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Are the following statements true or false about bill of lading and letter of credit

A. (i) Received for shipment bill of lading is equivalent to on board bill of lading.

(ii) An advising bank is under no obligation to add its confirmation to a letter of credit.

(iii) A claused bill of lading is not necessarily a discrepancy under an irrevocable letter of credit.

(iv) An insurance policy issued after the date of bill of lading is a valid document

(v) A through bill of lading entitles the consignee to receive the goods direct.

(vi) Banks should verify the signature on the insurance policy certificate.

(vii) Stale bill of lading is not necessarily a discrepancy under an irrevocable letter of credit.

(viii) An irrevocable letter of credit can be cancelled without the consent of the beneficiary.

Ans. A. (i) False. A received lot shipment bill does not indicate if the goods have actually been taken on the ship while an on board hill of lading does so.

ii. True. According to Article 8, the advising bank is merely to ensure the authenticity of the letter of credit and not to confirm it.

(iii) False. A claused bill of lading is not a good tender in a letter of credit unless the credit permits.

(iv) False. The insurance policy should bear the date of bill of lading, if not earlier. However, an insurance policy bearing a later date can be accepted provided it covers the risk from the date of shipment (bill of lading).

(v) False. A through bill of lading provides for the continuous responsibility of the shipping company and the transport/railway company where the goods are carried by more than one mode of transport. Distinguish this from the straight bill of lading which entitles the consignee to receive the goods direct in the sense that even presentation of bill of lading is not necessary if he is known to the transport company.

(vi) False. Article 17 of UCP absolves the bank from the responsibility of ensuring the genuineness of documents tendered.

(vii) False. Here stale bill of lading refers to the document which is presented after 21 days or after such period as may be stipulated in the letter of credit

(viii) False. Article 10 of UCP stipulates that an irrevocable letter of credit cannot be cancelled without the consent of all parties concerned.

(b) A letter of credit expires on 30th November for shipment and on 15th December for negotiation of documents. On 16th November a cable amendment extending the shipment date until 5th December is received. Will the expiry date of the letter of credit for negotiation be automatically extended? if so,-what will be the new expiry date?

(b) Ans: There is no provision in the UCP which provides for automatic extension in the last date for negotiation under a letter of credit with an extension in its last date for shipment. Therefore in the case cited, the extension in the latest date of shipment will not extend the expiry date of the letter of credit for negotiation.

Where the extended (late of shipment falls beyond the latest date for negotiation stipulated in the credit, it is practical and logical to assume that the date of negotiation is also extended till the date of shipment now extended. For instance, in the present case, if the latest date for shipment is extended until 25th December, the latest date of negotiation should also be automatically assumed to be extended up to 25th December.  Otherwise the extension in date of shipment will serve no purpose.

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