Uncategorized UCP 600 SUB-ARTICLE 37 (C) By Mr Old Man Posted on July 27, 2010 4 min read 24 0 16,103 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr QUERY Dear Mr.Old Man, Your comment on the following is appreciated. On 12 Nov 2009 our bank issued LC No. 1234 for EUR45,000. The LC stipulated “all charges outside Vietnam are for the beneficiary’s account and shall be deducted from the proceeds.” On 27 April 2010 we paid the documents presented by Bank X in accordance with their instruction. However, on 23 July 2010 we received an MT 799 from Bank X claiming for their charges as they had failed to claim from the beneficiary. Their reasoning was based on UCP 600 sub-article 37 (c). Is our bank obligated to pay such charges? If not, can you tell me how to reject their claim? Looking forward to your early reply. Best regards,V.A——— COMMENT Hi, You may reply Bank X as follows: QUOTEWe are afraid that your reference to sub-article 37 (c) is not quite appropriate in this case. Sub-article 37 (c) is understood to be applicable to the scenario where related charges payable to the nominated bank are to be deducted from the proceeds but no proceeds have been received by the nominated bank due to, for example, no presentation is made to the nominated bank or the LC has been cancelled or has expired unutilized. If this is the case the nominated bank can claim from the issuing bank for any charges unpaid. Your bank had the opportunity to collect the charges by deducting from the proceeds but it failed to do so. Therefore, it must be liable for its negligent mistake and is not protected by sub-article 37 (c). Please also note that we have closed our file regarding the said LC.UNQUOTE If needed, you may refer Bank X to Gary Collyer’s answer to a similar question regarding Article 37 (c) quoted below: —————————–Article 37 A nominated bank receives a presentation of documents and effects honour thereunder, deducting certain fees. They realise a short while later that they have forgotten to deduct their advising fee. Are they able to claim from the issuing bank citing sub-article 37 (c)? Answer:No. The nominated bank had an opportunity to deduct the fees from the presentation and failed to do so. They are not afforded any protection under sub-article 37 (c) for the fees that they failed to collect from a presentation that was made to them. ———————- Best regards,Mr. Old Man
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?