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WHERE THE APPLICANT REFUSES TO TAKE UP THE DOCUMENTS

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Yellow sand beach, Hai Van Pass

QUESTION

Dear Mr. Old Man,

We appreciate your answer to the following case:

At the request of the applicant, we issued an L/C fully secured by the applicant’s deposit account with our bank. The documents required for presentation including 3/3 original bills of lading made out to the order of our bank notify the applicant.

Having now received the documents complying with the credit terms and conditions, we notified the applicant of the same and  asked him to come to the bank to take up the documents to take delivery of the cargo. However, so far the applicant has not come to our bank to take up the documents while the shipping company is requesting us to take delivery of the cargo as the bill of lading is made out to the order of our bank.

What should we do in this case? Should we take delivery of the cargo as the bill of lading is made out to the order of our bank?

Thanks and best regards,

NPT

——–

ANSWER

Hi,

If the documents presented are complying, the issuing bank must pay in accordance with the presenter’s instructions regardless whether the applicant takes up the documents to take delivery of the goods or not and regardless whether the bill of lading is made out to the order of the issuing bank or the applicant.

Where the issuing bank has honoured the complying presentation, the applicant must reimburse the issuing bank in accordance with terms and conditions of the L/C opening contract signed between the issuing bank and the applicant. Since the L/C in question is fully secured by the applicant’s deposit account with your bank, you are entitled to debit his account to pay for the claimed amount.

If the applicant for some reason is trying to refuse to take up the documents, you can send the documents including the duly endorsed bills of lading to the applicant’s office by courier service or hand the documents directly to the applicant.

You may provide the shipping company with a copy of the duly endorsed bill of lading to show that the title of the goods has been transferred to the applicant – the real owner of the goods.

LAST BUT NOT LEAST

Remember to keep a set of the photocopy documents and other evidence  in case of a dispute with Applicant and having to go to court.

Kind regards,

Mr. Old Man

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