LC SWIFT Format: Field 43T (Transshipment)

Field 43T (Transshipment) is an optional field. It may present or it may not present.

Transshipment is shipment of goods in a single journey, from the point of origin to the final destination using a combination of different mode of transport.

Whether or not transshipment is to be allowed or permitted, it is largely depends on the type and nature of the goods and the trade terms used; E term, F terms, C terms or D terms.

Containerized goods are subject to transshipment because they are normally delivered to the carrier at the seller’s premise or at a named place prior to loading on board the vessel. The goods will be transported by a trailer/lorry by road to the port and later loaded on board the vessel at the port of shipment. In this case, transshipment is to be allowed.

On the other hand, petroleum, grains, liquid cargo and other loose products normally will be delivered directly from the depot at the port of loading and on board the vessel. In this instance, transshipment is prohibited. However, this does not mean the transshipment will not take place. The goods may be unloaded and loaded onto another vessel.

Under this field, either ‘ALLOWED’ or ‘NOT ALLOWED’ is to be indicated.

LC SWIFT Format: Field 43P (Partial Shipment)

Field 43P (Partial Shipment) is an optional field. The presence of this field would depend on the trade agreement between buyer and seller. Partial shipment is, in simple words, delivery of an order in two or more consignments, if allowed and mutually agreed upon by both parties, buyer and seller. The seller has the advantage to ship any quantity or amount lesser than the original order or as indicated in the LC in few shipments until fully delivered to the buyer.

For example, if the amount indicated under field 32B (Currency Code, Amount) is USD10,000.00, the seller may ship the goods worth of USD 3,000.00 in the first shipment, second shipment, USD5,000.00 and third shipment USD2,000.00.

Seller should always request that the LC specify whether partial shipment is allowed in order to avoid unexpected problems. In case partial shipment is allowed, the validity of the LC will not be affected even if a problem arises in meeting the delivery date. The total shipment of USD10,000.00 must be fully delivered within the expiry of the LC.

Under this field, either one of these words:

‘ALLOWED’ or
‘NOT ALLOWED’

should be indicated. If ‘NOT ALLOWED’ is indicated, the seller is to ship the whole order in one shipment only. The word ‘PROHIBITED’ sometimes is used instead of ‘NOT ALLOWED’.

LC SWIFT Format: Field 42C (Drafts at...)

Field 42C (Drafts at…) is an optional field which means it can present or it may not present depending on the availability of the credit, either by Payment, Acceptance, Deferred payment or Negotiation (Field 41a).

Field 42C should present if the availability of the LC is made by Acceptance or Negotiation (Field 41a). On the other hand, if the LC is made available by payment or Deferred payment, field 42C would not present.

When field 42C presents, field 42D (Drawee) must also present. The Draft must be drawn by the drawer either on the issuing bank or the confirming bank, if any. Therefore, field 42D must present to indicate the Drawee bank. If the LC does not require confirmation by a confirming bank, the Draft must be drawn on the issuing bank. Again, the Drawee bank can either be indicated by full name and address or by indicating the SWIFT address or BIC.

The use of Draft or Bills of Exchange in trade is widely practiced by banks worldwide. The Draft can be drawn at sight or at a determinable future time (tenor/time). Further information on Draft will be posted later.

LC SWIFT Format: Field 41D (Available with...by...)

Field 41D (Available with…by…) is a mandatory field which must present. ‘Available with’ refers to the bank which is a nominated bank, in the country of the seller, authorized by the issuing bank to make payment to the seller. The name of this bank must be expressly indicated either by indicating its’ Bank Identifier Code, which is the SWIFT address or the full name and address of that particular bank. In most cases, this bank is the correspondent bank of the issuing bank and normally an advising bank. However, it could also be the issuing bank which is in the country of the buyer.

For example, the nominated bank is Citibank N.A. London. It can be identified as CITIGB2L, which is the SWIFT address of Citibank, London. This is option ‘a’ for field 41 (41a).

The other option is to indicate the nominated bank under this field by expressly indicates the name of the bank with the full address. For example,

Citibank N.A.,
No 88, The Strand,
London WC2R 0DW.

This is option ‘D’ for field 41 (41D).

In the case where the LC is made available by ‘freely’ negotiation or ‘non-restricted’ negotiation, the nominated bank would not be named. This field will be indicated with ‘any bank’. This wording, ‘any bank’ refers to any bank in the country of the seller which is willing to take up the documents and negotiates. Seller may present the documents to any bank of his choice in his country. If the seller decides to present the documents to Union Bank of California, New York instead of his other bank, Chase Manhattan, New York, The Union Bank of California, New York is deemed to be the nominated bank (Article 2, UCP600).

The word ‘by’ here refers to the availability of the LC, either by payment, acceptance, deferred payment or by negotiation. If the LC is made available by payment, acceptance, deferred payment or ‘restricted’ negotiation, the name of the nominated bank must be expressly indicated under this field either using option ‘a’ or option ‘D’.

One of the following codes must be indicated under 'by...':

BY ACCEPTANCE

BY DEF PAYMENT

BY MIXED PYMT

BY NEGOTIATION

BY PAYMENT

LC SWIFT Format: Field 50, 59 and 32B

Field 50 (Applicant) is another mandatory field which requires bank to expressly indicate the name of the applicant or buyer together with the address. (Sample of LC issued: SWIFT Format).

Field 59 (Beneficiary) is also a mandatory field where the the name of the buyer is to be indicated with full address.

Field 32B (Currency Code, Amount) is where the amount of the credit should be indicated. The currency code used in this field is ISO approved codes such as GBP (Great Britain Pound), USD (United States Dollar), MYR (Malaysian Ringgit), NLG (Netherland Guilder), FRF (French Franc), HKD (Hong Kong Dollar), SGD (Singapore Dollar), EUR (Euro) etc. This field is a mandatory field.

LC SWIFT Format: Field 31D (Date and Place of Expiry)

Next field is field 31D (Date and place of expiry). As I mentioned in the earlier post (SWIFT Format: part 3), the date format is written as yy/mm/dd. For example, the date is indicated as 070424, the date is read as April 24th, 2007.

The additional information here is, the name of the country where the LC is to expire must also be indicated, for example, Malaysia, United Kingdom, United States of America etc. It is only the name of the country should appear in this field, name of district should not be indicated.

It is a practice in international trade, where the place of expiry is normally in the country of the seller. This is so because, it provides some cushion to the seller where seller has longer time frame to prepare the goods for shipment, obtain related documents, conduct pre checking of the document to ensure consistency and present them to his bank.

There are also cases where the place of expiry is in the country of the buyer. But this is very rarely. This would shorten some time for the seller to get things ready and present the documents. In this case, the LC must reach the issuing bank which is in the country of the buyer before the expiry of the LC. The time taken for the documents to travel by air courier to the final destination is an additional factor to be considered.

Whereas, if the LC is to expire in the country of the seller, the documents must reach the nominated bank in the country of the seller before the expiry of the LC.

Today, to keep up with the vast global development in trade, most LCs is issued available with any bank by negotiation and place of expiry is always in the country of the seller.

LC SWIFT Format: Field 40E (Applicable Rules)

The next mandatory field is field 40E (Applicable Rules) which must present in every LC issued. This field is customarily indicated by the issuing bank which corresponds to the type of the LC issued, either commercial LC or standby LC. This field must contain one of the following codes:

EUCP LATEST VERSION

The documentary credit is subject to the version of the supplement of the ICC Uniform Customs and Practice for Documentary Credits for Electronic Presentations, International Chamber of Commerce, Paris, France, which is in effect on the date of issue.

EUCPURR LATEST VERSION

The documentary credit is subject to the version of the supplement of the ICC Uniform Customs and Practice for Documentary Credits for Electronic presentations and the version of the Uniform Rules for Bank-to-Bank Reimbursements.

ISP LATEST VERSION

The standby letter of credit is subject to the version of the ICC International Standby Practices, International Chamber of Commerce, Paris, France, which is in effect on the date of issue.

OTHR

The credit is subject to any other rules.

UCP LATEST VERSION

The documentary credit is subject to the version of the ICC uniform Customs and Practice for Documentary Credits, International Chamber of Commerce, Paris, France, which is in effect on the date of issue.

UCPURR LATEST VERSION

The documentary credit is subject to the version of the ICC Uniform Custom and Practice for Documentary Credits and the version of the Uniform Rules for Bank-to-Bank Reimbursements.

The incorporation of either of the codes mentioned above into the LC forms the text of the LC and therefore governs the LC primarily, but of course not solely. Such incorporation will also form a parol of evidence rules in the court of law. Courts and arbitration tribunals applies the UCP because it is the most universally followed set of customary documentary credit rules. However, it does not prevent a court from applying its country’s national law.

For the purpose of this example, which refers to commercial letter of credit, the appropriate code to be incorporated is UCPURR LATEST VERSION or to indicate the full narration only instead of the code.