commercial invoice issued by a thrid party

[jim]

dear sir,

i found this lines a bank's magazine

ISBP stipulates that the commercial invoice may also be issued by a party other than the beneficiary if the credit allows "third party documents". So, acting on ISBP's recommendations, the commercial invoice issued by Lieferant GmbH could be accepted.

on the basis of UCP 600, the commercial invoice should nevertheless be issued by the beneficiary only or in the case of a transferred credit by the second beneficiary.

This advice is based amongst others on the following consideration: if the credit also required presentation of a draft issued by the beneficiary, ISBP point 21 c states that it could also be issued by the beneficiary only, which is Export GmbH. So does the draft come from the beneficiary, and the commercial invoice from any other party? That seems illogical - particularly as the applicant has not entered into a contractual agreement with the other party. therefore applies the credit clause "third party documents acceptable" to transport documents and other shipping documents such as packing lists, certificates of origin, etc. only and not to the commercial invoice.

we frequently receives LC with the clause "third party document acceptable". what should we do if the issuing bank raise discrepancy based on the above logic?

[nesarul]

Dear Sir,
Article 18(a)(i) of UCP 600 stipulated that commercial invoice has to be issued by the beneficiary.
But mentioning on the credit that third party documents acceptable -is simply modify the rule that any party can be named as consignor or shipper in any document including commercial invoice but excluding drfat. this is further confirmed by the ICC official opinion R557:

Given that the UCP permits such situations to occur, use of the term "Third party documents acceptable" can only lead to parties interpreting the clause to mean something different from the above. ICC has already stated that the use of such a term would permit the issuance of invoices in the name of a company other than the beneficiary.

.
So the logic what provided to reach in a conclusion that draft and commercial invoice must be from the beneficiary is not correct from my view point.
.
However we can further analysis why draft is not included as third party document.
.
regards
.

[abdu]

Dears,

Just a small opinion here, it is quite logical as to why the beneficiary(drawer) has to draw the drafts in the LC,

I cant agree more with wht Nesarul said...

When we have such LC's as issuing banks if we know the intentions of the appplicant by instructing us to have this clause "third party documents are cceptable" in the LC is only to mean that the shipper and consignor in the document can be a party other that the beneficiary...we can modify the clause stating
"Third party documents are acceptable in accordance with article 14 F of UCP 600"

Other opinions are welcome...

Regards,

[iLC]

However we can further analysis why draft is not included as third party document.

on run now. just a quick response. a draft is generally not counted as a document. the job of acceptance invariably comes with a draft. if there is a third party draft, then acceptance of it will develop a relationship between a third party and issuing bank which is not covered by the letter of credit

[nesarul]

Dear ILC,
Yes I am also in line with your thinking.
Thanks for sharing.
regards
nesar

[berry]

there is specific provision for draft in UCP 600.
article 2 definition of honor

c. to accept a bill of exchange (“draft”) drawn by the beneficiary and pay at maturity if the credit is available by acceptance.

[wongvv]

Hi !

According to ISBP 21 C, it mentions that "third party documents acceptable" - all documents, excluding drafts but including invoices, may be issued by a party other than the beneficiary.

V.V.