As we have discussed in various other blogs, letters of credit contain precise requirements that the beneficiary must meet in order to receive payment. The letter of credit must also state the specific documents needed to meet the requirements. Then, other conditions may exist such as whether partial shipments are allowed or not. If allowed, the beneficiary may make a partial shipment, present documents and get paid for the value of the goods shipped. Later he may make another shipment, present documents and receive payment, etc.

One beneficiary enjoys telling the story of the letter of credit he received for the shipment of “one live cow.” The letter of credit contained the condition that partial shipments were not allowed.

He thought this condition rather humorous since a partial shipment would be, well, utterly impossible!