1. Chapter 4 Documents in International Settlements
introduction of documents
classifications
financial documents: bills of exchange, promissory notes and checks;
mercantile documents: commercial invoice, transport documents, insurance policies and other documents.
the importance of documents

2. Chapter 4 Documents in International Settlements
In international settlements, all relevant parties deal with documents, not goods.
Banks pay against documents;
Exporters receive payment by handling over the required documents;
Importers pay by virtue of documents.
The documents called for by a payment method differs according to the nature of the transaction, the goods and the countries of exporters and importers, etc..

3. Chapter 4 Documents in International Settlements
functions
Evidence for the exporter to fulfill the sale contract;
representation of the goods;
financing means.
Requirements: accurate, complete, timely, tidy
requirements for making documents (Article20b);
requirements for signatures in documents;
requirements for the number of original documents and copies (article20c);
Requirements for authentication (article20d)
requirements for issuance date (article22).

4. Chapter 4 Documents in International Settlements
Classifications
basic documents: commercial invoice, bill of lading, insurance policy or certificate
additional documents: packing list, certificate of origin, inspection certificate, cable copy, and so on.

5. Chapter 4 Documents in International Settlements
Commercial invoice
Definition
A commercial invoice is the key accounting document describing the commercial transaction between the buyer and the seller, which gives details of the goods, service, price, quantity, settlement terms and shipment.
functions
ⅠIt is evidence for the importer to check goods and make payment.

6. Chapter 4 Documents in International Settlements
ⅡThe commercial invoice is the basis for the importer’s Customs' identification, classification, duty/tax assessment, and final approval of entry of the goods.
Ⅲ In the absence of a separate contract of sale , the invoice will take on added importance as the confirmation of the terms of the arrangements between the parties.
ⅣIn the absence of a separate bill, the importers or the issuing bank will make payments according to the invoice.

7. Chapter 4 Documents in International Settlements
Ⅴ The commercial invoice is the basis for exporters to collect and record.
ⅥThe commercial invoice is the basis for the exporter’s foreign Customs' identification, classification, duty/tax assessment, and final approval of delivery of the goods.

8. Chapter 4 Documents in International Settlements
items
the word “invoice” or “commercial invoice”;
name and address of the exporter, importer, and consignee, if any;
place and date of issuance;
L/C (contract) No. and date;
terms of delivery and payment;

9. Chapter 4 Documents in International Settlements
items relative to shipment: departure date, the name of vessel/flight, the place of receipt and the place of destination;
shipping marks, goods description, quantity of goods, price and amounts; (article 39)
signature of the exporter;
other references.

10. Chapter 4 Documents in International Settlements
other types of invoice
customs invoice: prepared by exporter for the importing customs to ascertain the original price and avoid dumping.
consular invoice: an invoice covering a shipment of goods certified in the country of export by a local consul of the country for which the merchandise is destined.
legalized invoice: similar to consular invoice.
pro forma invoice: a predecessor of commercial invoice.
sample invoice: for the importer to apply for tax reduction or exemption when importing samples of goods.

11. Chapter 4 Documents in International Settlements
packing list
Definition: Packing list (P/L) is an extension of commercial invoice, which provides the complete packing details of goods.
Functions
the evidence for importers to check and accept the goods;
The evidence for the importer’s customs to check particular packages.
Classification: packing list, weight memo (list), and size memo (list).

12. Chapter 4 Documents in International Settlements
transport documents
Commercial terms
International Rules for the Interpretation of Commercial Terms, INCOTERMS,1936, 1967, 1976, 1980, 1990, 2000.
functions:
the division of transport cost;
the division of transport risks;
the handling liabilities: furnishing of documents, export and import clearance, and notifications to the parities concerned.

13. Chapter 4 Documents in International Settlements
Incoterms do not deal with:
transfer of property/legal title;
breach of contract/deficiency in the merchandise;
terms of payment;
place of jurisdiction.

14. Chapter 4 Documents in International Settlements
elements
the precise point of goods’ transference;
a clear definition of the expenses;
the time and the place for the actual delivery of goods
Framework
Group E:
EXW, or EX Works means that the seller makes the goods available to the buyer at the seller’s own premises.
Group F: main carriage unpaid, including:

15. Chapter 4 Documents in International Settlements
FCA, Free Carrier (…named place), title and risk pass to the buyer including transportations and insurance costs when the seller delivers goods cleared for export to the carrier nominated by the buyer at the named place.
FAS, Free Alongside Ship (…named port of shipment), title and risk pass to the buyer including payment of all transportation and insurance cost when the goods are placed alongside the vessel at the named port of shipment by the seller;

16. Chapter 4 Documents in International Settlements
FOB, Free on Board (…named port of shipment), title and risk pass to buyer including payment of all transportation and insurance cost when the goods pass the ship’s rail at the named port of shipment.
Group C, main carriage paid, including:
CFR, Cost and Freight (…named port of destination), the seller pays the costs and freight necessary to bring the goods to the named port of destination but the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time of delivery, are transferred from the seller to the buyer;

17. Chapter 4 Documents in International Settlements
CIF, Cost, Insurance and Freight (…named port of destination), the seller has to procure insurance and pay the insurance premium in the name of the buyer;
CPT, Carriage Paid To (…named place of destination), title, risk and insurance cost pass to the buyer when the seller delivers the goods to the carrier nominated by him and pays transportation cost to the named destination;
CIP, Carriage and Insurance Paid To (…named place of destination), the seller has to procure insurance during the carriage.

18. Chapter 4 Documents in International Settlements
Group D, arrival of the goods, including:
DAF, Delivered At Frontier (…named place), title, risk and responsibility for import clearance pass to buyer when goods are placed at the disposal of the buyer at the named point and place at the frontier;
DES, Delivered Ex Ship (…named port of destination), title, risk and responsibility for vessel discharge and import clearance pass to buyer when the goods are placed at the disposal of the buyer on board the ship at the named port of destination;

19. Chapter 4 Documents in International Settlements
DEQ, Delivered Ex Quay (…named port of destination), title and risk pass to buyer when goods are placed at the disposal of the buyer not cleared for import on the quay at the named port of destination;
DDU, Delivered Duty Unpaid (…named place of destination), the seller delivers the goods to the buyer, not cleared for import, and not unloaded from any arriving means of transport at the named place of destination;
DDP, Delivered Duty Paid (…named place of destination), the seller delivers goods to the buyer, cleared for import, and not unloaded from any arriving means of transport at the named place of destination.

20. Chapter 4 Documents in International Settlements
Definition of transport documents
Transport documents are documents that represent the goods in transport or prove the goods have been received for transport.
bill of lading (B/L)
definition:
A bill of lading is a document issued by a carrier to a shipper, signed by the captain, agent, or owner of a vessel, providing written evidence regarding receipt of the goods, the conditions on which transportation is made, and the engagement to deliver goods at the prescribed port of destination to the lawful holder of the bill of lading.

21. Chapter 4 Documents in International Settlements
Characteristics
Requisite in form;
Written document;
Transferable documents;
Documents to deal with goods;
Documents with value.
Functions
A receipt of goods from the shipping company to the exporter;
Evidence of the transport contract for carriage between the exporter and the carrier;
Document of title.

22. Chapter 4 Documents in International Settlements
items
items on the obverse:
the carrier;
the shipper;
the consignee;
notify party;
vessel, port of loading, port of discharging and transshipment, if any;
marks and No.;
description of packages and goods;
freight;

23. Chapter 4 Documents in International Settlements
place and date of issue;
shipment clause;
without information clause.
Items on the reverse:
Definition clause;
Jurisdiction clause;
Duration of liability;
Package and marks;
Inaccuracy in particulars furnished by shipper;
Lien clause;
Transshipment clause;
on-deck cargo, live animals and plants.

24. Chapter 4 Documents in International Settlements
Classifications
shipped on board B/L & received for shipment B/L
shipped on board B/L: a B/L issued only after the goods have actually been shipped on board the vessel;
received for shipment B/L: a B/L issued to acknowledge receipt of shipment before cargo loading or before official original bill of lading is issued.
clean B/L & unclean B/L
Clean B/L: a B/L in which there is no indication of damage to the goods and packaging;
Unclean B/L: a B/L in which there is indication of damage to the goods or packaging.

25. Chapter 4 Documents in International Settlements
straight B/L, open B/L (blank B/L) & order B/L
Straight B/L: a non-transferable B/L which indicates the carrier will deliver the goods to the consignee.
open B/L: a B/L which indicates no specific consignee and the goods will be delivered to anyone who holds the B/L;
order B/L: a title document to the goods, issued "to the order of" a party, usually the shipper, whose endorsement is required to effect the negotiation.

26. Chapter 4 Documents in International Settlements
direct B/L, transshipment B/L, through B/L
direct B/L: issued when goods are shipped from the port of loading directly to the port of discharge without transshipment;
transshipment B/L: issued when the goods are transferred from one ship to another at a named transshipment port; (article 23 b, c)
through B/L: the carriage of goods from the port of loading to the place of destination are taken by two or more than two carriers, and the bill of lading to cover the entire carriage is issued by the first carrier.

27. Chapter 4 Documents in International Settlements
liner B/L & charter party B/L
Liner B/L: a B/L which indicates that goods are being transported on a ship that travels on a scheduled route and has a reserved berth at destination;
charter party B/L: a B/L issued by the hirer of a ship to the exporter, subject to the contract of hire between the ship’s owner and hirer.
long form B/L & short form B/L
short form B/L: a B/L that doesn’t contain the full details of the contact of the carriage on the back.

28. Chapter 4 Documents in International Settlements
anti-dated B/L, advanced B/L & stale B/L
anti-dated B/L: according to the request of shipper, the carrier signs a B/L in which the date of issuance is earlier than the actual date of shipment in order to comply with the requirements of L/C;
advanced B/L: a shipped on board B/L issued by the carrier when the goods haven’t been shipped on board.
stale B/L: a B/L which arrives after the consignment arrives at the final destination. Because the B/L is not available, the goods cannot be handed over to the consignee.

29. Chapter 4 Documents in International Settlements
other transport documents
sea waybill or ocean waybill: issued by the shipping company covering port-to-port shipment, not a title document. Example8-8.
multi-model transport document: a B/L covering two or more models of transport, such as shipping by rail and by sea. Example8-13.
air transport document: air waybill & house air waybill
air waybill: issued by the air carrier, a document evidencing shipment or dispatch or receipt of goods. Example8-9.

30. Chapter 4 Documents in International Settlements
Road or inland waterway transport documents;
Cargo receipt/railway bill;
Courier receipt and post receipt.

31. Chapter 4 Documents in International Settlements
insurance documents
Definition: An insurance document is a contract whereby the insuer undertakes to indemnify the assured in a manner and to the extent thereby agreed, against certain losses to cargo while in transmit.
functions:
evidence of insurance contract;
evidence of compensation.

32. Chapter 4 Documents in International Settlements
types:
insurance policy: a document issued by an insurance company, covering the goods being shipped against specified risks during the whole or part of the journey between the seller and the buyer.
insurance certificate: a document issued to the insured certifying that insurance has been effected and the version of the provisions of the policy is abbreviated.
combined certificate or risk note: a stamped invoice as an evidence of insurance.

33. Chapter 4 Documents in International Settlements
open policy: an agreement between the insurer and the insured before the goods are shipped in case that the buyer covers the risks lest the insurance might be delayed or missed.
insurance declaration: after the goods are shipped, the buyer should report to the insurer the details of shipment in insurance declaration.
cover note: a document issued to give notice that insurance has been placed pending the production of a policy or a certificate. (article 34 c, d)

34. Chapter 4 Documents in International Settlements
items
Insurer; (article 34 a)
the insured;
subject matter;
amount insured; (article 34 f)
items relative to shipment;
conditions:
basic risks: free from particular average (F.P.A.), with average (W.A.) & all risks.
General additional risks: theft pilferage and non-delivery, risk of fresh water rain damage, risk of shortage, risk of inter-mixture contamination, risk of leakage; risk of crash breakage; risk of taint of odor, risk of sweat and heating, risk of hook damage, risk of breakage of packing, risk of rust.

35. Chapter 4 Documents in International Settlements
Special additional risks: failure to deliver risk, import duty risk, on deck risk, rejection risk, aflation risk, inspection risk, war risk.
Claim payable at;
Surveyor;
Date and place of issue. (article 34 e)
other documents
inspection certificate: a document issued by an authority, as stated in the documentary credit, indicating that goods have been inspected prior to shipment and the results of the inspection.

36. Chapter 4 Documents in International Settlements
Key points related to the Inspection Certificate:
The description and mark of the goods must be the same as those mentioned in the commercial invoice and other documents to ascertain that the goods inspected are exactly those exported;
The wording on the inspection certificate must be exactly the same as those mentioned in the invoice and must be in compliance with the terms and conditions of the credit;
The inspection date must be earlier than B/L’s date or conform to that stipulated in the letter of credit.

37. Chapter 4 Documents in International Settlements
origin certificate: a document issued by an authority, as stated in the documentary credit stating the country of origin of goods.
representative form: Generalized System of Preference Certificate of Origin, a certificate used to obtain the treatment of preference customs duty imposed by the developed country in the developing countries.
Export license: a document prepared by a government authority of a nation granting the right to export a specific quantity of a commodity to a specified country.

38. Chapter 4 Documents in International Settlements
Beneficiary’s statement: a statement issued and signed by the beneficiary, certifying that he has done some work according to the stipulations in the credit.
Cable copy

39. Chapter 4 Documents in International Settlements
key points in review
Incorrect amounts or currency in bill of exchange;
Incorrect title in invoice or inconsistence of goods’ description with L/C;
Overloading or underloading;
Inconsistence of description of goods among documents;
Incomplete documents;
Omission of signature or stamp in documents;
Omission of endorsement;
Overdue loading or overdue presenting documents; .

40. Chapter 4 Documents in International Settlements
Clause as to partial shipment or transshipment is violated;
Inconsistence of the freight in transportation documents with trade terms;
Overdraft;
Conditional requirements specified in the L/C aren’t satisfied;
Corrections in documents haven’t been signed or stamped;
Inconsistence of the type of transport documents with L/C;
Documents presented obeyed the original L/C after the L/C has been revised;
Inconsistence of issuing date in documents.

41. Exercises
A credit calls for an invoice in 3 copies. When presented, they are identical computerized copies not marked as "original". Is this acceptable?
2. A credit has a certain description of the goods at the end of which it specifies:" FOB Shanghai". The invoice describes the goods but omits "FOB Shanghai". Is this acceptable?

42. Exercises
3. Would you accept a B/L where the instructions to the agent at the port of discharge state: "Do not deliver the goods without shipper's prior faxed agreement"?
4. A B/L shows that the goods were embarked in 40' "open top" containers. Is this a defective packaging condition causing the bill to become dirty/clauzed/foul?

43. Exercises
A B/L carries the following clause:" Packaging carried out using paper bags, the carrier accepts no responsibility in case of loss or damage caused to goods as a result of such type of packaging". Is this acceptable?
6. If a credit calls for a marine B/L without further specification, can you accept a received for shipment B/L?

44. Exercises
7. A copy of a document is indicated as "copy", but is not signed. Can you accept it?
8. A B/L is issued in "Received for shipment" format and also carries the notation "Shipment on board" with a date other than and subsequent to the date of issue of the B/L. For the purpose of the credit the correct date is: the shipped on board date or the date of issue?

45. Exercises
9. If the B/L said “short shipped one bale”, is this an unclean B/L?
10. Is an insurance document dated later than the shipment date is acceptable?