CAN THE APPLICANT CHANGE THE BENEFICIARY’S ADDRESS AS PER THE BENEFICIARY’S STAMP ON THE PROFORMA INVOICE?

Can the Applicant Change the Beneficiary’s Address Based on a Stamp on the Proforma Invoice?

In day-to-day LC practice, small details such as names and addresses often cause uncertainty.

A common question is whether the applicant may adjust the beneficiary’s address when issuing the LC, especially when documents like a proforma invoice show slightly different versions of the address.

The following query illustrates a situation that many practitioners have encountered.

QUESTION

Dear Sir,

The beneficiary’s address on the proforma invoice is slightly different from the stamp of the beneficiary on it. The applicant therefore wants to change the address in the LC to match the stamp.

Is this allowed?

Regards,

Jawad

Askari Bank Pakistan

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ANSWER

Hi Jawad,

Yes, this is generally allowed.

An LC is issued based on the applicant’s instructions. Although those instructions are often derived from a contract or a proforma invoice, it is important to remember a fundamental principle: a documentary credit is a separate transaction from the contract on which it may be based.

Banks examine documents against the terms and conditions of the LC, not against the contract or the proforma invoice.

Therefore, the applicant may request the issuing bank to state the beneficiary’s address in the LC as shown on the stamp or in any other form he believes to be correct.

That said, if there is any uncertainty about which address is correct, it is always advisable for the applicant to confirm with the beneficiary before issuing the LC. This helps avoid discrepancies later when documents are prepared.

If the LC specifies a particular beneficiary address, then whenever documents are required to show the beneficiary’s address, the details should not conflict with the LC data, in line with UCP 600 examination standards.

Not Only the Address…

In practice, it is not unusual for LC terms to differ from the underlying contract.

For example, a sales contract may stipulate a latest shipment date of 30 May 20xx, but the applicant, due to market needs, may request the issuing bank to issue the LC with a latest shipment date of 15 March 20xx.

If the beneficiary is able and willing to ship within that earlier date, he may simply accept the LC and perform accordingly. The parties may then formally amend the contract or otherwise treat the LC terms as prevailing for the transaction.

However, it should be remembered that the beneficiary is under no obligation to accept such changes. If the LC terms are not acceptable, the beneficiary may request an amendment or decline to use the credit.

Best regards,

Mr. Old Man