ISBP 2007

ISBP stand for International Standard Banking Practice for the Examination of Documents under Documentary Letter of Credit. It is an ICC publication and official ICC document. ISBP was prepared in order to fill the gap between general principals of UCP and the daily practice.

Responsibilities and Liabilities of Beneficiary/Exporter

Responsibilities and Liabilities of Beneficiary(exporter):

i) The beneficiary has the obligation to make export as per the contract and produce the documents as required by the credit. He 'can in no case avail itself of the contractual relationships existing between banks or between the applicant and the issuing bank'.

ii) In a transferable credit, if he requires it to be transferred, he should pay the charges of the transferring bank.

Different parties of Letter of Credit

Responsibilities and Liabilities of Applicant/Importer

The responsibilities and obligations of the Applicant(Importer):

i) Since the credit is based on the sale contract with the exporter i.e. the importer has a duty to the exporter to ensure that the credit is opened as per the terms of the sale contract. However, once a credit is issued, it stands by itself whether or not it is in accordance with the sale contract.

ii) Even if the bank that opens a letter of credit fails the importer remains liable to the exporter for the amount if the exporter has fulfilled his obligation under the contract.

iii) The obligations between the importer and the issuing bank are governed by the application-cum-agreement submitted by the importer to the bank.

iv) The applicant is liable to indemnify the banks against all obligations and responsibilities impossed by foreign laws and usages.

Parties involved in Letter of Credit

Different Parties of a Documentary Credit

Normally the following parties are involved to a documentary credit.

1. The Issuing Bank(opening bank)
2. Nominated bank or Intermediary bank
   i) Advising Bank/Notifying Bank
   ii) The Confirming Bank
   iii) Negotiating Bank
   iv) Accepting Bank
   v) Paying Bank
   vi) Reimbursing Bank
   vii) The Transferring Bank
3. The Applicant or Buyer (Importer)
4. The Beneficiary or Seller (Exporter)

Responsibilities and Liabilities of Parties of Letter of Credit

Bill of Exchange

Bill of Exchange: It is a negotiable instrument. It is an unconditional order, signed by the maker, to pay a certain sum of money, to a certain person, at the given date.

Bill of Lading

Bill of Lading: It is a document issued by the shipping company or its agent acknowledging the goods mentioned there in, on board the carrying vessel, in apparent good order and condition unless other wise indicated there in, for shipment to the consignee on terms & conditions as agreed upon as to their carriage. It is a document of title to the goods described in it.

Custom Invoice

Custom Invoice: These are specific forms supplied by the consular office of the importer duly filled and signed by the shipper and serve the purpose of making easy entry of the merchandise into the importing country. These invoices are for easy custom clearance.

Consular Invoice

Consular Invoice: This is an invoice issued or certified by the consulate or embassy of the importing country, stationed in the exporting country. This type of invoice is called Legalized Invoice.

Commercial Invoice

Commercial Invoice: When the supplier shipped the goods, he prepares a final invoice, which is called commercial invoice. This has no difinite form but usually commercial invoice includes description of the goods, unit price, name of the buyer and other specification as per credit terms.

Proforma invoice

Proforma Invoice: Proforma invoice is the offer or quatation of the supplier to the buyer. If the buyer accept the offer or quotation, the invoice become the contract between the buyer and the seller. Before opening the L/C, the applicant will submit the proforma invoice to the Issuing Bank as a contract with his supplier.