Mr Old Man Q&A CHANGING PAYMENT TERMS OF THE LC By Mr Old Man Posted on November 18, 2013 4 min read 31 1 12,084 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr Trở lại Cửa Khẻm QUESTION Dear Sir. Need a clarification on transferable LC regarding clause 42C. – If the original LC mentions LC at sight, can the 1st beneficiary change this to LC 30 days usance when transferring this LC to the 2nd beneficiary ( if the 2nd beneficiary agrees to LC 30 days). If a sight LC is transferred as a sight LC, we forsee this problem : The 2nd beneficiary after shipment will send the original documents to the 1st beneficiary’s bank for payment on sight basis. The bank that transferred this LC won’t have the money for this draft and will then have to wait for 15 days for the payment to come from the buyer’s bank, after the 1st beneficiary switches the invoice and bill of exchange. Hence, can the LC be transferred for a usance period of around 30 days, enough time to get the payment from buyer’s bank. Or will the shipper have to wait for 15 to 20 days for the payment from the 1st beneficiary’s bank? Pls advise early. Thanks V. ———- ANSWER Dear V. Article 38 (g) says that the transferred LC must accurately reflect the terms and conditions of the LC with specific exceptions (i) the amount of the LC, (ii) any unit price, (iii) the expiry date, (iv) the period for presentation or the latest shipment date or given period for shipment, any or all of which may be reduced or curtailed. So, the 1st beneficiary cannot change the payment terms from sight basis to usance basis when transferring the LC to the 2nd beneficiary. Only the agreement between the 1st beneficiary and the 2nd beneficiary is not sufficient for the transferring bank to transfer the LC with such a change. Trở lại Cửa Khẻm There’s no need for the 1st beneficiary to insist on such a change because unless the transferring bank is the confirming bank, under the transferred LC the transferring bank would undertake to pay the 2nd beneficiary only after receipt of the proceeds from the issuing bank whether the LC is payable at sight or at xxx days sight. Regards, Mr. Old Man #mroldman.net
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?