QUESTION Dear Mr. Old Man, I have 2 questions that need your expertise clarification: 1/ Does the act of endorsement of drafts by the LC beneficiary to presenting bank mean the transfer of beneficial right? 2/ Must the beneficiary endorse the draft to the presenting bank to authorize it  to claim reimbursement/payment from the issuing bank? Thank you so much …

QUESTION Hi Mr. Old Man, Our bank presented documents under a Letter of Credit that had already expired. The issuing bank replied, saying that since the L/C had expired, they would treat the documents as a collection. Two weeks later, they messaged again to say they had released the documents to the applicant upon acceptance, and payment would be made …

QUESTION Hi, An LC for USD 1,000,000 is issued with these key terms: Usance LC: 180 days from date of negotiation 41D: Available with any bank in the beneficiary’s country by negotiation 71D: All charges are on account of the applicant The beneficiary asks the negotiating bank to discount the bill at 3% per annum. Who is responsible for paying …

QUESTION Dear Mr. Old Man, Our bank issued a deferred payment L/C. The documents presented were fully compliant. Upon confirming compliance, our bank incurred its deferred payment undertaking and notified the foreign bank accordingly. The buyer accepted the obligation to pay on the due date and received the documents to collect the goods. However, when the goods were received, they …

  PARTIAL PAYMENT ON DISCREPANT DOCUMENTS Can an issuing bank pay only part of a discrepant presentation based on the applicant’s instructions? In documentary credit practice, situations sometimes arise where the applicant is willing to accept discrepant documents, but only on condition that the beneficiary agrees to a reduction in payment. This usually happens when market conditions have changed and …

QUESTION Dear Mr. Old Man, Hope this mail finds you well. I have a question that needs your expertise clarification: Can the issuing bank prepay or purchase its own accepted draft or its own deferred payment undertaking under UCP 600 sub-article 12(b)? Thank you. Frank —— ANSWER Hi Frank, UCP 600 Article 12(b) permits a nominated bank that has accepted …

QUESTION Dear Mr. Old Man, The Letter of Credit includes the following details: Field 50 (Applicant): AAA Company … Hong Kong Field 46A (Documents Required): … Full set of clean on board original ocean bill of lading made out to the order of ABC Bank Ltd, notify applicant, marked “freight prepaid”. … Field 47A (Additional Conditions): All documents must state …

QUESTION Dear Sir Good Day! LC shows the below clause:  SHIPMENT MUST BE EFFECTED INSIDE CONTAINERS AND B/L SHOULD EVIDENCE SO Is it enough if we show the Container Numbers Ex: CXHU4321079 without the wording “SHIPMENT IS EFFECTED INSIDE CONTAINERS”? If we don’t show the wording “SHIPMENT IS EFFECTED INSIDE CONTAINERS”, will it be a discrepancy? If not, please provide …

QUESTION Dear Mr. Old Man Hope you are doing well.  I would like to seek your advice for the following: I am quite confused with “Issued or Endorsed” and “Made Out or Endorsed” both are the same meaning?  One of my bank prefer the wording to mention as “made out or endorse”. I prefer to be mentioned “Issued or Endorsed” …

  QUESTION: What is the difference between discounting and negotiation in the context of letters of credit? Could you clarify? ——- ANSWER: Hi, Great question — it’s one that often comes up in trade finance. Under UCP 600, the term officially used is “negotiation”, not “discounting.” According to Article 2 of UCP 600, negotiation refers to: “The purchase by the …