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SUB ARTICLE 9 (d)_ADVISING OF CREDITS AND AMENDMENTS

By Mr Old Man
Posted on September 21, 2016
2 min read
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QUESTION

Hi Mr. Old Man,

We issue a LC through Bank A (first advising bank) stating Bank B as second advising bank in field 57A.

We now have RMA with Bank B. Our customer requests us to issue amendments and advise them directly to Bank B.

We are going to send an authenticated message to Bank A to ask for the consent of Bank A, Bank B and Beneficiary about using the second advising bank  instead of  the advising bank to advise any amendment thereto.

  1. If we receive the above consent, does it mean that UCP 600 sub-article 9 (d) is excluded?
  2. What are the risks of the issuing bank if they act as above mentioned?

I am looking forward to receiving your soon reply

Best regards,

AT

———

ANSWER

Hi,

According to UCP 600 sub-article 9 (d), a bank utilizing the services of an advising bank or second advising bank to advise the L/C must use the same bank to advise any amendment thereto.

So, if the issuing bank wishes to utilize the second advising bank’s services (instead of the advising bank’s) to advise amendments to the beneficiary, it should obtain the agreement of the advising bank and inform the second advising bank and the beneficiary of such agreement.

What you are doing is right. No risks!

Kind regards,

Mr. Old Man

 

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7 Comments

7 Comments

  1. antonio picchi

    September 22, 2016 at 3:29 am

    I Disagree the advising bank is the bank indicated in field 57 of Swift MT700, the bank that issuing bank uses to reach the bank in field 57 is called “receiver”.
    Second advising bank is choosen by the first advising bank!!
    Please tell the Swift manager to let the use of SWift Msgs 7xx without exchange of RMA.

    Reply

    • mroldman

      September 22, 2016 at 4:08 pm

      Dear Antonio,

      Below is what I get from SWIFT

      Quote
      Field 57a: Second Advising Bank
      DEFINITION This field identifies the bank, if different from the Receiver, through which the documentary credit is to be advised/confirmed to the beneficiary.
      Unquote

      Kind regards,
      Mr. Old Man

      Reply

  2. Green Rose

    September 24, 2016 at 1:34 pm

    Dear Mr OldMan,

    I have read many many from you, so useful for me, but, this is the first time I decide to write to you and hope you will help me.

    My LC as follows:
    .
    Field 45A:
    + Item A:
    Quantity: 20,000 kgs
    Unit price: 1.5 usd/kg
    Amount: 30,000.00 usd
    + Item B
    Quantity: 12,000.00 kgs
    Unit price: 3.00 usd/kg
    Amount: 36,000.00 usd
    + Item C
    Quantity: 5,000.00 kgs
    Unit price: 8.00 usd/kg
    Amount: 40,000.00 usd
    .
    Total quantity: 37,000.00 kgs (+/-10%)
    Total amount: 106,000.00 usd (+/-10%)
    .
    Field 47A: “more or less 10% in total quantity and total amount acceptable”
    +++++++++++++
    Docs presented with following details:
    Item A:
    + Quantity: 17,600.00
    + Unit price: 1.5 usd/kg
    + Amount: 26,400.00
    Item B
    + Quantity: 15,600.00 kgs
    + Unit price: 3.00 usd/kg
    + Amount: 46,800.00 usd
    Item C
    + Quantity: 5,100.00 kgs
    + Unit price: 8.00 usd/kg
    + Amount: 40,800.00 usd
    .
    Total quantity: 38,300.00 kgs
    Total amount: 114,000.00 usd
    .
    The actual total amount and total quantity are complied with tolerance stipulated in Field 47A.

    However, does the tolerance +/-10pct in this L/C also apply for quantity and amount of each item A/B/C?

    Could I raise discrepancies that “quantity and amount of item A and B not complied with L/C”?

    In field 47A, Is there any different understand between “more or less 10% in total quantity and total amount acceptable” and “more or less 10% in quantity and amount acceptable” (without the word “total”) when we check quantity and amount of each item?
    .
    I really hope to receive your reply. Thanks for your help.
    .
    Best regards,
    Green Rose.

    Reply

    • mroldman

      September 24, 2016 at 5:13 pm

      Visit here to find the answer:
      https://nhducdng.wordpress.com/2013/11/05/tolerance-again-and-again/

      Reply

      • Green Rose

        September 24, 2016 at 6:41 pm

        Thanks for your reply. I totally agree with your opinion, but when I showed your answer posted on 05/11/2013 to my team, they considered that situation not same to my case, just because of the word “total”.

        Their opinions are as below:
        My L/c stipulated “tolerance +/-10% in total quantity and total amount acceptable” means this tolerance only be applied for total quantity and total amount, there is no tolerance for each item. So, it’s unnecessary to care quantity and amount of each item. The seller can deliver actual quantity of each item as they want and finally if the actual total quantity of three items complied with +/-10%, docs will be considered ok. Discrepancies “quantity and amount of item A and B not complied with LC” is invalid.

        So my question is: Is there any difference in tollerance stipulation with or without the word “total”?

        One more time, thank for your consultancy.

        Best regards,
        Green Rose

        Reply

        • mroldman

          September 26, 2016 at 10:17 am

          Hi,

          Your colleague’s view may be correct (if by so stipulating, the issuing bank intends that the tolerance applies to the total quantity and amount only).

          As the stipulation is not clear as to whether the tolerance applies to individual items. So, there may be arguament or disputes between concerned parties.

          Kind regards,
          Mr. Old Man

          Reply

          • Green Rose

            October 3, 2016 at 2:56 pm

            Thanks for your reply,

            I totally agree with you that LC should contain clear stipulations about tolerance. This will help all parties avoiding disputes in future.

            Sincerely yours,
            Green Rose.

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