Ans. Precautions for the exporter
AS stated earlier, payment under letter of credit is available only if the exporter has tendered correct documents. These documents are carefully scrutinized first by the negotiating banker in the exporting country, before he makes payment to exporters. The issuing banker in the importer's country also scrutinizes it before reimbursing the negotiating banker. Any discrepancy in document can lead to delays in payment. Quite often documents are rejected on first presentation because they are either incomplete or incorrect. Some of the typical errors are as follows:
1) The letter of credit had expired.
2) The bill of lading was claused (unclean or dirty).
3) A charter party bill of lading was presented when L /C called on on-board shipment.
4) The goods were shipped on dock when it was not permitted.
5) Shipment was made between the parts other than those stated in the letter of credit.
6) Insurance cover was inadequate and expressed in a currency other than that required by the letter of credit.
7) The description (or spelling) of goods on invoice (s) differed from that in the letter of credit.
8) The weights, marks and numbers differed between export documents.
9) The amounts of value shown on the invoice (s) and bill of exchange (draft) differed.
10) The drawing was for less than the letter of credit amount (when part shipment) were not permitted.
11) The bill of lading did not evidence whether freight was paid or not.
12) The shipment was short.
13) The bill of exchange (draft) was drawn on wrong party.
14) The bill of exchange was payable on indeterminable date.
15) The bill of lading, insurance document or bills of exchange (draft) were not endorsed correctly.
16) The copy of the freight account was not attached (when called for by the letter of credit).
17) There was an absence of signatures of witnesses, when required, on document presented.
18)
The facsimile signatures were used when not allowed.
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