UCP600 Article 27: Clean Transport Documents
Article 27 of the UCP600 deals with the requirement for a clean transport document in the context of documentary credits. Here’s a breakdown of each clause along with examples for clarity:
Clause 1: Clean Transport Document Requirement
Text: “A bank will only accept a clean transport document.”
Explanation: This clause specifies that for a bank to honor a documentary credit, the transport document presented must be clean. A clean transport document is one that does not contain any clauses or notations that declare the goods or their packaging as defective.
Example: If a seller ships goods and the bill of lading (a type of transport document) states, “Goods are in damaged condition,” this would not be considered a clean transport document. The bank would refuse to accept this bill of lading under a documentary credit.
Clause 2: Definition of a Clean Transport Document
Text: “A clean transport document is one bearing no clause or notation expressly declaring a defective condition of the goods or their packaging.”
Explanation: This clause further clarifies what constitutes a clean transport document. It must be free from any remarks that explicitly state that the goods or their packaging are in a defective state.
Example: If the bill of lading states, “Packages are torn,” this notation indicates a defective condition of the packaging. Therefore, this bill of lading would not be considered clean and would not be accepted by the bank.
Clause 3: Absence of the Word “Clean”
Text: “The word ‘clean’ need not appear on a transport document, even if a credit has a requirement for that transport document to be ‘clean on board’.”
Explanation: This clause indicates that the transport document does not need to explicitly include the word “clean.” As long as there are no clauses or notations indicating a defective condition, the document is considered clean. This holds true even if the letter of credit specifies that the document must be “clean on board.”
Example: A bill of lading that does not contain the word “clean” but also does not include any negative remarks about the condition of the goods or their packaging would still be accepted. For instance, a bill of lading that states “Goods loaded on board” without any additional comments about defects is considered a clean transport document.
Summary
Understanding UCP600 Article 27 is crucial for exporters, importers, and banks involved in international trade. It ensures that the transport documents presented under a letter of credit accurately reflect the condition of the shipped goods, thus providing confidence and security to all parties involved. By requiring clean transport documents, banks help maintain the integrity of the trade finance process.
Additional Notes:
- On Deck: Refers to the transportation of goods on the deck of a vessel. Transport documents should specify if goods are stowed on deck as it can affect the condition and risk associated with the goods.
- Example: A bill of lading marked “on deck” indicates that goods are exposed to the elements, which might not be acceptable for certain types of shipments.
- Shipper’s Load and Count: Indicates that the shipper is responsible for loading and counting the cargo. The carrier does not take responsibility for the quantity or condition of the goods loaded.
- Example: A bill of lading with the notation “Shipper’s Load and Count” implies that any discrepancies in the number or condition of the goods are the shipper’s responsibility, not the carrier’s.