How to make your letter of credit transaction successful

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Article 26 UCP 600 provides that a transport document must not indicate that the goods are or will be loaded on deck. Hence, if a beneficiary under a letter of credit presents a bill of lading showing that the goods have been loaded “on deck”, a bank may properly refuse the documents and not pay the beneficiary. This seems quite a surprising result, particularly since generally containers are shipped on deck a vessel.

The term on deck, even though the UCP 600 do not specifically say so, only applies to marine transport.
A truck, a plane, a railway etc. do not have decks and the term is to be narrowly interpreted.
To get around the prohibition, carriers need to mention that they “may” load the goods on deck.
Article 26 a. UCP 600 specifically permits:
“A clause on a transport document stating that the goods may be loaded on deck is acceptable.”
Even though it might be obvious to the parties involved that the carrier will actually ship the goods on deck, he might not state so in the bill of lading.

The following bill of lading was rejected correctly:
“Perishable Cargo on Deck at Shipper’s Risk.”

A transport document bearing a clause such as “shipper’s load and count” and “said by shipper to contain” is acceptable.(see Article 26 b UCP 600). The carrier uses these clauses to limit his liability against claims from the consignee. Of course a carrier cannot limit his liability in case he knows that the information provided by the shipper is incorrect. In case he issued a bill of lading nevertheless, he would be liable for fraud.

Article 26 UCP 600 finally stipulates that “a transport document may bear a reference, by stamp or otherwise, to charges additional to the freight.”

The previous version of the UCP (the UCP 500) had listed special rules regarding the treatment of “freight payable” or “freight to be prepaid”. The ICC considered these provisions superfluous, since “there had been no instances in which banks queried terms related to freight payments that have been made or are to be made.”

A seller being obligated to pay the freight does not have to pay additional charges.
The ICC thusly:
“It is considered normal custom and practice for the exporter to pay only the sea freight and to be issued a ‘freight prepaid’ bill of lading, leaving the consignee to pick up the additional charges.”

In regards to additional charges the ICC further explains:
“Depending on the conference of the carrier, there may be charges in addition to the basic sea freight, such as ‘currency surcharge’, bunker adjustment surcharges’, heavy lift surcharge, etc.
“On top of this, charges to cover extra expenses in the port of destination may include ‘congestion surcharge’, ‘on carriage’, ‘local taxes, ‘optional destination fees’, etc.

The author further knows of war and terrorism surcharges, as well as charges related to the electronic advise of shipments to UD customs authorities.

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