ISBP 745: Documents with Correction Fluid or Erasures

Introduction

Correction fluid (commonly known as "white-out" or "liquid paper") and erasures on documentary credit documents are treated with suspicion by banks. ISBP 745 addresses the treatment of corrections, alterations, and overwriting on documents. Correction fluid and erasures may conceal tampering, unauthorized changes, or errors that the bank cannot verify. This guide explains how ISBP 745 treats correction fluid and erasures, what banks look for, and how to prepare documents without corrections.

Failure Modes

1. Correction fluid applied to a data field. The invoice amount is corrected using correction fluid. The bank cannot verify the original value or confirm the correction was authorized.

2. Erasure on the bill of lading. An erasure is visible on the bill of lading, suggesting a change to the goods description, quantity, or port. The bank flags this as a discrepancy.

3. Overwriting without authentication. A data field is overwritten (e.g., a quantity is changed from "500" to "600") but the correction is not signed or dated by the issuer. This is non-compliant under ISBP 745 A14.

4. Correction fluid on a stamp or signature. Correction fluid is applied over a stamp or signature, raising questions about the document's authenticity.

5. Multiple corrections without authentication. The document contains several corrections, none of which are signed or dated. The bank cannot verify the accuracy of any corrected data.

Resolution Steps

1. Prepare documents correctly the first time. The best way to avoid correction-related discrepancies is to prepare documents accurately from the start. Double-check all data before issuing the document.

2. Use hand-written corrections when necessary. If a correction is needed, use a pen to cross out the incorrect data and write the correct data nearby. Sign and date the correction.

3. Avoid correction fluid and erasures. Do not use correction fluid or erasers on documentary credit documents. These methods are not compliant under ISBP 745 A14.

4. Authenticate all corrections. Any correction must be signed or initialed by the party who issued or signed the document, together with the date of the correction.

5. Re-issue documents with significant corrections. If a document contains multiple corrections or a significant error, request a fresh document from the issuer rather than correcting the existing one.

6. Check documents for correction fluid before submission. Review all documents for visible correction fluid or erasures. If found, obtain a corrected document from the issuer.

7. Coordinate with the document issuer. If you need a correction, contact the issuer immediately. They may need to re-issue the document or authenticate the correction.

8. Train your documentation team. Ensure your team understands that correction fluid and erasures are not acceptable on documentary credit documents. Emphasize accuracy at the drafting stage.

Conclusion

ISBP 745 treats correction fluid and erasures as problematic because they raise questions about document integrity. The best practice is to prepare documents accurately from the start and avoid corrections entirely. If corrections are necessary, use hand-written corrections authenticated with the issuer's signature and date.

FAQ

Q1: Is correction fluid ever acceptable on a documentary credit document?
No. ISBP 745 A14 does not recognize correction fluid as a valid method of correction. Hand-written corrections authenticated with the issuer's signature and date are the only acceptable method.

Q2: What if the bank finds correction fluid on a document?
The bank may reject the document as discrepant because the correction is not authenticated. The bank may also flag the document for potential tampering.

Q3: Can a bank accept a document with correction fluid if the applicant waives the discrepancy?
Yes, under UCP 600 Article 16(b), the applicant may waive any discrepancy, including the use of correction fluid. The bank is not obligated to seek a waiver.

Q4: Does this rule apply to all documents?
Yes. ISBP 745 A14 applies to all documents presented under the credit. No document may use correction fluid or erasures without proper authentication.

Q5: What if the document is issued with a pre-printed error?
If the document contains a pre-printed error (e.g., a form with an incorrect field), the issuer must authenticate any correction made to that error. The correction must be signed and dated.

Source Notes

Source 1: "The cost of a comma: Documentation errors are the 'hidden tax' on Bangladesh's exports" — The Daily Star (2022). Context only: analysis of documentation errors, including corrections and alterations, in export documentation.

Source 2: "ICC briefing addresses the topic of reducing discrepancy rates" — Trade Finance Global (August 2022). Context only: analysis of common documentary credit discrepancies, including document alteration issues.

Source 3: "Everything you need to know about Letters of Credit: A comprehensive guide to Documentary Credits" — Trade Finance Global (2022). Context only: comprehensive reference on documentary credit compliance, including document correction requirements.