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What Is Document Compliance & How to Achieve It Effectively

Views: 0 Author: Site Editor Publish Time: 2026-02-26 Origin: Site

1. What Is Document Compliance?

Document compliance means that all documents provided by the exporter must strictly match the requirements stated in the letter of credit (L/C) issued by the importer’s bank.

All commercial, shipping, and official documents related to the goods must be fully consistent with the L/C terms, without any discrepancies or contradictions.

2. Key Points of Document Compliance

Banks examine all documents with reasonable care to ensure that:

The types, content, and number of documents are exactly as required by the L/C
The wording and details on the documents fully follow the L/C terms

Even if the actual shipped goods or the sales contract differs from the L/C, the L/C always takes priority.

If documents appear compliant with the L/C but the goods are inconsistent, the bank bears no responsibility.
If the goods are correct but documents show discrepancies with the L/C, the bank is liable, and the applicant may refuse payment.

3. Case Analysis of Document Discrepancies

In actual export business, strict compliance between documents and L/C is a basic rule.

The following case shows how discrepancies led to payment refusal.

A Chinese company (A) sold cloth to a West African company (B) on CIF terms, with payment by L/C.

The L/C required:

Quantity: “about 50,000 yards”
Insurance: W.P.A. + War Risk

Company A habitually insured All Risks + War Risk without carefully checking the L/C.

After shipment, the bank refused payment due to two major discrepancies:

Insurance coverage shown on the policy did not match the L/C requirement.
The bill of lading showed 44,800 yards, which was inconsistent with “about 50,000 yards”.

Company A argued that All Risks provided better coverage.

However, banks only check surface compliance with the L/C, not the actual benefits to the buyer.

According to UCP500 Article 39, the word “about” allows a 10% tolerance, meaning the acceptable range is 45,000–55,000 yards.

Since 44,800 yards was outside this range, the bank lawfully refused payment.

This case proves that document discrepancies can directly lead to payment risks in international trade.

4. How to Effectively Achieve Document Compliance

To avoid discrepancies under L/C payment terms:

Carefully check the L/C immediately upon receipt

Confirm consistency with the sales contract
Identify and remove soft clauses
Ensure all terms are practical and achievable

Request amendments promptly for any unacceptable terms
Do not take risks or rely on luck.
Prepare all documents strictly according to the L/C
Double-check descriptions, quantities, unit prices, ports, and insurance terms.

Only by strictly following document compliance can exporters avoid risks and protect their rights.

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