Mr Old Man Q&A L/C WITH MULTIPLE BENEFICIARIES By Mr Old Man Posted on October 30, 2017 2 min read 0 0 6,072 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr QUESTION Can an LC be issued in favour of several beneficiaries ? ——— ANSWER Hi, Never during my 20 years involved in LC world have I seen LC issued in favour of multiple beneficiaries. Some experts claim it is possible to issue one LC in favour of more than one beneficiary, especially when it is a standby LC, but they also claim that it is too complicated and not practical at all. One expert shared his experience in working on an LC that has one applicant and two beneficiaries. Here is how he did: 1) The L/C indicated both parties as beneficiaries. 2) The L/C indicated that either party could draw under the letter of credit up to the total amount of the letter of credit less any previous drawings done by either beneficiary. 3) The L/C required the presentation of the sole original letter of credit. 4) The L/C indicated that the original was sent to beneficiary A and a copy to beneficiary B. It also indicated that the beneficiary that did not hold the original in its possession must collect the original from the other beneficiary for a drawing. 5) The L/C indicated that once a drawing was submitted, the L/C would be endorsed by the drawing amount and returned to the presenting beneficiary. It is too complicated, isn’t it? L/C with multiple beneficiaries is not recommended. Kind regards, Mr. Old Man
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
CAN THE ISUING BANK CITE “LATE PRESENTATION” AS A DISCREPANCY SOLELY BASED ON THE DATE OF THE COVER LETTER?
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
CAN THE ISUING BANK CITE “LATE PRESENTATION” AS A DISCREPANCY SOLELY BASED ON THE DATE OF THE COVER LETTER?