Today we will clarify when we can use partial shipment and what differences have in the case of ‘shipment by installments’.
Partial shipping is a conduction fixed in the LC (letter of credit) agreed between the seller and buyer.
Partial shipment is allowed under the UCP 600 article 31 unless specifically prohibited in the credit.
To work with these terms we need to know the definition of part shipment and what are excluded from the part shipment definition.
If goods transporting is done by the same mode of transport, leave in the same day and for the same destination, it will be considered a part shipment. However, it will not be the case of partial shipment
If we have more than one set of transport documents even if they indicate different dates of shipment or different ports of loading.
So we can conclude that under the UCP 600 if more than one means of conveyance has been affected under one letter of credit presentation this will be regarded as a partial shipment.
Let’s see example on work: considering that the total purchase is for 100,000 US dollar, then the first shipment is for 30,000US dollar followed by a other shipment 30.000 US$ and the rest of goods with value 40,000US$ this case will be termed as part shipment if goods will go to the same destination and can be under the same LC (letter of credit).
Part shipment is commonly used where buyer does not need the whole quantity at one shot or this can be related to the financing situation of the buyer (no financing ability to pay for the whole batch of goods).
This type of shipment is used frequently when buyer has production plan in place in need the good to be delivered to him as per his manufacturing plan, buyer my ask for part shipment and can work under the same LC but this cannot mean that this is obligation.
If buyer and seller after negotiation decide to work with LC they must take in consideration to open an LC with validity period equal the delivery period plus one month to do not face problem with expiration.
Sow LC should be valid for the entire period of goods offer and delivery.
Goods payment must be for each shipment executed against document listed in the LC (letter of credit)
One by one till the last delivery fixed in the agreement between buyer and seller. If LC expire for some reason and the delivery period was extended for some reason related to two partners (seller-buyer)
Next presentation and delivery would be considered invalid, but if the two parties still wants to achieve the deal, buyer can amend the LC to extend the validity. All this depend on the relation formed between seller and buyer, if they see that they can work together with no problem they can extend any document and agreement as long as they wish.
Partial shipment can help buyer to safe money as if he will open LC to each delivery and let’s say that will be at min 5 shipment ,he will pay the full charge of all the five LC but putting them under part shipment and one LC buyer will pay the charge of one instrument of payment(letter of credit). 43590572

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