Common defects in Documentation

The bank making payment on behalf of its foreign correspondent must verify that all
documents and drafts conform precisely to the terms and conditions of the letter of credit.
The requirement s of credit cannot be waived or altered without paying specific authority
from the issuing bank. To avoid payment delays, the beneficiary should prepare and examine
all documents carefully before presenting them to take paying bank. Paying banks find that
the following discrepancies between the documents and the letter of credit occur most
frequently.
1. Invoice value or draft exceeds amount available under letter of credit.
2. Charges included in the invoice are not authorised in the letter of credit.
3. Amount of insurance coverage is inadequate or coverage does not include risks
required by letter of credit.
4. Insurance document is not endorsed and/or countersigned;
5. Date of insurance policy or certificate is later than the date on bills of lading;
6. Bills of lading are not clean that is, they bear notations regarding quality, good
order and condition of merchandise or its packing
7. Bills of lading are not marked on Board when so required by letter of credit.
8. On board enforcement or changes on bills of lading are not signed by carrier or its
agent or initialled by party who signed bills of lading;
9. On board endorsement is not endorsed;
10. Bills of lading are not endorsed;
11. Bills of lading are made out to order (shippers order, blank endorsed) where letter
of credit stipulates straight (direct to consignee) bill of lading or vice versa. (In
fact, it is better for the exporter to prepare to order B/L, as this will keep the goods
in the custody of the bank. In case of straight B/L, the title of the goods passes
automatically to the named consignee);
12. Bills of lading do not indicate freight prepaid when freight charges are included in
invoice;
13. Bills of lading are not marked freight prepaid when freight charges are included in
invoice;
14. Descriptions, marks, and numbers of merchandise are not same on all the documents
presented or are not as required by letter of credit;
15. Not all documents required by letter of credit are presented;
16. Invoice states used, second hand or rebuilt merchandise when such condition
authorised by letter of credit;
17. Invoice does not specify shipment terms (C&F, C.I.F. F.O.B., etc) as stated in letter of
credit;
18. Invoice is not signed as letter of credit requires.
19. L/C has expired prior to presentation of draft. .
20. Stale dated documents.
21. Changes included in the invoice not authorized in the credit.
22. Inconsistent description of goods.

23. Insurance document errors.

24. Invoice amount not equal to draft amount.
25. Ports of loading and destination not as specified in the credit.
26. Description of merchandise is not as stated in credit.
27. A document required by the credit is not presented.
28. Names of documents not exact as described in the credit.
29. Beneficiary information must be exact.
30. Invoice or statement is not signed as stipulated in the letter of credit.