Can an LC Be Amended After Documents Have Been Presented?

A question from Jawad Ahmed, Pakistan, raises two interesting issues in documentary credits:

1. Can an LC requirement be deleted by amendment after documents have already been presented and a discrepancy has been raised?
2. Can the requirement for a draft at sight in Field 42C be removed?

Here is my answer.

Question

Dear Sir,

Hope you are doing well.

I wanted to ask two questions.

First, we issued a letter of credit under which a Seaworthiness Certificate was required in Field 46A regarding the vessel’s seaworthiness.

The documents were presented, but the Seaworthiness Certificate was not presented. Therefore, as per the procedure, we raised a discrepancy and communicated it to the advising bank.

Now, the applicant has requested an amendment to delete the requirement for the Seaworthiness Certificate. My question is: can we issue the amendment now, when the documents have already been presented and we have already raised a discrepancy?

My second question is: can we delete Field 42C, “Drafts at Sight,” from an LC?

Please guide me on this matter.

Regards,

Jawad Ahmed
Pakistan

________

Answer

Dear Jawad,

Thank you for your questions.

Amendment or waiver?

If the Seaworthiness Certificate was required by the LC but was not presented, the issuing bank may refuse the presentation by citing the discrepancy “Seaworthiness Certificate not presented.”

According to UCP 600 Article 10(a), a credit can neither be amended nor cancelled without the agreement of the issuing bank, the confirming bank, if any, and the beneficiary.

Therefore, an amendment deleting the requirement would normally be relevant to future presentations, rather than retrospectively changing the documentary requirements applicable to a presentation that has already been made.

In this situation, if the applicant wants the issuing bank to accept the documents despite the missing Seaworthiness Certificate, the more appropriate approach is for the applicant to waive the discrepancy rather than amend the LC.

However, the applicant’s waiver does not by itself oblige the issuing bank to accept the documents. The issuing bank is still entitled to refuse the presentation if it does not accept the applicant’s waiver, in accordance with UCP 600 Article 16(c)(iii)(b).

Removal of the draft requirement in Field 42C

Yes. An LC can be issued without a requirement for a draft, and an existing LC can be amended to remove the draft requirement, subject to the agreement of the parties required under UCP 600 Article 10(a).

This is consistent with the ICC Guidance Paper on The Use of Drafts under Documentary Credits, which explains that drafts are not necessarily required under a documentary credit unless the credit calls for them.

Best regards,

Mr. Old Man