B/L for DOC LC not controlled or generated by Beneficary
Hello All, We have a situation we’d like to ask about:
- We are beneficiary on a documentary LC where we sold to a domestic customer (a) FOB US port
- Our domestic customer (a) sold to another domestic company (b) that will be ‘exporter of record’
- Domestic company (b) is creating the B/L for export and filing all paperwork for Customs
- Therefore we do not have control of original B/L
Our questions:· Should we have used FOB for this shipment, or another incoterm? Typically, when we sell FOB we are the exporter and generate the B/L. However, given that this was to a domestic counterpart, should an incoterm even be used?· If we do not control B/L, what document should we reference in our documentary LC to show that we performed to the contractual obligation
· With no B/L generated by us for the domestic transfer, who holds title to product and when does that title pass to buyer (we sold FOB, so per Incoterms that risk transfers at the ships rail in loadport, but when title would pass in this situation)
Many Thanks for any insight to this inquiry. I check your site often and am grateful to have such a valuable resource available.
Issuance of FCR i/o BL may solve your issue.
Imran Umer
IamImranUmer@gmail.com
FOB is not an appropriate Incoterm for this transaction. You could have used FCA or FAS, but both of these require you, as the seller, to clear the goods for export and this should be the responsibility of company B in your example. I would have suggested selling on an Ex-Works basis and using a collection receipt as the evidence of collection instead of a Bill of Lading.
The named consignee on Bill of Lading is entitled to collect the goods, but they do not hold title in law until the supplier has been paid - having said that, possession is 9/10ths of the law. Review your L/C, do you need to present a Bill of Lading in order to get paid?? Can you still amend the delivery term and the documentary requirements?? I would recommend the following structure :
1. Sell on Ex-Works basis
2. Replace Bill of Lading requirement with either a Collection notice, duly signed on behalf of Company A, or a Beneficiary's certificate stating that the goods were made available for collection but remained un-collected for xx days.
And I can only agree to what you wrote Peter.
FOB is completely wrong. FAS is so seldomly used, I would have to look it up in detail, but if you say so, I can spare the time.
I would either built it up on a FCA ... basis and draft the credit with an CMR or an FCR to be presented or on an EXW-basis, but then only a delivery note/good's receipt would be possibly presented.
If the risk and the costs to that port are for your account, CPT, CIP, DDU could also work.
FCRS and delivery note/good's receips are no transport documents (see Para. 19 of ISBPs 681), but this more affects the importer and his bank.
Concerning the title of goods, all such documents would not be negotiable leaving you with the necessity to produce 100 % compliant documents as your documents won't be needed for the export business of domestic company B with whom you do not even hold a contract.
Securing your rights with advance payments and/or guarantees/standbies might be a good idea, too. Maybe an advance payment of 50 % followed by an advance payment for 50 % against an advance standby with a reduction clause for 50 % of the delivery proven to that bank by virtue of a copy of the invoice and of the FCR often worked out fine with my clients.
You should contact one of our passionate American members for assistance (f.e. Peter M and LC Sam just to mention a few) or contact your bank, if they are good in International banking.
(You can also send private messages in the upper left corner!!)
-Each long journey starts with a small step-
Best regards
Frammi
Recent comments
34 sec ago
1 hour 3 min ago
1 hour 9 min ago
1 hour 15 min ago
2 hours 5 min ago
4 hours 48 min ago
6 hours 56 min ago
8 hours 11 min ago
8 hours 16 min ago
1 day 1 hour ago