DISCREPANT DOCUMENTS, WAIVER AND NOTICE

QUESTION

Dear Mr. Old Man,

We received from the presenter a set of documents which contained some minor discrepancies. Before sending MT 734 to the presenter, we contacted the applicant for a waiver of the discrepancies. However, the applicant informed us via telephone that he would reject the documents and asked us to return the documents to the presenter.

Should we give the notice of refusal and return the documents to the presenter or should we wait to receive the applicant’s confirmation in writing before giving such a notice of refusal?

Actually, we want to have time to persuade the applicant to accept the discrepancies as they are minor discrepancies.

Thanks for your help.

Best regards,
D
————–

ANSWER

Hi,

According to Article 16 UCP 600, if the issuing bank determines that the documents are not complying and decides to refuse the documents, it must give the notice of refusal to the presenter no later than the close of the fifth banking day following the day of presentation or it shall be precluded from claiming that the documents do not constitute a complying presentation.

In case of discrepant documents, the issuing bank may in its sole judgment approach the applicant for a waiver of the discrepancies. This does not, however, extend the period mentioned in sub-article 14 (b), i.e., five banking days following the day of presentation.

It should be understood that whether or not the issuing bank approach the applicant for a waiver of the
discrepancy, it must give the notice of refusal to the presenter no later than the close of the fifth banking day following the day of presentation.

To avoid being late in giving the notice of refusal and being precluded from claiming that the documents do not constitute a complying presentation while still having time to persuade the applicant to accept the discrepancies, the issuing bank may give the notice of refusal and at the same time approach the applicant for a waiver of the discrepancies. However, instead of returning the documents to the presenter, the notice may state that the issuing bank is holding the documents until it receives a waiver from the applicant or receives further instructions from the presenter prior to agreeing to accept the waiver from the applicant.

Regarding to disposal of documents instructions please refer to sub-article 16 (c) (iii) (a), (b), (c) and (d).

Kind regards,

Mr. Old Man