Exworks orders and transport documents

9 replies [Last post]
kuvulmaz
Offline
Joined: 01/15/2008
Printer-friendly versionSend by emailPDF version

Hi,

When we ask our bank to issue a letter of credit for an "exworks" order, they insist on adding a transport document to the section 46A.

However the exporter rejects this clause by saying that they are selling the goods on exworks terms, therefore they cannot be responsible for any transport document.

I cannot convince the bank or the exporter, is there way to solve this issue?

Thanks

 

admin
Offline
Joined: 05/06/2007
Ex Works: lessons learned

The requirement of the bank to receive a shipping document
is the result of its interest in collateralising the credit, that is receiving collateral for the money paid.

This interest however does not take into consideration that when delivering "Ex Works" the sellers responsibility ends when he/she puts the goods at the loading dock. No shipping document needed/required.

The bank's interest to secure its interest in repayment etc. can only be satisfied by declarations of the applicant, eg to transfer title to the issuing bank or creation of possesssionless liens, ie the right to execute into the goods without the need to exercise possession over the goods.

dr_aalw
Offline
Joined: 02/19/2008
EXW

Hi,

Try to show them an incoterm document from ICC. Maybe this will convince them. If you require, I will email it to you. my email is [email protected]

All the best

pan
Offline
Joined: 09/13/2007
EXW

Hi friend,

I have already sent an email to you to get copy of the ICC

document.

Thanks and ciao

pan
Offline
Joined: 09/13/2007
Incoterm EXW

Risks for a bank vary due to transport of goods or different delivery term. The issuing bank thinks that requesting a document of title is less risky, but is not always possible to satisfy the bank and the beneficiary. However where a bank would like to get a transport document, to be used in availing the documentary credit, has to word its request in this way:

-Forwarding Agent Receipt stating having received the goods for irrevocable despatch , by sea, air, surface, to the applicant/ to the issuing bank......

-the a.m document must not indicate the beneficiary a shipper.

Than not consider the presentation period, or insert ... days from the date of Forwarding Agent Receipt:

Could be used a MTD or FCR too, important is that the beneficiary when release the goods will receive a document to avail the l/c.

Just to remember , the beneficiary has still some risks, first of all no proof that the goods have been exported(Customs stamp on export declaration) or export made after the Value Added Tax statutory period( in Italy 90 days from invoice date)

Sorry I have other comment but I prefer to hear from other source.

 

Ciao

Frammi
Offline
Joined: 08/17/2007
EXW-deliveries

I like to draw the following node to your kind attention:

http://www.letterofcreditforum.com/node/255

Ciao Pan,

you wrote: "the a.m document must not indicate the beneficiary (as?) a shipper." This only makes sense when you are in doubt of the solvency of your clients, don't you agree? If your clients enjoys a good financial standing, I would always have the goods sent to them directly in order to save time and bank charges - a solvent client wouldn't like to pay them anyhow!

_______________________________

As Pan wrote, pay attention to the presentation period after shipment clause: A FCR is not recognized as a transport document, so you have to extend the clause by stipulating:

"Documents have to be presented not later than .. days after date of FCR, but still within credit validity".

______________________

Very carefull work from PAN to mention the VAT-matter, especially as it is situated outside the L/C. Perhaps it's best to contact the Customs Authorities in this respect and to ask for their advice as every country and sometimes even single regions have special internal rules.

-Each long journey starts with a small step-

Best regards

Frammi

Armagedo's picture
Armagedo
Offline
Joined: 09/10/2007
Some things are mixed

Hi!

Thanks to Ciao and Frammi for their answers.

But...

EXW term is the simpliest term for the Seller (applicant) since it calls for minor obligations on the Sellers part.

His only obligation is to present the goods as they are at the agreed point.

There is no responsibiity of the Seller to organize transportation, to load the goods onto the trucks, to fulfill export formalities, to customs clear the goods etc...

All this to be done by the Buyer for his own account and risk.

Thus the Seller is quite right in its reasons refusing presenting of any transport doc (as well as any proofs that the goods are customs cleared etc).

FCR could be the main doc on EXW basis.

But are You really ready to export those goods by yourselves?

Good luck.

 

kuvulmaz
Offline
Joined: 01/15/2008
Thank you all for your

Thank you all for your comments.

My bank's main concern is that when they remove the transport document from the L/C then they would lose the control and the ownership of the materials.

I could not convince my bank that it was unnecessary and I finally agreed to submit a covenant saying that I would not clear the goods from customs without bank's approval first.

Problem is solved for now until next similar L/C :)

Frammi
Offline
Joined: 08/17/2007
Sounds as if you were from Turkey :-))

Turkish banks love control on goods!

-Each long journey starts with a small step-

Best regards

Frammi

kuvulmaz
Offline
Joined: 01/15/2008
exactly :))

exactly :))

//
//