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Check 1
Why can an applicant-issued inspection certificate create draw risk?
Certificates of Origin, Inspection, Quality and Weight
Who issues a certificate can be as important as what it says.
Certificate of origin
Origin evidence may be issued or certified by specified bodies depending on the credit and destination requirements. Avoid requiring an issuer that cannot realistically provide it.
Inspection certificates
Independent inspection companies, chambers, laboratories, sellers or buyers may be named. The issuer requirement changes control and discrepancy risk.
Quality/weight evidence
Commodity trades may require assay, weight, quantity or quality certificates. Check units, tolerances and the point/location of inspection.
Applicant-issued certificates
Requiring a certificate controlled solely by the applicant can create practical draw risk. That does not automatically make the LC invalid, but the beneficiary should understand the dependence before shipment.
Standards / source note: For documentary-credit work, read the actual credit and amendments together with UCP 600 and the current ICC ISBP where applicable.
Remember thisAsk two questions: “what must the certificate say?” and “who has the power to issue it?”
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