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SUB-ARTICLE 18(B)

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by Old Man on Saturday, September 17, 2011 at 7:22am

QUERY FROM GABRIEL
.
Maximum amount payable under an LC is $100. No tolerance is allowed. Invoice amount is $101. In line with article 18b, beneficiary decides to draw on the LC for $100 only. If the LC calls for a draft drawn for 100% of the invoice value, in this case should the draft be drawn for $100 or $101? Appreciate your advice.
.
Regards,
Gabriel
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COMMENT
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Hi,
.
This situation falls into sub-article 18(b) which allows a nominated bank, a confirming bank or the issuing bank to accept an invoice with an amount in excess of the L/C amount provided the bank in question has not honoured or negotiated for an amount in excess of the L/C amount.
.
It is advisable that the bank in question should not pay the L/C amount without the presenter’s agreement which can be shown in the covering schedule as well as in the draft if any. So, the draft in this case should be drawn for an amount equal to the L/C amount only notwithstanding that the L/C calls for a draft drawn for 100% of invoice value.
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Best regards,
N.H.Duc

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4 Comments

  1. anonymous

    September 22, 2011 at 8:09 am

    Anonymous writes:Chào anh, liên quan đến điều 18B đang đề cập bên trên, em muốn hỏi là điều này chỉ áp dụng trong trường hợp LC không có quy định dung sai phải không anh?Cám ơn anh

    Reply

  2. mroldmanvcb

    September 22, 2011 at 11:09 pm

    Not correct.

    Reply

  3. anonymous

    November 21, 2011 at 3:11 pm

    Anonymous writes:what is the bank in question? could you explain more clearly. Thanks so much for your help.

    Reply

  4. mroldmanvcb

    November 21, 2011 at 10:11 pm

    The bank in question means the bank under consideration or discussion. The bank in question in the context of the above blog is undertood to be the nomnated bank.

    Reply

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