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Hello Experts,
Me and my colleagues have argument over two scenarios in BL.

LC calls for Bill of Lading to be made to the order of ABC Bank Ltd.
But Bill of lading made to the order of XYZ Bank Ltd. and then further endorsed to the order of ABC Bank Ltd.

Will it be considered as discrepancy?
Will it be a discrepancy if its vice versa?

Pls explain with rational for both the scenarios.

Thanks & Regards
Vikram

Dear Vikram,

Please refer to ISBP para:

101. If a credit requires a bill of lading to show that the goods are consigned to a named party, e.g., “consigned to Bank X” (a “straight” bill of lading), rather than “to order” or “to order of Bank X”, the bill of lading must not contain words such as “to order” or “to order of” that precede the name of that named party, whether typed or pre-printed. Likewise, if a credit requires the goods to be consigned “to order” or “to order of” a named party, the bill of lading must not show that the goods are consigned straight to the named party.

102. If a bill of lading is issued to order or to order of the shipper, it must be endorsed by the shipper. An endorsement indicating that it is made for or on behalf of the shipper is acceptable.
.

Mohiuddin

Mr.

mohiuddin wrote:Dear Vikram,

Please refer to ISBP para:

101. If a credit requires a bill of lading to show that the goods are consigned to a named party, e.g., “consigned to Bank X” (a “straight” bill of lading), rather than “to order” or “to order of Bank X”, the bill of lading must not contain words such as “to order” or “to order of” that precede the name of that named party, whether typed or pre-printed. Likewise, if a credit requires the goods to be consigned “to order” or “to order of” a named party, the bill of lading must not show that the goods are consigned straight to the named party.

102. If a bill of lading is issued to order or to order of the shipper, it must be endorsed by the shipper. An endorsement indicating that it is made for or on behalf of the shipper is acceptable.
.

Mohiuddin

Thanks Mohiuddin,

But this is not the relevant explanation to my question.
Can somebody else explain to me the rational behind this theory?

Dear Vikram,

IMO, It is Discrepancy, Coz presented BL not comply with LC terms. LC required Bill of Lading to be made to the order of ABC Bank Ltd. Not XYZ Bank Ltd.
.
On the other hand presented BL served your purpose.

Mohiuddin

Dear Vikram,

Do you mean that the last endorsement made by XYZ bank to order of ABC Bank? If that is the case, I think it's not discrepant. Though there were two endorsements: (1) the endorsement made by Shipper to order of XYZ Bank then (2) XYZ Bank continue endorsed to order of ABC Bank --> at last it was endorsed to order of ABC as LC required.

You can refer to the similar case whether L/C requires CPBL "made out to Order and blank endorsed" but CPBL presented was "endorsed by shipper to order of [name bank] and then they endorsed to [name company] who then endorsed in blank". (see Gen 181 FAQ under UCP 600 volume VI by Gary Collyer). Below is Suggested Answer of Gary:
Quote
Provided the endorsement made by [name company] was in blank i.e, they did not endorse to another [named] party then the document would be acceptable. The language in the LC does not prohibit multple endorsements, provided that the final endorsement is in blank.
Unquote

Hope this helps

Vikram,

Yes in both scenarios
Striclty from UCP angle article 14 J Consignee should be as per LC.In this case it is not, so discrepant.

(Of course logically speaking in both the cases end result are same though )

To Thuyvan
I heard when it comes for a dispute in bill of lading consignee and person holding (endorsee) have different rights.
But this one from Gary is surprising.

Would like to know from someone who have experience in Marine transport what are the rights of Consignee and Endorsee ?

Case 1.

LC calls for Bill of Lading to be made out to the order of ABC Bank Ltd.
Bill of lading made to the order of XYZ Bank Ltd. and then further endorsed to the order of ABC Bank Ltd.

Is it discrepant ? : Yes (because we are focusing on the consignee requirement)

Case 2.

LC calls for Bill of Lading to be made out to order and blank endorsed
Bill of lading made to the order of XYZ Bank Ltd, then further endorsed to the order of ABC Bank Ltd and ABC Bank endorsing to order of Beneficiary, who endorses in blank

Is it discrepant : No (because we are focusing on the endorsement requirement)

Although an endorser of a B/L is better protected under negotiable instruments law, the position of an endorsee is no different under such a B/L than that under a B/L made out to (or to order of ) Party A. Whereas, under a bill of exchange, each successive holder (by endorsement) acquires a better title than the previous endorser (free of any claims of fraud etc) a Bill of Lading is considered to be a "quasi" negotiable instrument, because this inherent quality does not apply to B/Ls, and each holder takes on the defects in title (if applicable) of the previous endorsers.

Hi Abrar,

In the two scenario both does not state consignee as per LC however only in second scenario you agree ..Does this have a backing from any of the rules,publication etc My problem is how you can refute the discrepancy when Issuing bank is refusing this document stating "Consignee is not as per LC terms"

On what basis we are stating one scenario we have to concentrate on consignee and another on endorsee ?

My opinion is this is not explained anywhere in UCP or ISBP nor any ICC opinion, if that is the case better to be safe than sorry and quote a discrepancy.

To clarify my earlier post, where the LC indicates consignee as a specific "to order" party with no further requirement for endorsement, the B/L should indicate such consignee directly in the consignee box, rather than through a subsequent endorsement "to order" of such consignee. So, in the given case, where the the B/L has been further consigned to the designated consignee through an endorsement, this would be considered a discrepancy.

However, if the LC were to require consignee as "to order" and blank endorsed, regardless of who the initial consignee is shown as, and regardless of the number of intermediate endorsements made, provided the final endorsement renders the B/L as a bearer document, this would comply with LC requirements.

The below link wherein this issue was previously discussed in 2011 might be of interest :

viewtopic.php?f=2&t=1881

hi,

I alway thought this is a discrepancy for not compliant with lc. lc called for made out not endorse.

But for unforeseen circumstance presented the following for a confirmed lc and was certified clean:

lc called for bl made out to order of abc bank
bl presented made out to order and endorsed to order of abc bank

and understand from another colleague she has the same issue and cfm bank is the one proposed to do endorsement.

But this is very much subject to bank, I know some banks cannot accept.