UCP 600 Article 28: Examining Commercial Invoices

Introduction

Commercial invoices presented under a credit requiring an insurance document under UCP 600 Article 28 must be examined for consistency with the insurance document, the transport document, and the credit. The commercial invoice is governed by UCP 600 Article 18, not by Article 28. However, the cross-reference between the invoice and the Article 28 insurance document is a essential examination step, particularly for coverage amount calculation. This guide addresses how the examiner cross-references a commercial invoice against an Article 28 insurance document, identifies the data points that must align, and determines when a discrepancy exists.

Failure Mode Analysis

F1: The invoice CIF value is different from the insurance coverage calculation. The invoice shows a CIF value of USD 100,000, but the insurance shows USD 108,000. Article 28(d) requires at least USD 110,000. The discrepancy must be flagged.

F2: The invoice shows a different currency than the insurance. The invoice is in USD, but the insurance is in EUR. Article 28(e) requires the insurance currency to match the credit. The discrepancy must be flagged.

F3: The invoice goods description does not match the insurance document. The invoice says "100 units of machinery" but the insurance says "100 units of equipment." Article 14(d) requires consistency. The discrepancy must be flagged.

F4: The invoice is not signed or dated. Article 18(a) requires the invoice to be dated and signed. An unsigned or undated invoice is discrepant.

F5: The invoice shows a different Incoterms term than the credit. The credit states "CIF Rotterdam" but the invoice states "FOB Antwerp." The CIF value calculation depends on the correct Incoterms term. A discrepancy in Incoterms affects the insurance coverage amount.

F6: The invoice is issued by a party other than the beneficiary. Article 18(a) requires the invoice to be issued by the beneficiary named in the credit. If the invoice is issued by a different party, the presentation is discrepant unless the credit permits it.

F7: The invoice total value does not match the credit amount. The credit states "amount: USD 50,000" but the invoice shows "total: USD 48,000." Article 18(b) requires the invoice to match the credit. The discrepancy must be flagged.

Deterministic Resolution Architecture

1. Verify the invoice issuer. Confirm the invoice is issued by the beneficiary named in the credit per Article 18(a).

2. Verify the date and signature. Confirm the invoice is dated and signed per Article 18(a).

3. Compare the goods description. Compare the goods description on the invoice against the credit. Confirm they match per Article 18(b). Apply ISBP 745 A12 for tolerances.

4. Calculate the CIF or CIP value. Extract the CIF or CIP value from the invoice. Calculate 110% of that value or the credit amount, whichever is greater. This is the minimum insurance coverage.

5. Compare the insurance amount. Confirm the insurance amount meets or exceeds the calculated minimum per Article 28(d).

6. Compare currencies. Confirm the invoice currency matches the credit and the insurance currency matches the credit per Article 28(e).

7. Compare Incoterms. If the credit states a specific Incoterms term, confirm the invoice uses the same term. A discrepancy in Incoterms affects the CIF value calculation.

8. Record the decision. Document the cross-reference results, the data examined, and the outcome. Preserve the examination worksheet.

9. Escalate discrepancies. If a discrepancy exists, prepare the discrepancy notice per Article 16. If the discrepancy is ambiguous, contact the issuing bank.

Conclusion

The commercial invoice under Article 18 must be cross-referenced against the Article 28 insurance document for CIF value, currency, goods description, and Incoterms consistency. The examination follows Article 14(d) and ISBP 745 paragraphs A11–A12 and A34. The key data points are the CIF value calculation, the 110% minimum coverage, and the currency match.

FAQ

How is the CIF value calculated for insurance purposes? The CIF value is the cost, insurance, and freight value stated on the invoice. The insurance coverage must be at least 110% of this value or the credit amount, whichever is greater.

What if the invoice does not state a CIF value? If the credit requires CIF terms, the invoice must state the CIF value. If the invoice uses different Incoterms, the CIF value must be calculated or derived from the invoice data.

Can the insurance amount exceed 110% of the CIF value? Yes. Article 28(d) sets a minimum. Higher coverage is acceptable.

What if the invoice and insurance show different quantities? Article 14(d) requires consistency. A quantity discrepancy between the invoice and insurance must be flagged.

Can the invoice be in a different currency than the insurance? Article 28(e) requires the insurance currency to match the credit. If the invoice and insurance use different currencies, the examiner must determine whether the credit permits this.

Source Notes

All sources referenced in this article are context only — the examination steps derive from UCP 600, ISBP 745, and common practice.

• UCP 600 — Uniform Rules and Practice for Documentary Credits, ICC Publication no. 600. Context only.
• ISBP 745 — International Standard Banking Practice, ICC Publication no. 745. Context only.
• ICC Academy, "Certified UCP 600 Specialist (CUCP)." Context only.
• ICC, "Commentary on UCP 600." Context only.