INTRODUCTION At first sight, there seems to be no reason why a usance LC cannot be made available with any bank by acceptance or by deferred payment. UCP 600 does not prohibit such a structure. But there is an important practical question: will any bank actually be willing to act on such a nomination? This question becomes even more interesting …

Introduction In documentary credit transactions, an insurance document may sometimes contain several parties whose respective roles are not immediately clear. The insurance broker, the named assured, the beneficiary and the underwriters may all appear in the same document. Does the issuing bank need to investigate who is actually behind the insurance arrangement? Or should it simply examine the document as …

Điều 2 UCP 600 định nghĩa thư tín dụng là một thỏa thuận không thể hủy ngang, bất kể được gọi tên hay mô tả như thế nào, và cấu thành một cam kết chắc chắn của ngân hàng phát hành về việc thanh toán khi xuất trình phù hợp.

Introduction Mr. Old Man received an inquiry about the risks a bank may face when issuing a local guarantee against a counter-guarantee issued by an insurance company rather than a bank. Although the counter-guarantee may contain wording similar to that of a standard bank counter-guarantee, would a bank be willing to accept it? Let’s look at the practical considerations. Question …

Introduction Mr. Old Man received two questions concerning commercial invoices presented under a letter of credit (L/C): whether additional charges can be included in the invoice when the L/C allows a tolerance, and whether the unit price can be reduced when it is not specified in the L/C. Question Dear Mr. Old Man, I have two questions and would appreciate …

Introduction An insurance policy may contain several exclusion clauses. But does the presence of additional exclusions automatically make the insurance document discrepant under a Letter of Credit (LC)? The answer is not necessarily. Under UCP 600, we need to distinguish between the acceptability of exclusion clauses and whether the insurance document provides the coverage specifically required by the LC. Let …

Intro In documentary credit operations, should a bank raise a discrepancy simply because a document contains a reference in a different format from those seen on previous presentations? Not necessarily! The key is to examine what the LC actually requires, rather than assume that a familiar format has become a mandatory requirement. In this Q&A, Mr. Old Man considers whether …

Introduction In international trade, the beneficiary of a letter of credit (L/C) is not necessarily the party that physically ships the goods. This often happens in transactions involving traders, transferable L/Cs, or back-to-back L/Cs. Sub-article 14(k) of UCP 600 addresses this issue, but does it mean that the shipper must be different from the beneficiary? Mr. Old Man shares his …

An unusual guarantee structure raises an important question: Can a bank obtain legal protection from a counter-guarantee issued by another part of the same bank? Mr. Old Man shares his views on the legal and credit risks involved. Question Dear Mr. Old Man, Our bank is considering a transaction in which our head office would issue a counter-guarantee, while our …