Does Field 39A Cover Quantity Tolerance?

A reader recently sent Mr. Old Man an interesting question about quantity tolerance under an L/C.

The issue sounds simple at first glance, but in practice it often creates confusion between sales contract terms, the wording of the credit, and the application of UCP 600 Article 30.

Here is the question and discussion.

Question

Dear Mr. Old Man,

I would greatly appreciate it if you could spare some time to clarify the following issue for me.

The sales contract stipulates:

QUANTITY: 200 Metric Tons (+/- 10%)

In the issued letter of credit, Field 39A clearly states:

Credit Amount Tolerance: 10/10

However, in the “Description of Goods” section, the L/C only states:

Quantity: 200 Metric Tons

without mentioning any tolerance, nor does it specify that:

“10 pct more or less on total quantity acceptable”

or any similar wording.

In my opinion, this could become a cause of discrepancy because the quantity shown on documents such as the Invoice, Packing List, etc. may differ from the quantity stated in the L/C, while the L/C itself does not expressly provide any tolerance for quantity.

I suggested adding such wording, but my department manager believes that the tolerance stated in Field 39A already covers the goods quantity tolerance as well, and therefore no amendment to the L/C is necessary, in order to avoid delay and additional costs.

I would highly appreciate your opinion on this matter.

Best regards,
H.N.

________

Answer

Hello,

Thank you for your question.

Field 39A is titled:

“Percentage Credit Amount Tolerance.”

According to the SWIFT definition, this field specifies the tolerance applicable to the documentary credit amount as a percentage plus and/or minus that amount.

Therefore, this field applies only to the credit amount and does not automatically apply to the quantity of goods.

I agree with your view that if the tolerance is intended to apply to the quantity, the L/C should expressly state wording such as:

“10 pct more or less on total quantity acceptable”

or similar wording.

In the case you described, although the L/C does not expressly provide a quantity tolerance, Article 30(b) of UCP 600 may still permit a tolerance of plus or minus 5% in the quantity of goods, because the quantity is stated in metric tons rather than in a stipulated number of packing units or individual items, provided that the drawing amount does not exceed the amount of the credit.

So, strictly speaking, your concern is valid. However, under UCP 600, a limited tolerance may still be available even without explicit wording in the L/C.

Best regards,
Mr. Old Man