What are the points that needs to be under consideration at the time of negotiation of document?

Answer:

While negotiating the documents under Letter of Credit, utmost care should be taken on the following points :-

1.	Letter of Credit:
	(a)	Examine whether it is a revocable or an irrevocable L/C. No documents should be negotiated under revocable L/C.
	(b)	If the L/C is transmitted by Telex, the same must be authenticated by authorized signatory of the Advising Bank.
	(c)	If the L/C is an Air-mailed one, the signature thereon must be verified by the Advising Bank for authentication purpose.
	(d)	Whether the opening bank is with a good means and standing, if not whether confirmation from a third bank already been obtained.
	(e)	Whether the L/C is subject to UCPDC, ICC Publication 600.
	(f)	Negotiation and reimbursement clauses of the L/C should be very clear i.e. unambiguous. For Example, (i) where negotiation remains restricted with advising bank only, the relative documents under that credit can not be negotiated freely by any bank. (ii) where the reimbursement clause is a conditional one, the documents under that clause should not be negotiated.
2.	Bill of Exchange/Draft:
	(a)	Whether the draft has been drawn as per terms of the credit and is dated and signed by the beneficiary.
	(b)	The date, amount in words and figures, drawee’s name and drawer’s signature, tenor etc. are must be as per credit terms & in conformity with the Invoice and other documents.
	(c)	Whether it is drawn on a bank as per L/C terms.
	(d)	In case of usance bills whether the required Stamp has been affixed.
3.	Invoice:
	(a)	The price, price terms, quality, quantity, total value and all other specifications of the goods should be quoted in the invoice as per credit terms.
	(b)	The number of copies should be exactly with the credit terms.
	(c)	All the copies must be signed by the beneficiary.
	(d)	The shipping marks, no of packing as shown in B/L are mentioned properly & correctly.
	(e)	All other informations that are desired by the credit should be appended thereof exactly.
4.	Packing List: It means the specification of packing of goods shipped by the shipper under a letter of credit :-
	(a)	Mode of packing and number of packing should be in conformity with the terms of the credit.
5.	Certificate of Origin: It is the evidence where the goods have been manufactured. It should be issued by the organization as laid down in the credit. Generally the Chamber of Commerce of the exporting country issues such a certificate.
6.	Bill of Lading/FCR: It is a title to the goods which is issued by the |Master/Captain of the Ship acknowledging the receipt of the goods on board and undertakes to deliver the same to the place of destination as specified thereon:-
	(a)	Full sets of B/L copies should be submitted as per credit terms.
	(b)	Clean ‘shipped on Board’ B/L is internationally acceptable.
	(c)	Examine whether the B/L has been properly dated i.e. stale or combined or charter party B/L or short form of B/L not acceptable unless specified in the credit.
	(d)	The port of loading, the port of destination/discharge and the name of carrying vessel must be incorporated in the B/L.
	(e)	B/L should be duly signed and drawn or endorsed to the order of the bank as specified in the credit.
	(f)	Notify party’s name should be incorporated in the B/L as per credit terms.
	(g)	If the shipment is made on FOB basis, Freight collect at the port of destination must be mentioned in the B/L.
	(h)	If the shipment is made on C & F basis, freight prepaid must be mentioned in to B/L.
	(i)	Shipment made in the proper shipping line and within the shipment validity of the credit.

7) Other Documents:

Any other papers/documents such as Weight and Measurement Certificate, Radiation certificate, Phytosanitory Certificate, manufacturer’s Certificate, and Inspection Certificate etc. as stipulated in the credit must be examined carefully before negotiating the documents and to be confirmed that all are properly and timely submitted.