WHERE AN INVOICE IS ISSUED FOR AN AMOUNT IN EXCESS OF THE AMOUNT PERMITTED BY THE CREDIT

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QUERY
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Dear Nguyen Huu Duc,

I've received the query below.
I think there are several factors resulting in over-amount in the invoice:

1. overshipment (base on ISBP para.64a. if UCP600 art.30b not applicable, the issuing bank would mark this invoice "discrepant" even though the drawing amount not excess).
2. including charges or cost not required by the LC (also discrepant as per ISBP para.61).
3. compared with 45A, the only difference is the invoice amount (It depends. The issuing bank could refuse or accept based on UCP600 art.18b)

What do you think of it?

Thanks and best regards
Sheilar

————- Original Message ————-

Hello Sheilar,

Imagine the following situation:

We have an export l/c for EUR 100.000,00 available by negotiation with any bank. The goodsdescription indicates (e.g.) woodproducts as per proforma invoice number … dated …

The beneficiary presents documents bearing above goodsdescription and indicating amount as EUR 101.000,00. Formally spoken a reserve is applicable. We do not negotiate and send the documents to the opening bank informing them that we applied article UCP art. 18B and only claim EUR 100.000,00.

I wonder if this means that there is no reason for the opening bank to refuse the documents OR is art 18B only to be considered as a gesture and the documents can still be refused.

I would say that art 18B is, formally spoken, not intended to let the reserve for “l/c-amount overdrawn” disappear and that, consequently, the documents can still be refused by the opening bank/applicant.

Looking forward to your reaction.

Kind regards,
Wil

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COMMENT
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Dear Sheilar,

Sub-art. 18 (b) allows the nominated bank, confirming bank (if any) or the issuing bank to accept a commercial invoice for an amount in excess of the amount permitted by the L/C provided the bank in question has not honoured or negotiated for an amount in excess of that permitted by the L/C.

The modal verb “MAY" used in the said sub-article expresses a permission, not an obligation. So, I totally agree with you that the issuing bank is at its own discretion to decide whether to accept or refuse a commercial invoice for an amount that is greater than the L/C amount.

Sub-article 18 (b) refers to the excess amount shown on the invoice, not to over shipment, hence, the invoice that shows over shiped is deemed to be discrepant.

Best regards,
Nguyen Huu Duc