Article 31 and Article 32 look similar on the page. One covers partial shipments. The other covers instalment shipments. In practice, they couldn't be more different, and confusing them can cost you the entire remaining value of an LC.
Article 31 — Partial drawings and shipments
The default position is simple: partial shipments are allowed unless the LC expressly prohibits them. If the LC says nothing about partial shipments, you can split your cargo across multiple shipments and draw against the LC each time.
This catches exporters who assume they need to ship everything at once. If you have an LC for 1,000 metric tons and you can only source 600 right now, you can ship 600, present documents, draw against the LC, and ship the remaining 400 later. No amendment needed, provided the LC doesn't say "partial shipments not allowed."
There's a nuance worth understanding. Under Article 31(b), presentations of more than one set of transport documents — covering shipment from one or more ports on different dates — will be treated as partial shipment. But multiple sets of transport documents covering shipment from the same port, on the same vessel, on the same date are not treated as partial shipment, even if they show different loading dates.
In practical terms: if you load two containers onto the same vessel at the same port, and you get two separate BoLs, that's not a partial shipment. If you load one container today and another next week from the same port on a different vessel, that is a partial shipment.
Why does this matter? Because if the LC prohibits partial shipments and you end up with two BoLs from the same port on different dates, the bank will refuse the presentation.
Article 32 — Instalment drawings and shipments
This is the dangerous one.
An instalment LC specifies a schedule: ship X quantity by Date A, ship Y quantity by Date B, ship Z quantity by Date C. The amounts and dates are defined in the LC itself, usually in Field 47A.
Article 32 says: if any instalment is not drawn or shipped within the period allowed for that instalment, the credit ceases to be available for that instalment and any subsequent instalments.
Read that again. If you miss one instalment, you don't just lose that instalment — you lose every instalment after it. The LC is effectively dead for everything you haven't yet shipped.
There's no cure for this. No amendment can retroactively fix a missed instalment deadline. The provision is automatic and absolute. Miss the first instalment by a day, and the second and third instalments are cancelled — even if you're fully prepared to ship them on time.
The difference in practice
Article 31 is forgiving. You can ship in parts, at your own pace, as long as you're within the overall LC expiry and shipment dates. There's no penalty for shipping less than the full amount in one go. The LC stays alive for the balance.
Article 32 is unforgiving. The schedule is fixed, the deadlines are absolute, and the consequences of missing one are catastrophic. A seller who misses an instalment deadline doesn't just face a discrepancy — they face a total loss of the remaining credit.
The critical question when you receive an LC is: does this LC contain an instalment schedule, or does it simply permit partial shipments? An LC that says "shipment in three lots of equal quantity, first lot by 30 March, second lot by 30 June, third lot by 30 September" is an instalment LC governed by Article 32. An LC that says "partial shipments allowed" with a single latest shipment date is governed by Article 31.
If you're not sure which applies, check Field 47A and the structure of the LC dates carefully. If there are multiple shipment dates tied to specific quantities, assume Article 32 applies and treat every deadline as non-negotiable.
What to do about it
For Article 31 partial shipments: plan your shipments around production and logistics, not around anxiety. You have flexibility. Use it.
For Article 32 instalment shipments: build buffer into every deadline. Start production early. Confirm vessel bookings in advance. Have contingency plans for delays. And if you suspect an instalment is at risk, request an amendment to the schedule before the deadline passes — not after. Once an instalment deadline lapses, the LC provision is triggered automatically. No amount of explanation will reverse it.
The safest approach is to treat every instalment LC with the same urgency you'd give a final shipment deadline. Because under Article 32, every instalment date is a final deadline.
David Berney is the founder of SmartLC, a trade finance platform for managing the Letter of Credit lifecycle. He builds software for the people who actually prepare, check, and present trade documents.