International market involves various types of trade documents that need to be
produced while making transactions. Each trade document is differ from other and
present the various aspects of the trade like description, quality, number,
transportation medium, indemnity, inspection and so on.
So, it becomes important for the importers and exporters to make sure that their
documents support the guidelines as per international trade transactions. A
small mistake could prove costly for any of the parties.
For example, a trade document about the bill of lading is a proof that goods have been
shipped on board, while Inspection Certificate, certifies that the goods have
been inspected and meet quality standards.
So, depending on these necessary documents, a seller can assure a buyer that he
has fulfilled his responsibility whilst the buyer is assured of his request
being carried out by the seller.
The following is a list of documents often used in international trade:
- Air Waybill
- Bill of Lading
- Certificate of Origin
- Combined Transport Document
- Draft (or Bill of Exchange)
- Insurance Policy (or Certificate)
- Packing List/Specification
- Inspection Certificate
Air Waybills make sure that goods have been received for shipment by air. A
typical air waybill sample consists of of three originals and nine copies. The first
original is for the carrier and is signed by a export agent; the second
original, the consignee's copy, is signed by an export agent; the third original
is signed by the carrier and is handed to the export agent as a receipt for the
Air Waybills serves as:
• Proof of receipt of the goods for
• An invoice for the freight.
• A certificate of insurance.
• A guide to airline staff for the
handling, dispatch and delivery of the consignment.
The principal requirement for an air waybill are :
- The proper shipper and consignee must be mention.
- The airport of departure and destination must be mention.
- The goods description must be consistent with that shown on
- Any weight, measure or shipping marks must agree with those
shown on other documents.
- It must be signed and dated by the actual carrier or by the
named agent of a named carrier.
- It must mention whether freight has been paid or will be paid at the
Bill of Lading is a document given by the shipping agency for the goods shipped for
transportation form one destination to another and is signed by the
representatives of the carrying vessel.
Bill of landing is issued in the set of two, three or more. The number in the set
will be indicated on each bill of lading and all must be accounted for. This is
done due to the safety reasons which ensure that the document never comes into
the hands of an unauthorised person.
Only one original is sufficient to take possession of goods at port of discharge
so, a bank which finances a trade transaction will need to control the complete
The bill of lading must be signed by the shipping company or its
agent, and must show how many signed originals were issued.
It will indicate whether cost of freight/ carriage has been paid or not :
"Freight Prepaid" : Paid by shipper
"Freight collect" : To be paid by the
buyer at the port of discharge
The bill of lading also forms the contract of carriage.
To be acceptable to the buyer, the B/L should :
- Carry an "On Board" notation to showing the actual date of shipment,
(Sometimes however, the "on board" wording is in small
print at the bottom of the B/L, in which cases there is no need for
a dated "on board" notation to be shown separately with date and
- Be "clean" have no notation by the shipping company to the effect
that goods/ packaging are damaged.
The main parties involve in a bill of lading are:
- The person who send the goods.
- The person who take delivery of the goods.
- Notify Party
- The person, usually the importer, to whom the shipping company
or its agent gives notice of arrival of the goods.
- The person or company who has concluded a contract with the shipper
for conveyance of goods
The bill of lading must meet all the requirements of the credit as well
as complying with UCP 500. These are as follows :
- The correct shipper, consignee and notifying party must be shown.
- The carrying vessel and ports of the loading and
discharge must be stated.
- The place of receipt and place of delivery must be stated, if
different from port of loading or port of discharge.
- The goods description must be consistent with that shown on
- Any weight or measures must agree with those shown on other
- Shipping marks and numbers and /or container number must agree with
those shown on other documents.
- It must state whether freight has been paid or is
payable at destination.
- It must be dated on or before the latest date for shipment specified in
- It must state the actual name of the carrier or be signed as
agent for a named carrier.
The Certificate of Origin is required by the custom authority of the
importing country for the purpose of imposing import duty. It is usually issued
by the Chamber of Commerce and contains information like seal of the chamber,
details of the good to be transported and so on.
The certificate must provide that the information required by the
credit and be consistent with all other document, It would normally
- The name of the company and address as exporter.
- The name of the importer.
- Package numbers, shipping marks and description of goods to agree with
that on other documents.
- Any weight or measurements must agree with those shown on other
- It should be signed and stamped by the Chamber of Commerce.
Combined Transport Document is also known as Multimodal Transport Document,
and is used when goods are
transported using more than one mode of transportation. In the case of
multimodal transport document, the contract of carriage is meant for a combined
transport from the place of shipping to the place of delivery. It also evidence
receipt of goods but it does not evidence on board shipment, if it complies with
ICC 500, Art. 26(a). The liability of the combined transport operator starts
from the place of shipment and ends at the place of delivery. This documents
need to be signed with appropriate number of originals in the full set and
proper evidence which indicates that transport charges have been paid or will be
paid at destination port.
Multimodal transport document would normally show :
- That the consignee and notify parties are as the credit.
- The place goods are received, or taken in charges, and place of final
- Whether freight is prepaid or to be collected.
- The date of dispatch or taking in charge, and the "On Board" notation,
if any must be dated and signed.
- Total number of originals.
- Signature of the carrier, multimodal transport operator or their agents.
Commercial Invoice document is provided by the seller to the buyer.
Also known as export invoice or import invoice, commercial invoice is finally used by the custom authorities of the importer's country to
evaluate the good for the purpose of taxation.
invoice must :
- Be issued by the beneficiary named in the credit (the seller).
- Be address to the applicant of the credit (the buyer).
- Be signed by the beneficiary (if required).
- Include the description of the goods exactly as detailed in the
- Be issued in the stated number of originals (which must be marked
"Original) and copies.
- Include the price and unit prices if appropriate.
- State the price amount payable which must not exceed that stated
in the credit
- include the shipping terms.
A Bill of Exchange is a special type of written document under which an
exporter ask importer a certain amount of money in future and the importer also
agrees to pay the importer that amount of money on or before the future date.
This document has special importance in wholesale trade where large amount of
Following persons are involved in a bill of exchange:
Drawer: The person who writes or
prepares the bill.
Drawee: The person who pays the
Payee: The person to whom the
payment is to be made.
Holder of the Bill:
The person who is in possession of the bill.
On the basis of the due date there are two types of bill of exchange:
- Bill of Exchange after Date: In this case the due date
is counted from the date of drawing and is also called bill after date.
- Bill of Exchange after Sight: In this case the due date
is counted from the date of acceptance of the bill and is also called bill
of exchange after sight.
Also known as Insurance Policy, it certifies that goods transported have been insured under an open policy
and is not actionable with little details about the risk covered.
It is necessary that the date on which the insurance becomes effective is
same or earlier than the date of issuance of the transport documents.
Also, if submitted under a LC, the insured amount must be in the same currency
as the credit and usually for the bill amount plus 10 per cent.
The requirements for completion of an
insurance policy are as follow :
- The name of the party in the favor which the
documents has been issued.
- The name of the vessel or flight details.
- The place from where insurance is to commerce typically the
sellers warehouse or the port of loading and the place where
insurance cases usually the buyer's warehouse or the port of
- Insurance value that
specified in the credit.
- Marks and numbers to agree with those on other documents.
- The description of the goods, which must be consistent with that
in the credit and on the invoice.
- The name and address of the claims settling agent together
with the place where claims are payable.
- Countersigned where necessary.
- Date of issue to be no later than the date of transport documents
unless cover is shown to be effective prior to that date.
Also known as packing specification, it contain details about the packing materials
used in the shipping of goods. It also include details like
measurement and weight of goods.
The packing List must :
- Have a description of the goods ("A") consistent with the
- Have details of shipping marks ("B") and numbers consistent
with other documents
Certificate of Inspection is a document prepared on the request of seller when he wants the
consignment to be checked by a third party at the port of shipment before the
goods are sealed for final transportation.
In this process seller submit a valid Inspection Certificate along with the
other trade documents like invoice, packing list, shipping bill, bill of lading
etc to the bank for negotiation.
On demand, inspection can be done by various world renowned inspection agencies on
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