QUESTION
We, as issuing bank, issues a transferable letter of credit available with any bank by negotiation and Bank A is nominated as transferring bank. The credit does not contain a clause like “Unit price, amount and/or second Ben’s information are prohibited to be indicated on documents except invoice and draft.”
We are advised by the transferring bank that credit was transferred partly to XXX – the second beneficiary with the amount to be transferred YYY. The invoice and draft after being substituted by the first beneficiary were forwarded to our bank together with other documents of the second Beneficiary.
Among other presented documents, bill of lading indicates details description of goods including unit price and transferred amount (YYY) which causes conflict data with that on invoice and credit.
My colleague is on the view that: the bill of lading are discrepant because it indicates unit price which is different from that in the invoice and credit. However, in my opinion, the feature of transferable credits allows a document to indicate some data which may conflict with data on other documents, hence, the issuing bank must accept it. Like the case where the credit was transferred, C/O may indicate different invoice no., different routing…
Would you share your view, please?
Best regards,
TVTT
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ANSWER
Hi,
You are correct. There is no discrepancy.
In reply to a similar question, ICC is of the following opinion: “When an issuing bank agrees to issue a transferable credit it must appreciate that some of the information that may appear on certain documents may not agree with that shown on the invoices due to the substitution of the invoices. For instance, the invoice number of the first beneficiary may be different from an invoice number (that of the second beneficiary) which may appear on say, a certificate of origin. If amounts are shown on documents other than the invoice (and draft(s) if any) and these differ from that on the substituted invoice, the issuing bank will still be bound to effect settlement if the documents are otherwise in conformity with the credit terms and conditions”.
The above opinion is quoted from R489. Notwithstanding that the opinion was given under UCP 500, it is still valid for similar cases.
Kind regards,
Mr. Old Man
