UCP 600 Article 38 — Examining Bills of Lading Under Transferable Credits

Introduction

When a documentary credit is transferred under Article 38, the second beneficiary must present documents — including bills of lading — that comply with the terms of the transferred credit. The transferring bank must examine these bills of lading against the transferred credit's requirements before paying or negotiating. This guide addresses the specific examination requirements for bills of lading within the transferable credit framework.

Failure Mode Analysis

Failure Mode 1: Bill of Lading Reflects Original Credit, Not Transferred Credit

The second beneficiary presents a bill of lading that matches the original credit's terms but not the transferred credit's terms. If the transferring bank alters any terms during transfer, the bill of lading must comply with the altered terms.

Failure Mode 2: Shipper Identified as Original Beneficiary

The bill of lading identifies the original beneficiary as shipper, but the transferred credit names the second beneficiary as shipper. This inconsistency is a discrepancy.

Failure Mode 3: On-Board Date Before Transfer

The bill of lading's on-board date predates the transfer of the credit. While this is not inherently a discrepancy, it may indicate that goods were shipped before the second beneficiary had rights under the credit.

Failure Mode 4: Port of Discharge Changed

The transferred credit changes the port of discharge from the original credit. The bill of lading reflects the original port, not the transferred port.

Failure Mode 5: Full Set Not Presented

The transferred credit requires a full set of bills of lading. The second beneficiary presents only one of three originals. Under Article 20(a)(iv), this is a discrepancy.

Deterministic Resolution Architecture

Step 1: Review Transferred Credit Terms

Before examining the bill of lading, review the transferred credit for any changes from the original credit. Identify the shipper, consignee, notify party, ports, and any other requirements.

Step 2: Verify Shipper Identity

Confirm that the bill of lading identifies the correct shipper. If the transferred credit names the second beneficiary as shipper, the bill of lading must reflect this.

Step 3: Check On-Board Notation and Date

Verify that the bill of lading contains an on-board notation with a date that is not later than the credit's latest shipment date. Confirm the date is consistent with the transfer date.

Step 4: Compare Port Details

Compare the port of loading and port of discharge on the bill of lading against the transferred credit's requirements. Any deviation constitutes a discrepancy.

Step 5: Verify Full Set Presentation

Confirm that the number of originals presented matches the number required by the transferred credit.

Step 6: Confirm Clean Status

Verify that the bill of lading is clean — free of clauses indicating damage, defective packaging, or other adverse conditions.

Step 7: Document Examination Results

Record the examination results in the bank's file. If the bill of lading complies, proceed to payment or negotiation. If discrepant, refuse and notify the second beneficiary under Article 16.

Conclusion

Bills of lading under transferred credits require careful examination against the transferred credit's terms, not the original credit. The transferring bank must verify shipper identity, on-board notation, port details, original count, and clean status before proceeding.

Frequently Asked Questions

1. Can the transferred credit change the shipper to the second beneficiary?

Yes. Article 38(g) allows the transferred credit to name the second beneficiary as shipper if the original credit's terms permit. The transferring bank must ensure the bill of lading reflects this change.

2. What if the bill of lading predates the transfer?

There is no UCP 600 prohibition on pre-transfer shipment dates. However, the bill of lading must comply with the transferred credit's latest shipment date.

3. Can the second beneficiary present a bill of lading from the original beneficiary?

If the transferred credit names the second beneficiary as shipper, a bill of lading identifying the original beneficiary as shipper is a discrepancy.

4. Does the transferring bank examine documents?

Yes. Under Article 38, the transferring bank examines documents presented by the second beneficiary against the transferred credit's terms. It does not examine against the original credit.

5. What if the transferred credit does not change the bill of lading requirements?

If the transferred credit retains all original credit terms, the bill of lading must comply with those terms exactly as they appear in the transferred credit.

Source Notes

Context only — no primary source text was extracted for this guide. All references to UCP 600 and ISBP 745 are based on the well-known published rules. Source URLs from the batch data point to ICC and ICC Academy publications: "UCP 600 - Uniform Rules and Practice for Documentary Credits" (ICC, 2023); "A guide to types of documentary credit" (ICC Academy, 2024); "Certified UCP 600 Specialist (CUCP)" (ICC Academy, 2025).