ISSUING BANK UNDERTAKING UNDER LC AVAILABLE BY PAYMENT

QUESTION

Dear Mr. Old Man,

My 3rd question at noon. Sorry for taking your time but your reply makes me broaden my horizons a lot.

L/C required: F41A: Available with VBAAVNVX by payment.

Upon receipt at our counters in Vietnam of documents complying with LC terms and conditions, we shall pay you accordingly to your instructions.

In my opinion, it is unreasonable with Available by payment when showing: “upon receipt docs complying…”.

I hope to receive your response in the soonest time.

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 Thanks, and best regards,

KT

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ANSWER

Hi,

Where the LC is available with the issuing bank, the confirming bank (if any) or with a nominated bank by payment, the documents must be presented to that bank for payment.

So, if the LC issued by VBAAVNVN states that it is available with VBAAVNVN by payment, the documents must be presented to VBAAVNVN within the period for presentation and within the LC validity for payment. It is not unreasonable when the LC issued by the issuing bank (VBAAVNVN) stipulates “Upon receipt of the documents complying with the LC terms and conditions we shall pay in accordance with your instructions”.

If the LC is available with a nominated bank by negotiation, the issuing bank may undertake to reimburse the negotiating bank either of the followings:

• Upon receipt of the documents complying with the LC terms and conditions we shall reimburse in accordance with your instructions”; or
• Upon receipt of your authenticated swift/telex message certifying that the documents comply with the LC terms and conditions we shall reimburse in accordance with your instructions” (in case the LC allows TT reimbursement).

Regarding the issuing bank undertaking and the confirming bank undertaking, please refer to Article 7 and Article 8 UCP 600.

Best regards,

Mr. Old Man