REASON FOR EXISTENCE OF SUB-ARTICLE 30 (C)

QUESTION

Please help me understand the reason for existence of Art.30 c of UCP 600.

Is it applicable only when:

1. Credit prohibits partial shipment?
2. Quantity is stated in the credit and that quantity is shipped in full even when stated in quantities like Metric Tons etc?
3. Unit price if stated in the credit is unaltered in the invoice?
What is the reason for allowing a negative tolerance of 5% and why is it insisting on quantity to be shipped in full?
If quantity and unit price cannot be allowed then how the invoice can be drawn for >=95% <100%? Kindly help Subramanian -----
ANSWER

Hi,

Sub-article 30 (c) covers the situation where the terms are CFR or CIF and the price quotation is based on a hypothetical or soft quotation on the insurance premium and/or the freight charges. Upon presentation of the documents, the beneficiary invoices for the actual insurance and freight costs, which conceivably are less than those quoted originally in the purchase order. Therefore, a 5% tolerance is allowed in the beneficiary’s invoice, always provided that the quantity of the goods, if stipulated in the credit, is shipped in full, and a unit price, if stipulated in the credit, is not reduced (see R367).

I just give an example to illustrate the point:

• LC details:
Credit amount: Not exceeding USD150,000
Goods: 10 trucks
Unit price: USD12,000/unit
Delivery term: CFR Da Nang Port, Vietnam
Freight charges as per actual freight invoice but not exceeding USD30,000

• Invoice presented:
Goods: 10 trucks
Unit price: USD12,000/unit
Freight charges: USD23,000.
Total invoice amount: USD143,000 CFR Da Nang Port, Vietnam

• Conclusion:
Draft drawn for USD143,000 is acceptable as per UCP 600 sub-article 30 (c).

Best regards,

Mr. Old Man