The cargo arrives in good order, on time, exactly as ordered, and the bank refuses to pay. That is the normal shape of a letter of credit failure. Under UCP 600 a bank examines documents and deals with documents alone; it has no interest in the goods, the performance or the commercial reality behind them. A presentation either complies on its face with the terms of the credit, or it is discrepant, and a discrepant presentation turns a paid sale into a negotiation.
The expensive mistakes are made at booking, before a document exists. Read the credit against the routing you intend to use. If transhipment is prohibited, a service that relays through a hub becomes unusable even where a through bill would cover it. If the port of loading is named, substituting another gateway is a discrepancy rather than an operational detail. The latest shipment date is measured against the on-board date, so a vessel that rolls one week can put the credit out of reach.
The bill of lading carries most discrepancies. Under UCP 600 it must appear to name the carrier and be signed by the carrier, the master or a named agent with the signing capacity stated; it must show the goods shipped on board a named vessel at the port of loading the credit states, with a dated on-board notation where the document is not already a shipped bill; it must be presented as the full set of originals the credit calls for; and it must be clean.
Who issues that bill also matters. A credit calling for a bill of lading issued by a carrier does not automatically accept a forwarder's house bill, and a charter party bill is excluded unless the credit permits one. If a house bill or a multimodal transport document is what the routing will actually produce, the credit has to say so before the booking is placed. That is a routine amendment before shipment and an argument afterwards, which is the entire reason to raise it early.
Goods descriptions follow two different standards, and people conflate them. The commercial invoice description must correspond with the description in the credit; the other documents may describe the goods in general terms, provided nothing conflicts with the credit. Data across the presentation need not be identical but must not be inconsistent, so weights, carton counts, shipping marks and quantities have to agree between invoice, packing list and transport document. Quantity and amount tolerances do exist, but they are narrow and conditional.
Insurance documents fail on predictable points. The document must be issued and signed by an insurer, an underwriter or their agent, and a broker's cover note is not acceptable. Cover must be for at least 110 per cent of the CIF or CIP value, in the currency of the credit, and effective no later than the date of shipment, so a policy dated after the on-board date is discrepant even where the cover is retroactive in fact. The risks covered must be the risks the credit names.
Then there are the documents you do not control. A certificate of origin, an inspection certificate or a beneficiary's certificate has to come from the party the credit names, in the form it specifies, and stamped or legalised where that is required. A clause requiring a document signed or approved by the applicant places payment in the buyer's gift and should be amended out before the goods are made. Conditions stated with no document attached are disregarded by banks, but they still generate argument.
Timing is a discrepancy like any other. Unless the credit says otherwise, presentation must be made within twenty-one calendar days of the shipment date and in any event by expiry, and the originals have to reach the presenting bank inside that window, allowing for courier transit from origin. The practical discipline is a draft cycle: circulate drafts of every document, the transport document included, for checking against the credit before any original is issued or signed.
Correcting an issued original bill of lading means surrendering the full set and having it reissued, which takes days, costs money and can consume the presentation period on its own. Where a presentation does turn out discrepant, the options are to correct and re-present inside the validity, to ask the applicant for a waiver, or to fall back to collection terms, and each of those weakens the seller's position. Send us the credit at booking rather than at shipment, and we will check its transport terms against the routing while both can still change.
