Letter of Credit Forum

Hello

Well, as a ‘shipper’ (as opposed to a ‘beneficiary’) this should not create any additional risks for you except under the following circumstances, which may or may not apply in your case.

1. As consigned, you have no idea – and will never really know – who the ultimate consignee is. This may cause you commercial problems in that your product may be restricted either by law or by ‘agency’ arrangements you have with distributors. As long as it is not an issue for you as to who actually gets end-control of the cargo, this is not an issue.

2. Be satisfied that the cargo is adequately insured – preferably by your own endeavours. A consignee – whoever it is – may renege on a shipment at any time and liabilities can revert to the shipper (I am thinking here specifically about General Average claims).

3. Don’t split the set of bills (if they are called for in multiple identical versions which are often incorrectly referred to as ‘originals’). So if three ‘originals’ are issued, make sure the credit calls for all three and not for one to travel in advance to a third party by some other means – like the postal service.

4. Once the bills have left your control you will have no or limited rights of estoppel,  so make sure that you are complaint with the credit. I wouldn’t send the documents forward for acceptance, for example, if you have repeated or ‘fatal’ discrepancies.

All trade is risk, that’s why you make a profit at it (or try to, anyway). So, consigning the bills in this manner is just introducing one risk in exchange for another – nothing sinister here, unless, as I say above, you need to know the identity of the true consignee for commercial or legal reasons.

cheers

phill doran

"...in armour bright, the merchant men..."