International Sale of Goods
International Sale of Goods Contracts
A bill of lading is almost invariably preceded by a sale of goods contract, which will require the seller to produce original shipping documents (including a bill of lading and certificates of quality, quantity and origin) as a condition for payment. These documents evidence that the seller has complied with his contractual obligations regarding the shipment and quality of the cargo, entitling him to payment.
International Sale of Goods Contracts
A bill of lading is almost invariably preceded by a sale of goods contract, which will require the seller to produce original shipping documents (including a bill of lading and certificates of quality, quantity and origin) as a condition for payment. These documents evidence that the seller has complied with his contractual obligations regarding the shipment and quality of the cargo, entitling him to payment.
INCOTERMS use abbreviations to allocate cost and responsibility for delivery of goods between buyer and seller. For example, in an FOB sale, the seller must clear the goods for export and load the goods on board the ship nominated by the buyer, cost and risk being divided at the ship's rail. Conversely, in a CIF sale, the seller must pay the costs, insurance and freight to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods have crossed the ship's rail.
Documentary Credits
Often a seller wants to be assured that he will be paid before arranging to ship the goods and hand over the B/L and related documents to the buyer. He will therefore require his buyer to set up a documentary credit, under which the bank will undertake to pay the seller the price on presentation by the seller to the bank of certain documents, including the B/L.
A uniform set of rules is almost invariably used for these types of credits. The rules were first devised by the International Chamber of Commerce in 1933 and the current edition is the Uniform Customs and Practice for Documentary Credits 600 (known as UCP600), which came into effect in July 2007.
Key Terms of the eUCP600
The eUCP was developed as a supplement to UCP and provides the necessary rules for the presentation of the electronic equivalents of paper documents under credits. It has been in force since 1 April 2002.
eUCP allows for presentation completely electronically or for a mixture of paper documents and electronic presentation. Any requirement of the UCP or the eUCP to produce one or more originals or copies will be satisfied by the presentation of one electronic record.
Credits issued under eUCP600 place one additional burden on the beneficiary of the credit: a beneficiary presenting documents electronically must send a notice of completeness notifying the bank that the presentation is complete, failing which presentation is deemed not to have been made and the bank is not required to commence its review of the documents. It is imperative, therefore, that the Notice of Completeness is sent when the last of the documents to be submitted to the bank has been transferred.
