Partial shipments, partial drawings and partial payments are very closely related terms in letters of credit transactions.
A beneficiary can make partial shipments, if the letter of credit allows partial shipments explicitly; or else it is silent in regards to the partial shipments.
If a letter of credit disallows partial shipments, this means that the beneficiary can not make any partial shipments under that letter of credit.
After reading this article, you should understand the connection between partial shipments, partial drawings and partial payments under letters of credit.
A letter of credit has been issued in SWIFT format, subject to UCP latest version, with the following details:
- 32B: Currency Code, Amount
Currency : USD (US DOLLAR)
Amount : #300.000,00#
- Field 43P: Partial Shipments: Allowed
- Field 43T: Transhipment: Not Allowed
- Field 45-A: Description of Goods: 3 Pcs of Olive Oil Processing Machinery
- Field 46A: Documents Required:
• 1 original signed commercial invoice and 1 copy.
• 1 original packing list and 1 copy.
• Full set of original bill of lading clean on board marked freight collect made out to the order of Issuing Bank, notify applicant.
The beneficiary has to ship 3 olive oil processing machinery under this sample letter of credit.
Shipping only 1 olive oil processing machinery is a partial shipment.
After shipping 1 olive oil processing machinery, the beneficiary collects the shipping documents and makes the presentation to the issuing bank.
The beneficiary demands 100.000,00 USD from the issuing bank. This is the partial drawing as the beneficiary demands not the full credit amount.
The issuing bank checks the documents, and if the documents are complying then the issuing bank pays 100.000,00 USD to the beneficiary, which is the partial payment.
It is possible to get partial payments under the letters of credit, when partial shipments have been effected. Actually it is why partial shipments exist at the first place.