An exporter of agricultural machinery presents its documents to its bank in Paris. They are rejected: the bill of lading bears the notation “shipped on deck at shipper’s risk”, and it was presented twenty-three days after shipment. The buyer, for its part, refuses to waive the discrepancies. The goods are at sea.
The most common discrepancies
Shipment. The bill of lading must indicate that the goods have been shipped on board a named vessel, by pre-printed wording or a dated on board notation (UCP 600, Article 20). A “received for shipment” bill without an on board notation is rejected.
Deck cargo. A transport document must not indicate that the goods are or will be loaded on deck; a clause stating that they may be loaded on deck is acceptable (Article 26).
Clauses. Only a clean document is accepted, that is, one bearing no clause expressly declaring a defective condition of the goods or their packaging (Article 27).
Time limit. Presentation must be made within twenty-one calendar days after the date of shipment, and in any event no later than the expiry date of the credit (Article 14(c)).
Consistency. Data in the documents must not conflict with each other or with the credit.
The refusal procedure
The bank has a maximum of five banking days following the day of presentation to determine whether the presentation is complying (Article 14(b)). If it refuses, it must give a single notice stating each discrepancy (Article 16). A bank that fails to comply with these rules is precluded from relying on the discrepancies. This is often the first line of challenge.
Remedies
Before shipment, the terms of the credit should be reviewed with the freight forwarder: port, vessel, date, required notations, period for presentation. After a refusal, several options are available: having the carrier correct the document if this is still possible, obtaining a waiver of the discrepancies from the buyer, presenting the documents on a collection basis, or challenging the validity of the refusal.
What the firm checks first
- The terms of the credit and the applicable UCP.
- The bill of lading: shipment, deck carriage, clauses, dates.
- The date of presentation and the twenty-one-day period.
- The notice of refusal: timing and content.
- The contractual relationship with the buyer.
For the firm’s services, see Bills of lading and the pillar page International sales and Incoterms.
Further reading
- Clean bill of lading against a letter of indemnity: the risks for shipper and carrier
- Goods carried on deck without your consent: loss and compensation
- FOB, CFR, CIF: who can sue the carrier after cargo damage?
This analysis is part of the firm’s work in maritime law.
Frequently asked questions
Does a “may be carried on deck” clause lead to rejection of the bill of lading?
No, a clause stating that the goods may be loaded on deck is acceptable (UCP 600, Article 26).
What is the time limit for presenting the documents?
No later than twenty-one calendar days after shipment, unless the credit provides otherwise, and before the credit expires (UCP 600, Article 14(c)).
Can the bank raise new discrepancies later?
No, its notice of refusal must list all of them (UCP 600, Article 16).