Is $0.01 Overdrawn a Discrepancy?

Intro

In trade finance, documentary checks often come down to decimals. A difference of just 0.01 in the presented invoice total versus the LC amount may seem trivial, but banks operate under strict rules of compliance. The following Q&A looks at whether such a minor discrepancy should be considered a valid discrepancy under UCP 600 and banking practice.

QUESTION

Dear Mr. Old Man,

The LC allows +/- 10% tolerance. The LC value is USD 1,965,431.21, so the ceiling is USD 2,161,974.33.

But the documents presented total USD 2,161,974.34 — just 0.01 above.

Is this really a discrepancy?

Obidur

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ANSWER

Hi Obidur,

I am not aware of any ICC Opinion that deals exactly with your case — an invoice total exceeding the LC tolerance by USD 0.01.

Article 30 allows up to 10% more or less, unless otherwise restricted. In your LC:

• LC value: 1,965,431.21
• +10% tolerance: 2,161,974.33
• Invoice total presented: 2,161,974.34

Which means the presented value exceeded the ceiling by USD 0.01.

Under UCP 600, the tolerance is a hard cap — “not to exceed.” Even 0.01 beyond is, strictly speaking, a discrepancy. An issuing bank that cites “LC overdrawn” is therefore within its rights.

In practice, a difference of one cent in a multi-million transaction causes no harm. Many banks will raise it as a “nuisance discrepancy,” charge a fee, and then seek the applicant’s waiver rather than refuse outright. A court, if it ever came to that, might well treat such a difference as de minimis and order payment.

Bottom line:

Technically, you are outside the LC tolerance by 0.01 and the bank may raise a discrepancy. But common sense tells us that document checkers are not meant to act like robots. Good banking practice should treat such a case proportionately — note the discrepancy, yes, but not let one cent derail a multi-million transaction.

Best regards,

Mr. Old Man