24 February 2008

SWIFT Format: Field 78

Field 78 (Instruction to the paying/accepting/negotiating bank) is an optional field where Issuing Bank will indicate instructions regarding sending of the documents, method of reimbursement and other related instructions such as:




These instructions are meant for the Paying Bank or Accepting Bank or Negotiating Bank such as where the documents should be sent to and how the reimbursement is going to be paid.

20 February 2008

SWIFT Format: Field 49

Field 49 (Confirmation instruction) is a mandatory field. This field must present in every LC issued. This field contains instruction regarding confirmation of the LC where it must contain one of the following codes:

1. CONFIRM – The receiver is requested to confirm the LC
2. MAY ADD – The receiver may add its confirmation to the LC
3. WITHOUT – The receiver is not requested to confirm the LC

However, if a bank (receiver) which is authorized or requested by the issuing bank to confirm the LC (CONFIRM) is not prepared to do so, it must inform the issuing bank and may advise the LC to the beneficiary without confirmation.

When the field is indicated by the code ‘MAY ADD’, the receiver may or may not add its confirmation. Should the receiving bank wishes to add its confirmation, it must also inform the issuing bank prior to adding its confirmation and advise the same to the beneficiary.

When the code “WITHOUT’ is indicated and the receiving bank wishes to add its confirmation at the request of the beneficiary, it must also notify the issuing bank to obtain approval before adding its confirmation.

When confirmation is added to the LC, the confirming bank is acting as a second issuing bank in the country of the seller.

16 February 2008

SWIFT Format: Field 48

Field 48(Period for presentation) is an optional field where the time limit within which the presentation of the shipping documents should be made to the issuing bank or nominated bank by or on behalf of the beneficiary/seller.

As a general rule, this time period starts from the date of shipment which is indicated in the transport documents i.e. Bill of Lading, Multimodal transport documents, Air Waybill etc.

Secondly, in any event or when this field is not present or where there is no express indication in this field, the presentation should be made not later than 21 calendar days after the date of shipment but not later than the expiry date of the LC. In this case, the expiry date of the LC is deemed to be an expiry date for presentation.

The number of days indicated in this field should accommodate the seller a comfortable time period to enable him to obtain certain documents issued by third party (Insurance document, Transport document, Certificate of origin, inspection certificate etc), to prepare other documents, to vet through all the documents, to collate and to make presentation to the bank.

Buyer may indicate any number of days, for example, 7 days, 12 days, 14 days or 21 days. The number of days is calculated from the date of shipment indicated in the transport document.

12 February 2008

SWIFT Format: Field 71B

Field 71B (Charges) is also an optional field. This field is meant for the following charges:

1. Agent’s commission (AGENT)
2. Commission (COMM)
3. Our Correspondent’s commission (CORCOM)
4. Commercial discount (DISC)
5. Insurance premium (INSUR)
6. Postage (POST)
7. Stamp duty (STAMP)
8. Teletransmisson charges (TELECHAR)
9. Wharfing and warehouse (WAREHOUS)

This field is accommodated for 35 characters (alpha numeric) per line subject to a maximum of 6 lines. By indicating either one or combination of some of the charges above, the proceeds received by the seller is the net amount after deducting the said charges.

As a general rule as well as to avoid disputes, in most cases, all the charges incurred in the country of the buyer will be paid by the buyer and those charges incurred in the country of the seller is to be paid by the seller. Therefore, this field is normally indicated as follow:

‘all charges outside Malaysia (country of the buyer) is for the account of the beneficiary’.

Having indicated as such, the seller would be able to account his actual cost up to delivery (handing over to carrier / on board the vessel) of the goods and buyer on the other hand would know his actual cost before selling the goods.

11 February 2008

SWIFT Format: Field 47A

Field 47A (Additional conditions) is also another optional field. This field is normally used by issuing bank or the buyer to lay down other important instructions and requirements.

This is where issuing bank indicates among others, discrepancy fee is charged for the account of the seller should there is any discrepancy in the presentation. Buyer may make use of this field to provide instructions to the seller to request additional performance for example, to fax Bill of Lading, invoice or other performance deemed necessary. But bear in mind, all these additional performance must be accompanied by a simple written confirmation to certify that such performance has been discharged and the written confirmation must be submitted to the bank to form a presentation.

To illustrate this, assuming the additional condition is worded as follow:

‘…Seller is to fax a copy of Bill of Lading upon shipment to buyer at 603-56784535. A certificate to this effect is required for negotiation’

In this case, first, the seller must fax a copy of B/L to the buyer upon shipment of the goods. Secondly, the seller must also prepare a certificate or written confirmation (letterhead) addressed to the buyer to confirm that the B/L has been faxed. This ‘certificate’ or written confirmation must also be submitted to the bank.

Other than this, buyer may also include requirements such as appointment of transport, inspection of goods, conditions for delivery or other additional performance. All these performance must be accompanied with a written confirmation.

08 February 2008

SWIFT Format: Field 46A

Field 46A (Documents required) is also another optional field. However, in most commercial LC, this field is always presents. This is where all the documents required pertaining to that particular trade described in the LC should be expressly indicated.

This includes type of documents, number of copies as well as photocopy or original piece. As a general rule, at least one original of each document stipulated in the LC must be presented (Article 17(a), UCP 600). Documents are categorized as financial documents, commercial documents, transport documents, insurance documents and official documents.

Drafts or Bills of Exchange (B/E) are example of financial documents. These documents are normally provided by the bank, signed by the seller and drawn on the nominated bank or the issuing bank. B/E is a negotiable instrument and transferable in principle. The reason why this document is used in trade is simply because it provides a second legal protection to the acceptor or bona fide holders. In the event of default, the holder shall pursue legal action based on the B/E alone. This is also one of the reasons why freely negotiable LC is becoming so popular worldwide.

Commercial invoice on the other hand is not negotiable but only serves as an accounting document where details descriptions of the goods are indicated. This document normally is prepared by the seller. Packing list is another document prepared by the seller where it indicates how the goods are packed, weight of packaging, number of items per package and marks and numbers.

There are various types of transport documents which largely depend on the mode of transport engaged in moving the goods from the point of origin to the final destination. Multimodal transport is increasingly important in this modern world with the introduction of containerization. Goods can be picked up at the seller’s premise and move on using a combination of different mode of transports. In this case, multimodal transport document is required to be presented. Port to port shipment or inland waterways where goods are moved using vessel require Bill of Lading or Sea Waybill. If goods are transported by air, Air Waybill is required and so on. All these documents are issued by the transport operators.

It is also important to note that while in transit, the goods are exposed to risks, damage or loss. In this instance, insurance coverage against damage or loss to the goods should be procured and should be expressly indicated in the LC.

It is sometimes required by the law of the importing country to declare certain goods of their content, substance or origin to ensure compliance. Therefore, official documents such as analysis certificate, inspection certificate, quality certificate or certificate of origin may be required to be indicated in the LC.

It is worth to remember that only documents related to the trade of the goods should be requested because it will implicate the ability of the seller to prepare, obtain and to present all the documents to the bank to claim for payment.

State clearly what are documents required, how many copies, how many original and how many photocopies. If, documents such as analysis certificate, inspection certificate or quality certificate is required, state clearly who should issue and who should sign them.

07 February 2008

SWIFT Format: Field 45A

Field 45A (Description of goods and/or services) is another optional field. However, in commercial LC, this field is always presents. This is where the goods purchased by the buyer are described as well as indication of trade term used.

The description of goods should not be so excessive and complicated. Although this field provides 100 lines with 65 characters (alpha numeric) per line, but traders are always encouraged to describe the goods as brief as possible.

LC does not guarantee the buyer will receive the goods he ordered. This is not the function of the LC, in short, LC does not guarantee the goods. It serves no purpose at all by excessively describe the goods to the last details.

For example, if buyer is buying cell phone parts of various models and colors for various brands, they need not necessarily be described model by model, color by color or brand by brand in the LC. It is sufficient to indicate for example, ‘…cell phone parts as per pro-forma invoice no 1234 dated 4th February 2008’.

The trade term used or agreed upon by both parties must also be indicated in this field e.g., FOB, CIF, CPT.

06 February 2008

SWIFT Format: Field 44C (Latest Date of Shipment)

Field 44C (Latest date of shipment) is also another optional field. This field may or may not present. If it does not present, the shipment must be made within the validity of the LC.

If this field present, the shipment must be made within the date indicated in this field. The date indicated in this field is the limit within which the shipment must be made by the seller. This date should not exceed the expiry date of the LC.

Evidence of shipment is indicated in the transport documents like multimodal/combined transport document, Bill of Lading, Non-Negotiable Sea Waybill, Charter Party Bill of Lading, Air Transport Document, Road, Rail or Inland Waterway Document, Courier Receipt, Post Receipt or Certificate of Posting.

The date indicated on those documents is deemed to be the date of shipment and it should be within the date indicated in field 44C.

05 February 2008

SWIFT Format: Field 44A (Place of taking in charge...)

Field 44A (Place of taking in charge / dispatch from.. / Place of receipt) is an optional field. This is a field where a place or a point of handing over the goods to the carrier should be indicated. The place or point is depending on the trade terms used e.g. Ex-Work, FCA, FAS, FOB, CFR, CIF, CPT, CIP, DAF, DES, DEQ, DDU or DDP.

Field 44A is appropriate for multimodal transport where the place or point of handing over is any place on land.

Field 44E (Port of loading / Airport of Departure) on the other hand is most appropriate to be used where mode of transport is determined by vessel or aircraft.

Field 44F (Port of discharge / Airport of destination) is also an optional field where a place of actual physical delivery of the goods should be made in the country of the buyer. The same case applies to field 44B (Place of final destination / For transportation to… / Place of delivery).

The appropriate trade terms and fields to be used will be discussed in the coming post.
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