Shipped on board and clean on board bill of lading

I would like to explain the difference between shipped on board bill of lading and clean on board bill of lading on this page. 

The reason I would like to write about this topic is that some issuing banks demand "shipped on board" bills of lading, whereas others demand "clean on board" bills of lading under "letters of credit" payments.

Exporters are getting confused, when carriers issue a "shipped on board" bill of lading where the letter of credit requires a "clean on board" bill of lading or vice versa.


In such a case the dilemma that exporters are facing is very simple: Is there any difference between "shipped on board" bill of lading and "clean on board" bill of lading?

Under letter of credit transactions:

According to letter of credit rules a bank will only accept a clean transport document. A clean transport document is one bearing no clause or notation expressly declaring a defective condition of the goods or their packaging. 

The word "clean" need not appear on a transport document, even if a credit has a requirement for that transport document to be "clean on board".

Letter of credit rules states that "Terms such as “Shipped in apparent good order”, “Laden on board”, “Clean on board” or other phrases that incorporate “shipped” or “on board” have the same effect as the words “Shipped on board”."

Under cash against document transactions:

According to documentary collection rules a banks will not be checking either a bill of lading or any other document. As a result it does not matter for the banks whether "shipped on board" or "clean on board" notation has been added on a bill of lading.

Under cash in advance and open account transactions:

There is no rule available which regulates the content of the documents under cash in advance or open account transactions.
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