Letter of credit document checklist: avoiding discrepancies under UCP 600
Updated
Most refused letter-of-credit presentations fail on small, avoidable inconsistencies. This checklist covers what banks examine under UCP 600 and the mistakes behind most discrepancies.
How banks examine L/C documents
Under a letter of credit the bank pays against documents, not goods. Under UCP 600 — the ICC rules used by most documentary credits — the bank checks only whether the documents, on their face, comply with the credit, the rules and international standard banking practice (ISBP). It has at most five banking days after presentation to decide (article 14(b)).
Documents do not have to be word-for-word identical, but data in one document must not conflict with data in another document or in the credit (article 14(d)). In practice most refusals come from a handful of fields that disagree between the invoice, the packing list and the transport document.
Read the credit first: the MT700 fields that matter
| Field | Meaning | What to check |
|---|---|---|
| 31D | Date and place of expiry | Documents must be presented by this date. |
| 32B | Currency and amount | Same currency on the invoice; the total must not exceed the amount unless a tolerance applies. |
| 39A | Amount tolerance | For example 10/10 allows 10% more or less. |
| 43P / 43T | Partial shipments / transhipment | Whether split shipments or transhipment are allowed. |
| 44E / 44F | Port of loading / discharge | The bill of lading must show these ports as named in the credit. |
| 44C | Latest date of shipment | The on-board date on the B/L must not be later. |
| 45A | Description of goods | The commercial invoice must correspond to it. |
| 46A | Documents required | Every listed document, the number of originals and copies, and any required wording. |
| 47A | Additional conditions | For example the L/C number on all documents, or a specific marks format. |
| 48 | Period for presentation | Days after shipment to present documents; 21 days if not stated. |
Commercial invoice (UCP 600 article 18)
- Issued by the beneficiary (the seller named in the credit) and made out in the name of the applicant (the buyer).
- In the same currency as the credit. It does not need to be signed unless the credit says so.
- The description of goods must correspond with field 45A. Other documents may describe the goods in general terms, as long as they do not conflict (article 14(e)).
- Quantities, unit prices and the total must be arithmetically correct, and the total must not exceed the credit amount beyond any allowed tolerance.
- The Incoterms rule and named place as stated in the credit, for example “CIF Long Beach”.
- Any reference the credit asks for, such as the L/C number, PO number or HS code.
Bill of lading (article 20)
- Names the carrier and is signed by the carrier, the master or a named agent.
- Shows that the goods were shipped on board a named vessel, either pre-printed or by a dated on-board notation. That date is the date of shipment and must not be later than field 44C.
- Shows the port of loading and port of discharge stated in the credit.
- Is clean: no clause declaring the goods or packaging defective (article 27).
- Is presented as a full set of originals when the credit asks for one.
- Shows the consignee and notify party exactly as the credit requires, for example “to order of [issuing bank]”.
- Agrees with the packing list and invoice on gross weight, number of packages and marks.
Insurance document (article 28)
When the seller insures (CIF or CIP), the policy or certificate must be in the currency of the credit, dated no later than the shipment date unless it shows cover from that date, and cover at least 110% of the CIF or CIP value when the credit states no other amount. See the 110% insurance rule.
Timing: shipment, presentation and expiry
- Ship no later than the latest shipment date in field 44C.
- Present within the period in field 48 — or 21 calendar days after shipment if none is stated — and never after expiry (article 14(c)).
- Where a quantity or amount is described as “about” or “approximately”, a tolerance of 10% more or less applies (article 30(a)). Without that wording, a 5% quantity tolerance applies to goods not counted in packing units or individual items, provided the credit amount is not exceeded (article 30(b)).
The ten most common discrepancies
- Late shipment (on-board date after 44C) or late presentation.
- Invoice amount above the credit amount, or in a different currency.
- Goods description on the invoice that does not correspond to field 45A.
- Gross weight or package count on the B/L different from the packing list.
- Port names that differ from 44E / 44F, or a missing on-board notation.
- Consignee or notify party not as the credit requires.
- Insurance cover below 110% of CIF / CIP, or insurance dated after shipment.
- Documents, originals or copies listed in 46A missing from the presentation.
- Additional conditions in 47A ignored, for example the L/C number missing on the documents.
- Arithmetic errors: line amounts that are not quantity × unit price, or totals that do not add up.
How LADEO helps
LADEO reads the MT700 text of your credit and checks the invoice, packing list and shipping instruction against it before anything is sent, with the UCP 600 article for each finding. Uploaded bills of lading, certificates of origin and insurance documents are compared with the invoice and packing list — weights, packages, references and the 110% cover. LADEO does not replace the bank's examination; the terms of your credit always prevail.
This guide is general information, not legal or banking advice. Follow the exact terms of your credit and ask your bank when in doubt.