Some of the basic documents
Bills of Lading
A bill of lading (B/L) is used for sea shipment and is a certificate of ownership of goods. It must be produced at the port of final destination by the importer in order to claim goods.
As a document of title, the bill of lading is also a negotiable document and you may sell the goods by endorsing or handing it over to another authorized party, even while the goods are still at sea.
Although negotiable bills of lading are in common use, some countries do not allow them or make it difficult fro them to be used. You have to be sure that a negotiable B/L is accepted in your country. Otherwise, a non-
The B/L is a formal, signed receipt for a specified number of packs, which is given to the export agent by the shipping line when the shipping line receives the consignment. If the cargo is apparently in good order and properly packed when received by the shipping line, the bill of lading, is deemed as "clean". The ship owner thus accepts full liability for the cargo described in the bill.
A commercial invoice is a bill for the goods from the seller to the buyer. These invoices are often used by governments to determine the true value of goods when assessing customs duties. Governments that use the commercial invoices to control imports will often specify its form, content, number of copies, and language to be used, as well as other important details.
An insurance certificate is a representation of the insurance policy taken out by the buyer or the seller (depending on the Incoterms) for a shipment.
• Blank insurance certificates are supplied by the insurer pre-
• For a sea shipment, an insurance certificate is issued as evidence of the existence of the marine insurance policy.
• The marine insurance policy is a contract between the insured and the insurer which defines the terms of the agreement between the insured and the insurer.
The packing list indicates the number of items in the contents of each pack, along with individual weights and dimensions. This list enables you to check that the correct number of units has been received. Customs authorities can also easily identify a specific pack if they wish to inspect.
An air waybill is used for air transport and is documentary evidence of the conclusion of a contract for carriage. It serves as:
• Proof of receipt of the goods for shipment
• An invoice for the freight
• A certificate of insurance
• A guide to airline staff for the handling, dispatch and delivery of the consignment.
Usually, the document consists of three originals and nine copies. The first original is intended for the carrier and is signed by a export agent; the second original, the consignee's copy, is signed by an export agent and accompanies the goods; the third original is signed by the carrier and is handed to the export agent as a receipt for the goods after they have been accepted for.
Letters of Credit
In simple terms, a letter of credit is an undertaking by a bank to make a payment to a named beneficiary within a specified time, against the presentation of documents which comply strictly with the terms of the letter of credit.
Its main advantage is providing security to both the exporter and the importer, but the security offered, however, comes at a price and must be weighed against the additional costs resulting from bank charges. The exporter must understand the conditional nature of the letter of credit and the fact that payment will not be made unless the terms of the credit are met precisely.
A letter of credit is opened by an importer (applicant), to ensure that the documentation requested reflects and proves that the seller has performed under the requirements of the underlying sales contract, by the exporter by making them conditions of the letter of credit (N.B. The sales contract is not an inherent part of the Letter of Credit, although the Letter of Credit may contain a reference to such contract). For the exporter a letter of credit, apart from cash in advance, is the most secure method of payment in international trade as long as the terms of the credit are met.