Does an Inter – Bank Courier Clause Override the LC Presentation Period?

Intro

 Letters of Credit sometimes contain additional conditions that blur the line between presentation by the beneficiary and document handling between banks.

When such clauses are poorly drafted, the question inevitably arises: can an issuing bank turn an internal routing instruction into a discrepancy?

The following Q&A addresses one such situation involving Fields 47A and 48.

QUESTION

Dear Sir,

LC clause under Field 47A, point no. 4, states that the negotiating/nominating bank must send the original documents to the intermediary bank and/or confirming bank, which will forward the documents to ABC Bank by courier service, latest by 45 days after the date of shipment.

However, LC Field 48 (Period for Presentation in Days) states: 45 days from the date of shipment.

If the documents are presented to the nominated bank within the presentation period and before 45 days from the date of shipment, can discrepancies be raised based on the clause in Field 47A, point no. 4?

Kindly provide your valuable suggestions.

Regards,

Ranjana Pathak

TOC

________

ANSWER

Dear Ranjana,

Thank you for your question.

My short answer is NO.

In accordance with the stipulation in Field 48, the beneficiary is entitled to present the documents to the nominated/negotiating bank on any day within 45 days from the date of shipment. Once a complying presentation is made within this period, the presentation requirement is fulfilled.

The clause in Field 47A is poorly drafted and ambiguous. It governs inter-bank document routing after presentation, not presentation by the beneficiary itself. It does not — and cannot — modify or override the presentation period stipulated in Field 48.

In this respect, ISBP 821, Preliminary Considerations (v) states:

“The applicant bears the risk of any ambiguity in its instructions to issue or amend a credit. An issuing bank should ensure that any credit or amendment it issues is not ambiguous or conflicting in its terms and conditions.”

Accordingly, any delay or issue arising from courier transmission between banks after a timely presentation cannot be attributed to the beneficiary, nor can it form a valid basis for refusal.

Therefore, the issuing bank cannot raise a discrepancy based on the clause in Field 47A where presentation has been made within the period stipulated in Field 48.

I hope this clarifies the matter.

Best regards,

Mr. Old Man