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TOLERANCE REVISITED 3

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QUERY FROM DUONG MINH NGOC

Dear Mr. OLD MAN,

I know you a long time from your blog which I got much value knowledge from and I really admire to your large knowledge of trade finance field. During the time of checking docs, we’ve been facing some cases which makes us unable to decide they’re discrepancies or not. That is the reason why we ask for your value opinions.

We are looking forward to receiving your reply soon.

The details of cases as following:

LC required:
LC amount: USD90, 521.50; Quantity of goods: 234.00MT; Total amount of goods: USD90,521.50 (LC not stipulated about unit price)
Partial shipment: Allowed
+/-10pct in quantity and amount acceptable

INV presented:
Quantity of goods: 225.00 MT
Unit price: 402.32
Total amount: USD90,521.50

Question:

1, Can we raise the disrepancy that: the ratio between total amount of goods and the quantity not as per LC
2, How to solve the problem of lack of quantity but IB must pay in full amount? (Incase of none discrepancy)

Best regards,
Duong Minh Ngoc (Ms.)
Executive Senior Officer
Trade Processing

———————————–

COMMENTS

Hi,

1. No. The invoice presented meets the requirement of LC and UCP 600 Article 30 (a).
The quantity of goods can be from 210.60MT to 257.40MT
The invoice amount can be from USD81,469.35 to USD99,573.65
2. The applicant bears the risk of any ambiguity in its instructions to issue or amend LC (ISBP para. 2).
Partial shipments are allowed, so further shipments may be made.

Further comments from international experts will be sent to you soon.

Best regards,
Mr. Old Man
—————-

Good morning! Get up please or you'll be late. 6AM already!!!!

Following my mail last mid night, the below comment is from T.O Lee – a well known expert:

Quote

The goods, even of the same kind, may be of different grades for different prices. The LC allows partial shipments/drawings.

So any combination is compliant provided the LC is not overdrawn in total shipments.
Hence the first shipment can be any quantity and amount provided it meets the common sense rule. One would not ship just 1/2 MT for one shipment for obvious reason.

Unquote

Hopefully it's good enough for you to make up your mind!!!

Nice day!

Mr. Old Man

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