“ARTICLE 13 DISCLAIMER ON EFFECTIVENESS OF DOCUMENTS”
This article of URC 522 (Uniform Rules for Collections) outlines the extent of a bank’s responsibility regarding the documents presented under a documentary credit. Here’s a detailed breakdown of each clause within Article 13, including explanations and examples:
Clause: “Banks assume no liability or responsibility for the form, sufficiency, accuracy, genuineness, falsification or legal effect of any document(s)”
Explanation: Banks are not responsible for verifying whether the documents presented are properly formatted, complete, or legally effective. This means that the bank does not check if the documents comply with the required standards or if they have been correctly executed.
Example: Suppose a bank receives a bill of lading for a shipment. The bank is not liable if the bill of lading contains errors or if it was falsified, as long as the documents comply with the terms set out in the credit. If the bill of lading inaccurately describes the shipment or is forged, the bank will not be held accountable.
Clause: “nor do they assume any liability or responsibility for the general and/or particular conditions stipulated in the document(s) or superimposed thereon”
Explanation: Banks do not take responsibility for the specific terms or conditions mentioned in the documents or any additional conditions that might be added. They are only concerned with whether the documents comply with the credit terms, not with the details within those documents.
Example: If a sales contract stipulates certain conditions regarding the quality of goods, the bank will not be held liable if those conditions are not met. For instance, if the contract requires the goods to be of a specific quality and the actual goods do not meet this requirement, the bank is not responsible for any issues arising from this discrepancy.
Clause: “nor do they assume any liability or responsibility for the description, quantity, weight, quality, condition, packing, delivery, value or existence of the goods represented by any document(s)”
Explanation: Banks are not liable for verifying the physical characteristics of the goods described in the documents. This includes aspects such as quantity, weight, quality, and condition of the goods, as well as how they are packed and delivered.
Example: If the documents presented show a shipment of 1000 units of goods, but the actual shipment contains only 900 units, the bank will not be responsible for this discrepancy. The bank’s role is limited to processing the documents according to the credit terms, not inspecting or verifying the actual goods.
Clause: “nor for the good faith or acts and/or omissions, solvency, performance or standing of the consignors, the carriers, the forwarders, the consignees or the insurers of the goods, or any other person whomsoever”
Explanation: Banks do not assume responsibility for the reliability or performance of the parties involved in the transaction, including the consignors, carriers, forwarders, consignees, insurers, or any other parties. They are not liable for any actions or failures on the part of these parties.
Example: If a carrier fails to deliver the goods on time or if the consignee is unable to pay for the goods, the bank is not liable for these issues. The bank’s responsibility is solely to process and check the documents as per the credit terms, not to oversee the actions of other parties involved in the transaction.