SHIPMENT PRIOR TO LC ISSUANCE DATE; REIMBURSEMENT CHARGES

QUESTION

Janny writes:

Hi Mr.Old man,

1) Our company received an L/C as follow:
– L/C issuing date: 27 Nov 2012
– Late of shipment date: 26 Nov 2012

That L/C is ok or not?

2) L/C has reimburement Bank. But I don't know whether we (exporter) have to pay the fee for reimbursement bank or not? Because exporter and importer don't require reimbursement.

Thanks u so much
Janny
———————

ANSWER

Dear janny,

1) Shipment prior to L/C issuance date is acceptable unless prohibited by the L/C. However, the beneficiary should ask himself if he can comply with the latest date of shipment which is earlier than the L/C issuance date. If not, he should ask for an amendment.

2) A reimbursing bank’s charges are for account of the issuing bank unless otherwise instructed by the issuing bank in its reimbursement authorization, e.g., the reimbursing bank’s charges are for the account of the beneficiary.

Regarding reimbursement charges, please refer to Article 16 URR 725:
QUOTE
a. A reimbursing bank's charges are for the account of the issuing bank.
b. When honouring a reimbursement claim, a reimbursing bank is obligated to follow the instructions regarding any charges contained in the reimbursement authorization.
c. If a reimbursement authorization states that the reimbursing bank's charges are for the account of the beneficiary, they shall be deducted from the amount due to a claiming bank when reimbursement is made. When a reimbursing bank follows the instructions of the issuing bank regarding charges (including commissions, fees, costs or expenses) and these charges are not paid, or a reimbursement claim is never presented to the reimbursing bank under the reimbursement authorization, the issuing bank remains liable for such charges.
d. All charges paid by the reimbursing bank will be in addition to the amount of the authorization, provided that the claiming bank indicates the amount of such charges.
e. If the issuing bank fails to provide the reimbursing bank with instructions regarding charges, all charges shall be for the account of the issuing bank.
UNQUOTE

Best regards,
Mr. Old Man