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| (iii) Certificate of inspection There are two types of certificate of inspection. When their issuance and content are under the control of an independent third party, the certificates provide documentary proof of the seller’s compliance with the underlying contract. When the beneficiary controls their issuance or content, they serve to create warranties 122 An Introduction to Letters of Credit, Letters of Credit Web Report, op. cit, at 16. 123 Ibid. 124 See UCC § 5 -110 (a) (1995) which extends beneficiary warranty to applicant and UCC §5 - 111 (1962) which extends warranty to all interested parties. from the beneficiary This position seems to be reflected in Commercial Banking Company of Sydney Ltd. v. Jalsard Pty Ltd., 126 in which the Privy Council had to decide what particulars were required in a Certificate of Inspection. In Commercial Banking Company of Sydney Ltd. v. Jalsard Pty Ltd., the buyer’s letter of credit required a certificate of inspection to be tendered in relation to the goods, a quantity of battery- operated Christmas lights sold by a seller in Taiwan. Certificates were tendered stating that the surveyors had supervised the packing of the goods, implying that there were no apparent defects in the goods or in the manner of their packing. When the goods arrived in Sydney, they were found to be of defective quality and substantially unsaleable. The buyer claimed that the bank had wrongly accepted the documents. However, Lord Diplock stated 127 that the term Certificate of Inspection normally requires that the person issuing the certificate inspect the goods visually. The use of the term Certificate of Inspection did not implicitly require another particular method of inspection (such as electrical testing) or other particular information (for instance, as to the quality of the goods) to be recorded. (iv) The certificate of origin and phytosanitary certificate The certificate of origin, and phytosanitary certificate, in addition to bills of lading and commercial invoices, are other documents that have been traditionally relied upon by the applicant-buyers for as 125 Ibid. 126 [1972] 3 W.L.R. 566. 127 Ibid, at 570. long as letters of credit has existed as essential for their protection before the issuer sends funds to the seller-beneficiary. Such certificate usually has no special features that prevent forgery. In fact, in many countries, one could get a genuinely issued certificate of origin fora nonexistent cargo. 128 (v) The bill of exchange The bill of exchange must be compliance in accordance with the law of the country in which it is drawn. It must specify all clauses and notations specified in the letter of credit, and, if made out to the order of the beneficiary, carryall the necessary signatures and endorsements. Banks also tend to require it to be drawn up in the language of the credit. 129 (vi) The insurance documents Where required, the insurance documents must state that the goods are insured, usually for their CIF value plus 10% starting no later than the shipping date. They should be made out in the currency of the credit and state the risk covered. Where necessary, they must be endorsed. 130 3.4.5 Sellers duties to submit valid and compliant documents (a) Seller’s empty warranty of genuineness to the issuing bank 128 Trade Finance Fraud - Understanding the Threats and Reducing the Risk, A Special Report prepared by the ICC International Maritime Bureau, op.cit., at 15. 129 Grassi, op.cit., at 88 130 Ibid, at 89. As already mentioned, in Lambias (Import & Exporters) Co. Pty Download 302.29 Kb. Share with your friends:
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