5 February 2021
With a soft or hard letter of comfort, suretyship, (bank) guarantee, commercial credit insur-ance, Hermes cover, documentary collection, export factoring, advance payment or perhaps with a letter of credit? Organisations such as the International Chamber of Commerce (ICC) offer numerous templates for such instruments, which are supposed to allow an optimal security for the respective individual case (e.g. URDG 758, UCP 600, URC 522). Particularly in light of current uncertainties (e.g. pandemic, Brexit or embargoes), securing exports is of great importance. You can find more details on the possible effects of such radical events on supply chains in our guideline – "Closer to shorter supply chains!?”.
When you have decided to use a letter of credit, the next questions arise: How does it work? What do you need in the event of default in order to obtain the service? The security agreements often specify a large number of different documents: bills of lading, waybills, etc. Depending on the type of transport route, the designations vary. This leads to an almost unmanageable number of socalled traditional documents. In international matters, the situation becomes even more complicated. The term bill of lading alone, which is commonplace in the export business, has numerous variations in international traffic: order or bearer bill of lading - shipped or received for shipment – without remarks (clean) or not (claused)?
To help you keep track of the security options for your export business, this guideline gives you insights into the nine most important security methods, espe-cially the recently popular letter of credit. Followed by explanations of the most common transport documents and their terminology. Finally, we address classic stum-bling blocks in export agreements so that you do the right thing in your export business right from the start.
Of course, clauses must also be understood in the same way by the parties. Incoterms (internationally standardised terms of delivery) are intended to ensure uniform interpre-tation of contracts. From 1 January 2020, the Incoterms will apply in their eighth version. Details on Incoterms and what will change from 2020 can be found in our Newsflash – Incoterms® 2020.