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What is document consistency and how can we effectively achieve document consistency?

What is document consistency and how can we effectively achieve document consistency?

author: Nina
2024-06-19

1.What is document consistency?

Consistency of documents refers to the requirement that all documents provided by the exporter strictly comply with the requirements of the letter of credit issued by the importing bank, or that all documents produced and provided by the exporter related to the purchase and sale of the goods fully comply with the requirements of the letter of credit applied for by the importing party without any contradiction.

2.Key points of document consistency

To achieve consistency in documents, banks must carefully review all documents and ensure that the type, content, and number of copies of the documents submitted by the beneficiary, as well as the wording, are completely consistent with the provisions of the letter of credit. Even if the actual shipment of goods or the contents of the contract and confirmation letter contradict the provisions of the letter of credit, the letter of credit must prevail.

Therefore, if the documents negotiated by the bank appear to match the letter of credit but the goods do not match, the bank shall not be held responsible as it has no knowledge of it; On the contrary, if the actual goods are correct but the documents do not match the provisions of the letter of credit on the surface, the bank shall be responsible, and the applicant for the letter of credit can refuse to redeem the documents and make payment based on this.

3.How to effectively achieve document consistency

It is currently very common for Chinese enterprises to settle accounts through letters of credit in international trade. Therefore, in their export business, they should strictly adhere to the principle of consistency between documents. After receiving a letter of credit issued by a foreign buyer, they should carefully review the letter of credit to determine whether the provisions of the letter of credit are consistent with the contract, whether there are soft clauses in the letter of credit, and whether the seller has the ability to comply with the various provisions of the letter of credit.

Once any issues are discovered, the buyer should be promptly notified to modify the letter of credit, and no luck should be taken. If it is deemed that there are no issues after the review, the documents should be carefully prepared in accordance with the provisions of the letter of credit, so that they are strictly consistent, in order to avoid adverse situations, take preventive measures, and effectively protect one's rights.

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