The issuance of a documentary credit is not always a simple formality or an act that can be completed in a standard or repetitive manner. It often requires attention to detail and, more importantly, to contain wording that is not ambiguous or subject to more than one interpretation.
An applicant should ensure that the instructions it provides to its bank, for the issuance of any documentary credit, fully meets its needs in terms of specifying the appropriate documentary requirements, so as to enable the smooth importation of the goods, and provide a suitable level of assurance, as to the quality, standard and/or type of goods being purchased.
The content of the sales contract, proforma invoice or purchase order agreed with the exporter (seller) should, where appropriate, be reflected in these instructions.
UCP considerations - Applicant, Beneficiary & Advising Bank
As sub-article 14 (j) allows for different addresses of the applicant and beneficiary to appear on documents, provided such addresses are within the same countries as those mentioned, the application form must indicate if the addresses are only to be those stated. This sub-article requires that when the address and contact details of the applicant are shown as part of the consignee or notify party fields of a transport document they must be as stated in the documentary credit, therefore there is a need for the details to be as complete and precise as possible.
Sub-article 18 (a) (i) requires that a commercial invoice appear to indicate that it has been issued by the beneficiary and sub-article 18 (a) (ii) that a commercial invoice must be made out in the name of the applicant (each subject to as provided for in article 38).
Sub-articles 37 (a) and (b) state, respectively, "A bank utilizing the services of another bank for the purpose of giving effect to the instructions of the applicant does so for the account and at the risk of the applicant." and "An issuing bank or advising bank assumes no liability or responsibility should the instructions it transmits to another bank not be carried out, even if it has taken the initiative in the choice of that other bank."
A more in-depth study can be found in our module: Sales Contract and Creation of LC Application at https://www.tradefinance.training/shop/