Mr Old Man Q&A EXPIRED LC By Mr Old Man Posted on May 10, 2018 2 min read 0 1 3,857 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr Goat Bike? QUESTION Hi Mr. Old Man, We have the following case relating to expired L/C. Our bank sent the issuing bank the documents under the L/C available with the issuing bank by acceptance. As the L/C expired, the issuing bank sent us a message informing that it treated the documents as a collection. Two weeks later, the issuing bank sent us another message informing that it had released the documents against the applicant’s acceptance and the payment would be made at maturity. I want to know whether the issuing bank is correct when releasing the documents to applicant upon the applicant’s acceptance without seeking our consent. Thanks and best regards Tan ————————– ANSWER Hi, Where the L/C expired, the issuing bank’s payment obligation under the L/C ceases. If this is the case, the issuing bank may not handle the presented documents in accordance with sub-article 16 (c) UCP 600. It may just send the presenter an MT799 saying that the L/C expired and that it is returning the documents to the presenter or holding the documents at the presenter’s disposal. The issuing bank in your case was not correct to treat the presented documents as a D/A collection and release the documents against the applicant’s acceptance without the presenter’s prior consent. The issuing bank must pay if the applicant fails to pay at maturity. Kind regards, Mr. Old Man
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
CAN THE ISUING BANK CITE “LATE PRESENTATION” AS A DISCREPANCY SOLELY BASED ON THE DATE OF THE COVER LETTER?
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
CAN THE ISUING BANK CITE “LATE PRESENTATION” AS A DISCREPANCY SOLELY BASED ON THE DATE OF THE COVER LETTER?