One L/C, Two Expiry Places? Singapore or Hong Kong

Intro
From time to time, L/C applicants try to build a little flexibility into the credit structure. One common request arises when a beneficiary operates in more than one location and has not yet decided where the documents will be negotiated. Can an L/C show two possible expiry places instead of one? A reader recently raised this practical question.

Question

Good morning, Mr. Old Man,

I have one question and would appreciate your expert opinion.

My customer (the applicant) would like to open an L/C to a Singapore bank, while the beneficiary shows a Hong Kong address.

The applicant requested that the place of expiry be stated as “Singapore or Hong Kong”, because the beneficiary cannot yet decide whether the documents will be negotiated in Hong Kong or Singapore. The beneficiary has operations in both places.

Can we accept such a requirement? My understanding is that we can only indicate one expiry place.

Please help!

Many thanks,

Jas

______

Answer

Dear Jas,

Thank you for your question.

Under UCP 600, documents must be presented to the bank with which the credit is available within the stipulated expiry date and presentation period. In practice, the place of expiry normally corresponds to the place where presentation may be made.

When a credit is available by negotiation with any bank, the expiry place is often indicated as the country of the beneficiary, simply to guide where presentation is expected to occur. However, this is not a strict requirement under UCP 600.

If the credit states that it is available by negotiation with any bank in Singapore or Hong Kong, the beneficiary may present the documents to any bank in either location for negotiation, provided that presentation is made within the expiry date and the applicable presentation period.

Therefore, indicating “Singapore or Hong Kong” as the expiry place would, in my opinion, be acceptable.

In practice, most issuing banks prefer to specify one place only, simply to keep the credit neat and avoid operational confusion. But from a UCP perspective, allowing presentation in either Singapore or Hong Kong is not inconsistent with the rules.

Best regards,

Mr. Old Man