Uncategorized TOLERANCE REVISITED (2) By Mr Old Man Posted on April 19, 2015 3 min read 7 0 5,663 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr QUESTION Hi Mr. Old Man, I have a question about the amount L/C tolerance. Could you please give me your advise on the following case: L/C at sight with full amount 252,259 USD. L/C does not show tolerance and partial shipment is prohibited. If we issue the invoice with the amount less than 252,259 USD, then is it a discrepancy or not? Your quick response is highly appreciated. Regards Patrick ——— ANSWER Hi, The information provided in your question is not enough to give a definite answer. Please check if your case falls into the cases referred to in UCP 600 sub-article 30 (b) or sub-article 30 (c) as quoted below for your reference: Sub-article 30 (b): A tolerance not to exceed 5% more or 5% less than the quantity of the goods is allowed, provided the credit does not state the quantity in terms of a stipulated number of packing units or individual items and the total amount of the drawings does not exceed the amount of the credit. Sub-article 30 (c): Even when partial shipments are not allowed, a tolerance NOT TO EXCEED 5% LESS THAN THE AMOUNT OF THE CREDIT IS ALLOWED, provided that the quantity of the goods, if stated in the credit, is shipped in full and a unit price, if stated in the credit, is not reduced or that sub-article 30 (b) is not applicable. This tolerance does not apply when the credit stipulates a specific tolerance or uses the expressions referred to in sub-article 30 (a). According to R689 / TA618, any drawing under the LC would be subject to the allowances made in UCP 600 sub-article 30 (b) or sub-article 30 (c), depending on the terms of the LC and the underlying drawing. A drawing of up to 5% less in the LC amount would be allowed under the LC. Kind regards, Mr. Old Man
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
CAN THE ISUING BANK CITE “LATE PRESENTATION” AS A DISCREPANCY SOLELY BASED ON THE DATE OF THE COVER LETTER?
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
CAN THE ISUING BANK CITE “LATE PRESENTATION” AS A DISCREPANCY SOLELY BASED ON THE DATE OF THE COVER LETTER?