By reading the clause code, we can see the letter of credit more clearly. After getting the letter of credit, focus on checking some key clauses:
1. If you get a photocopy or a pre-approved fax, first check whether the document is complete. Pay special attention to whether the sentences at the end of each page and the beginning of the next page are connected normally to avoid human negligence and omissions in fax copying.
2. Check clause 59 to see if the name of the beneficiary is correct. Because basically all documents will display the name of the beneficiary, if the name is wrong, the whole thing will be wrong. Especially for those documents that need to be issued by national institutions, because the name of the beneficiary has been recorded in advance and it is difficult to change.
3. Check clause 32B to see if the amount is accurate.
4. Check clauses 44C and 31D to see if it can be shipped in time as required. The time interval between 44C and 31D cannot be too short, generally requiring more than 10 days, and about 15 days is appropriate. Because after the goods are loaded on board, it takes a certain amount of time to proofread and receive the bill of lading, especially if your office is far away from the export terminal. 44C and 31D are very important clauses. If these two times are overdue, it will be a major discrepancy that is enough to invalidate the letter of credit. You can refer to clause 48. However, in current letters of credit, the time of clause 31D plus the time of clause 48 is just the time limit of clause 44C.
5. Check 45A to see if it is consistent with the contract. If not, see if it is acceptable. In particular, sometimes customers like to describe the product name in a general way in this clause for the purpose of tax avoidance, such as changing pig split leather to “leather”. However, when doing export commodity inspection, the State Administration of Commodity Inspection does not allow such simplification, which will inevitably cause discrepancies between documents. Therefore, you should pay attention to the scale. If you cannot do it according to the customer’s requirements, notify the customer in time to modify it.
6. Focus on reviewing 46A and 47A. 46A is the type requirement of the document, and 47A supplements the practice of the document and other requirements. These two clauses are the most important and core parts of the letter of credit. They should be reviewed word by word, without missing a single punctuation mark. There should not be any ambiguity. If you have any questions, ask your bank and peers for help, or contact your customers. The bank’s opinion is the most important. You must make a thorough understanding and never take it for granted.
For 46A, you may wish to make a separate list and check the types, names, number of copies and issuing institutions of the documents one by one to see if they can be done in a timely and complete manner. For example, there have been cases that require a Generalized System of Preference Certificate of Origin (Form A) with one original and three copies. But in fact, under normal circumstances, the Generalized System of Preference Certificate only has one original and two copies. If this detail is ignored during the review, there will be trouble in making the document.
The same is true for clause 47A. Sometimes it involves not only the preparation of documents, but also the cost. For example, requiring documents to be certified by the Council for the Promotion of International Trade/Chamber of Commerce will invisibly incur an additional fee.
Pay attention to check whether there are any contradictions or conflicts in the provisions of the documents.
7. Review of other clauses. You can review the clause code to see if there are any errors. Pay attention to the division of bank fees. The principle of fairness is to share them. It is generally acceptable that “the fees incurred outside the applicant’s country shall be borne by the beneficiary.” Some customers will stipulate that “all fees except the issuance fee shall be borne by the beneficiary”, which is obviously unfair.