Presentation Period vs. Expiry Date: When the Presentation Period Appears to Extend Beyond the LC Expiry Date

In documentary credits, it is not uncommon to see a presentation period that appears longer than the time remaining before the expiry date of the credit. At first glance, this may seem contradictory and sometimes leads to confusion between applicants, beneficiaries, and even junior trade finance staff.

The key point, however, is that under UCP 600, documents must comply with both the presentation period requirement and the expiry date requirement simultaneously.

Question

Dear Mr. Old Man,

An LC states:

• Presentation period: 15 days from the date of shipment.
• However, the period between the latest shipment date and the expiry date is only 10 days.

This appears contradictory because the beneficiary may not have the full 15 days available if shipment is made on the latest shipment date.

If the beneficiary presents documents after the expiry date but still within 15 days from shipment, can the bank refuse the documents?

And if the matter were brought before a court, who would likely prevail?

Obidur

________

Answer

Dear Obidur,

Thank you for your question.

The stipulation does not necessarily create a contradiction.

Under UCP 600, documents must satisfy both conditions:

1. They must be presented within the presentation period stated in the credit; and
2. They must also be presented no later than the expiry date of the credit.

Therefore, if the beneficiary ships the goods earlier than the latest shipment date, the beneficiary may still enjoy the full 15-day presentation period without any problem.

For example:

• Latest shipment date: 10 June
• Expiry date: 20 June
• Presentation period: 15 days from shipment

If shipment is made on 5 June, the beneficiary can still present documents on 20 June, thereby enjoying the full 15-day presentation period. In such a case, there would be neither a late presentation discrepancy nor an expired credit discrepancy.

The issue arises only when shipment is effected too close to the expiry date. If shipment is made on 10 June, documents must still be presented no later than 20 June, even though the LC mentions 15 days after shipment. In practice, the expiry date becomes the controlling deadline because an LC cannot be honoured after it has expired.

Accordingly:

• Presentation after the allowed presentation period constitutes a Late Presentation discrepancy.
• Presentation after the expiry date constitutes an Expired Credit / LC Expired discrepancy.

If a dispute were brought before a court, the court would normally consider the wording of the credit, the applicable governing law, and internationally accepted banking practice under UCP 600. In most cases, a bank refusing documents presented after the expiry date would be on strong legal and practical grounds.

Best regards,

Mr. Old Man