ISBP 745 Section D: On Board Notation, Date, and Port

Introduction

The on board notation on transport documents is a cornerstone of documentary credit compliance under UCP 600 and ISBP 745. Banks examining documents must verify that the on board notation contains the correct date, port of loading, and port of discharge as required by the credit. This guide examines the regulatory framework governing on board notations, common failure modes in practice, and the steps required to achieve compliance.

Failure Mode Analysis

Failure Mode 1: Date Discrepancy Between On Board Notation and Bill of Lading

A common failure occurs when the on board notation date differs from the date of the bill of lading without explanation. Banks may reject documents if the on board notation is undated or if the date cannot be verified. Under ISBP 745, the on board date takes precedence, but the discrepancy creates uncertainty that banks are unwilling to accept.

Failure Mode 2: Missing or Incorrect Port of Loading

Documents may be rejected if the port of loading in the on board notation does not match the credit requirement. This includes situations where the notation shows a transshipment port rather than the original port of loading, or where the port name is misspelled or abbreviated in a way that creates ambiguity.

Failure Mode 3: On Board Notation on Non-Conforming Transport Document

Sometimes the on board notation appears on a transport document that does not otherwise meet the credit requirements. For example, if the credit requires a clean bill of lading but the transport document contains clauses indicating damage or contamination, the on board notation alone does not cure the deficiency.

Failure Mode 4: Failure to Address Transshipment Issues

When a credit prohibits transshipment, the on board notation must confirm that the goods were shipped directly from the port of loading to the port of discharge. Documents that do not address transshipment or that indicate intermediate stops may be rejected.

Deterministic Resolution Architecture

1. Review the credit terms to identify the exact port of loading, port of discharge, and any transshipment restrictions
2. Verify that the transport document type matches the credit requirement (bill of lading, sea waybill, or charter party bill of lading)
3. Confirm that the on board notation is present, signed, and dated on the transport document
4. Cross-check the on board notation date against the credit's shipment deadline to ensure compliance
5. Verify that the port of loading in the on board notation matches the credit requirement exactly
6. Confirm that the port of discharge is correctly stated and matches the credit requirement
7. If the credit prohibits transshipment, verify that the transport document confirms direct shipment
8. Check for any clauses or annotations on the transport document that may affect its clean status
9. If discrepancies are identified, contact the carrier to obtain corrected documentation before the presentation deadline
10. Document the compliance rationale for each key decision to create an audit trail

Conclusion

Compliance with ISBP 745 Section D requirements for on board notations requires meticulous attention to detail. The on board notation must contain the correct date, port of loading, and port of discharge, and the transport document must otherwise meet the credit requirements. Banks apply strict compliance standards, and any discrepancy in these elements can result in document rejection. Successful navigation of these requirements depends on understanding the distinction between the on board date and the bill of lading date, and ensuring all notation elements align with the credit terms.

FAQ

What happens if the on board notation date differs from the bill of lading date?
Under ISBP 745, the on board date takes precedence. However, if the discrepancy creates uncertainty about whether the goods were shipped within the credit's timeframe, the bank may reject the documents. It is best to ensure both dates align or to have a clear explanation for any difference.

Can the on board notation be added after the bill of lading is issued?
An on board notation must be signed and dated by the carrier or their agent. If added after issuance, the notation must be clearly indicated as being added subsequently. Banks may scrutinize late-added notations more carefully.

Does ISBP 745 allow abbreviated port names in the on board notation?
ISBP 745 does not explicitly address abbreviations, but banks expect port names to be clearly identifiable. Standard abbreviations (e.g., "NYC" for New York) are typically accepted, but non-standard abbreviations may create ambiguity and lead to rejection.

What if the credit specifies a range of ports for loading?
If the credit permits loading from any port within a range, the on board notation must indicate the actual port of loading. The notation cannot simply reference the range; it must specify the specific port where the goods were loaded.

How does transshipment affect the on board notation?
If the credit permits transshipment, the on board notation should confirm that the goods were loaded on board at the specified port of loading. If transshipment is prohibited, the transport document must confirm direct shipment from the port of loading to the port of discharge.

Source Notes

The on-board notation rule
- Source: Business Standard
- URL: https://www.business-standard.com
- Published: 2024
- Context: This article discusses the on board notation requirements in the context of shipping and trade finance. It provides background information on industry practices but does not constitute legal or professional advice.