown  as  “mashine”  instead  of  “machine”,  “fountan  pen”  instead  of  “fountain  pen”  or  
“modle”  instead  of  “model”  would  not be regarded as a conflict of data under UCP 600 sub
article  14  (d).  However,  a  description  shown  as,  for  example,  “model  123”  instead  of  “model  
321”will  be  regarded  as  a  conflict  of  data  under  that  sub-article.

Under CFR incoterm, insurance is arranged by the importer/applicant. The purpose of

a shipment advice is for the insurance company to initiate insurance policy & calculation of
premium to be charged to the applicant, based on the shipment details provided in the
shipment advice (including the invoice value).

The typing error (USD54,00.00 instead of USD54,000.00) on the shipment advice may
result  in  a  lesser  value  of  goods  covered  in  the  insurance  but  as  the  insurance’s  cover  note  
(issued by the insurance company in favour of Bank K prior to issuance of documentary
credit to comply Bank K issuance requirements) is for US$54,000 where no partial shipment
is allowed in the documentary credit, the insurance company can safely believe value of
shipment is US54,000. At a first glance it appear as shipment advice is in conflict with the
invoice value but common sense prevails in the given situation that this is clearly a typing
error where one zero has been missed out in the shipment advice.

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Document 470/TA 810
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 At the request of bank K, the amount on the shipment advice was corrected by the
beneficiary and a full set of documents re-presented to bank K, and subsequently refused
with  a  new  discrepancy  “Late  Presentation”.  

Although there is a conflict of data on the shipment advice with other documents, we
are of the opinion thatr this is still not a valid reason for refusal. Based on the above, our
conclusion  is  that  the  ‘shipment  advice’  discrepancy  is  not  correct,  and  that  bank  K  should  
therefore reimburse bank U.

For this particular case, we kindly ask you to advise us regarding the following
questions:

1. Does  the  omission  of  a  “0”  in  the  amount  in  the  Copy  of  Shipment  Advice  constitute  a  
valid discrepancy, or can it be regarded as a typing error that – in the context of this
presentation – does not affect the meaning.

2. Is it acceptable for the issuing bank to raise a discrepancy on the re-presentation that
was not raised in the first presentation?

3. Is the issuing bank obligated to reimburse the nominated bank?

We kindly ask your official opinion if our conclusion is correct.

UNQUOTE

Analysis

Under documentary credits covering CFR shipment it is quite common for a credit to
call for a shipment advice sent to an insurance company to be included in the list of required
documents.

The function of a shipment advice is to provide timely information of correct shipment

details for the purpose of arranging appropriate insurance cover. In this particular query,
there is no dispute in respect to the timeliness of the information.

The shipment advice presented under the credit is to be checked in accordance with
UCP 600 sub-article 14 (f) which provides that the document presented fulfils the function of
a shipment advice and otherwise complies with UCP 600 sub-article 14 (d) (conflicting data).

The shipment advice presented under the credit stated value of shipment as USD
54,00.00  whereas  the  invoice  stated  USD  54,000.00.  The  value  stated  on  the  insurance’s  
cover note is irrelevant for determination of compliance as it is not required under the credit.

According to English convention, amounts of higher than 999.00 are commonly

presented using a comma as delimiter; forming groups of maximal three digits before the
radix point. An amount stated as USD 54,00.00 does not follow this convention and can
clearly be classified as a typing error. Even in countries using a decimal comma rather than
a decimal point, USD 54,00.00 would not follow convention.

ISBP745 paragraph A23 provides that a typing error that does not affect the meaning
of a word does not make a document discrepant and would not result in conflicting data.

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Document 470/TA 810
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 However, even though the amount of USD 54,00.00 is clearly a typing error, it does
affect the meaning of the data due to the fact that the recipient of the shipment advice
cannot rely on this information in order to ensure appropriate insurance cover. Thus the
function of a shipment advice is not met by the document presented.

The issuing bank asked for re-presentation of corrected documents by phone. There is
no evidence as to the scope of this instruction. It is quite usual for beneficiaries to correct
discrepant documents in order to re-present them. Such re-presentation however, would not
benefit from a former presentation date, but will be checked for timely presentation
independently. Refusal of re-presented  documents  on  the  basis  of  “late  presentation”  is  not  
considered  violation  of  the  requirement  of  a  “single”  notice  of  refusal.

Conclusion

1. In this case, the typing error in the amount in the Shipment Advice is a discrepancy;
the shipment advice does not fulfil its function of providing correct information on
shipped goods in order to arrange insurance cover.
2. Yes
3. No

The opinion(s) rendered on this query reflect the opinion of the ICC Banking
Commission’s  officers  based  on  the  facts  under  “QUOTE”  above.  They  do  not  
necessarily reflect the opinion of the ICC Banking Commission until the Banking
Commission renders its approval or disapproval of these opinion(s) at the next
scheduled meeting.

The reply given is not to be construed as being other than solely for the benefit
of guidance and there should be no legal imputation associated with the reply offered.
If this query relates to a matter currently under consideration by the courts, the ICC
Banking Commission will refrain from considering it for adoption as an opinion.

Neither the ICC nor any of its employees, nor any member of the Banking
Commission, including the Chairman, Vice-Chairmen or Technical Advisers shall be
liable to any person for any loss or damage arising out of any act or omission in
connection with the rendered opinion(s).

Yours sincerely,

Thierry Senechal
Policy Manager
Banking Commission

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Document 470/TA 810
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