LATE PRESENTATION OR NOT?

QUESTION

Dear Mr. Old Man,

A deferred payment LC stipulates as follows:

F31D (Date and Place of Expiry): 150105 GERMANY

F48 (Period for Presentation): WITHIN 21 DAYS FROM BILL OF LADING DATE

The documents presented by the nominated bank in Germany shows the covering schedule date as 05 January, 2015 and the bill of lading date as 10 December, 2014.

Please let me know if we can raise the discrepancy “late presentation”. Is it acceptable if that covering letter states that the documents are complying with the credit terms and conditions?

How are sub-article 14(b) and sub-article 29 (b) applicable?

Thank you in advance.

VT

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ANSWER

Hi,

You should not determine if the documents are presented within the stipulated presentation period based on the covering schedule date. The covering schedule date is not the presentation date but any date before or on the date the documents are forwarded to the nominated bank or the issuing bank. If the covering schedule contains a statement that the documents are complying, it can be understood that the documents are presented within the stipulated presentation period and LC validity.

In your case, the documents may have been presented to the nominated bank on 29, 30 or 31 December, 2014 and in accordance with sub-article 14(b), the nominated bank had five banking days following the day of presentation to determine if the presentation was complying. Therefore, the fact that the covering schedule dated 05 January, 2015 does not signify that the documents were late presented.

In reply to a similar question on www.letterofcreditforum.com in 2008, I mentioned the case where  the documents are presented one or two days or even three or four days later than the expiry date and some dishonest banks may abuse the five-banking-day gap to save their customers from the discrepancy “late presentation”. An honest bank should not do this.

What does sub-article 29(b) say?

Sub-article (b) says that if presentation is made on the first following banking day, a nominated bank must provide the issuing bank or confirming bank (if any) with a statement on its covering schedule that the presentation was mad within the time limits extended in accordance with sub-article 29(a). Sub-article 29 (a) allows a presentation to be made on the first following banking day if the expiry date or the last day for presentation falls on a day the nominated bank is closed for reasons other than those referred to in article 36.

The covering schedule did not contain such a statement; it means that the case in question does not fall into the category of article 29.

Kind regards,

Mr. Old Man