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  • Missing and incorrect documents

    Chapter 3 - Cotton marketing - Documentation (‘back office’) 

     
     
    In principle a set of shipping documents made up of some documents and some guarantees can be acceptable, and it is possible for payment to be made and delivery to a buyer to take place even though no original documents have passed between seller and buyer. But if the absence of documents prevents the importation of a shipment, buyers will not make payment on the basis of a guarantee as they will be unable to gain access to the shipment. While bank guarantees from seller to buyer are generally acceptable for missing contractual documents, guarantees for missing B/Ls must be made out to the shipping company and forwarded to the buyer for use. Shipping companies provide their own pre-printed guarantee forms for this purpose.

    A buyer may also accept the seller’s personal guarantee for missing documents without a bank’s involvement. The seller may take steps to rectify errors in documents, especially when the documents relate to prompt landing and importation of a shipment (e.g. B/Ls) and when the time saved by amending them on the spot either benefits the buyer or prevents charges to the seller. The buyer can give the B/Ls to the shipping company’s agent at destination, who will amend them on receipt of authority from the seller via the shipping company’s agent at the port of shipment.

    Occasionally an entire set of documents is lost or destroyed in transit. The shipping company can then be requested to issue duplicate bills in return for an unlimited bank guarantee as indemnity against possible future liability to a holder of the supposedly lost documents. Since 1 July 2007, according to UCP 600 article 35 (Uniform Customs and Practice for Documentary Credits), the courier risk is automatically covered by the issuing bank.

    Occasionally an entire set of documents is lost or destroyed in transit. The shipping company can then be requested to issue duplicate bills in return for an unlimited bank guarantee as indemnity against possible future liability to a holder of the supposedly lost documents. Since 1 July 2007, according to UCP 600 article 35 (Uniform Customs and Practice for Documentary Credits), the courier risk is automatically covered by the issuing bank.

    As far as incorrect documents are concerned, obvious clerical errors that do not materially affect a document do not entitle a buyer to delay or refuse payment. If mistakes invalidate a document or affect its reliability, the document is regarded as a missing document and a guarantee can be submitted in its place. The document itself is then returned for re-issue or amendment by the seller.
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    Cotton Exporter's Guide

    Brochure - African cotton promotion
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