LC - A Document Examination Checklist

The Draft: Check that...

• the Draft bears the correct Letter of Credit reference number, the signature and/or the name of the Drawer corresponds with thename of the Beneficiary,

• the tenor is in accordance with the Letter of Credit,
• the payee is the bank documents are being presented to or the Beneficiary,
• if the payee is the Beneficiary, it is duly endorsed and bears no restrictions or conditions in the endorsement (e.g., “without recourse”),
• the amounts in figures and words correspond and the currency is that in which the L/C is issued,
• it is drawn on the Drawee specified in the L/C,
• the amount drawn does not exceed the balance available in the Letter of Credit,
• the values of the draft and the invoice correspond,
• it has a current date—specifically, the shipment date if the Letter of Credit calls for the maturity of the Draft to be based on the bill of lading date,
• any apparent alterations have been properly stamped and/or initialed,
• it contains any necessary clauses required by the Letter of Credit.

The Invoice: Check that...

• the correct number of original(s) and copy(ies) is presented,
• it is issued by the Beneficiary named by the Letter of Credit and, if an address is shown, it is the same address as that indicated in the L/C,
• the Applicant (the buyer) is indicated as the invoiced party, and, if an address is shown, it is the same address as that indicated in the L/C,
• the description of the goods is in exact accordance with the merchandise description in, and includes the shipping terms indicated in, the Letter of Credit, and no extra goods are included, no additional detrimental description of the goods appears that may question their condition or value (e.g., “re-conditioned”), any other information supplied in the invoice, such as marks, numbers, transportation information, packaging, weight, freight charges or other related insurance and transport charges etc., is consistent with that in the other documents,
• the currency of the invoice is the same as that in the Letter of Credit,
• the invoice amount is at least the amount of the Draft,
• if partial shipments are prohibited, the invoice covers the complete shipment as required by the L/C or is within the 5% tolerance allowed by the UCP,
• if required by the Letter of Credit, the invoice is signed, notarized, legalized, certified, etc.

Transport Documents: Check that...

• the full set of originals issued is presented, unless otherwise allowed by the Letter of Credit (for air waybills, the original Shipper’s Copy constitutes the “full set”),
• it clearly indicates who the carrier is,
• it clearly indicates the name and capacity of the signer (e.g., “ABC Co. as carrier” or “XYZ Co. as agent for ABC Co., the carrier”),
• if an “ocean” or “port-to-port” bill of lading is required, it clearly indicates that the goods are on board a named vessel at a named port on a given date,
• the place of receipt/origination/taking in charge, port of loading, port of discharge, place of delivery/destination, etc. are as specified in the L/C,
• it is not a “charter party” transport document, unless authorized in the L/C,
• the name of the consignee is as stipulated in the Letter of Credit,
• if the transport document requires endorsement, it is appropriately endorsed,
• there are no clauses on the transport document that may render it “unclean” (See UCP 500 sub-Article 32(a)), the description of the goods is not inconsistent with the description of the goods as stated in the invoice, and that the marks and numbers as well as other specifications, if any, are identical to those appearing on the other documents, any apparent alterations have been properly stamped and/or initialed,
• the name and address, if any, of the notify party are as stipulated in the Letter of Credit,
• the indication of “freight prepaid” or “freight collect,” as required by the terms of the Letter of Credit, appears on it and is consistent with the shipping terms shown in the invoice, all other conditions stipulated in the appropriate transport articles of UCP 500 are complied with.

The Insurance Document: Check that...

• the policy/certificate/declaration/cover note, as required by the Letter of Credit, is presented,
• the full set of the insurance document issued (all signed originals) is presented,
• if specified in the L/C, the correct number of original(s) and copy(ies) is presented,
• it is issued and signed by the insurance company or underwriter or their agents, or countersigned by the assured if so required by the insurance document itself,
• the date of issuance or date from which cover is effective is no later than the date of loading on board or dispatch or taking in charge of the goods, as the case may be,
• if the assured named is other than the Confirming Bank, Issuing Bank or buyer, it bears the appropriate endorsement,
• it is issued in the same currency as the Letter of Credit, unless otherwise allowed in the Letter of Credit,
• the insured value of the goods is as required by the Letter of Credit or as defined in UCP 500 sub-Article 34(f),
• the goods description is not inconsistent with and relates to that of the invoice, the marks and numbers, etc. are identical to those of the transport document and all other information appearing on the document is consistent with that of the other documents,
• it covers the specified risks as stated in the Letter of Credit and that the risks are clearly defined,
• it covers the merchandise from the port of loading or place of taking in charge to port of discharge or place of delivery designated in the L/C, any apparent alterations have been properly stamped and/or initialed.