WHERE MORE THAN ONE SET OF DOCUMENTS IS PRESENTED UNDER ONE COVERING SCHEDULE

QUESTION

LC allowed partial shipments. The beneficiary effected two shipments and presented to the negotiating bank two separate sets of documents, one set is complying, while the other set is not.

The negotiating bank later forwarded to the issuing bank the two sets of documents under one covering schedule which showed the details of each set of documents as well as the amount of each set of documents.

The issuing bank refused both sets of documents reasoning “since the documents are under one cover letter, it should be treated as a single presentation”.

The negotiating bank did not agree with the issuing bank and insisted the issuing bank to honour the compliant set of documents. However, the issuing bank kept silent.

Which bank is correct in its reasoning?

Thank you.

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ANSWER

Hi,

I understand from your description that the two sets of documents were presented to the issuing bank under one covering schedule which clearly showed the details of each set of documents and the amount of each set of documents and that one set complies and the other does not.

The issuing bank in this case may refuse the the set of documents that does not comply and must honour the set of documents that complies.

The issuing bank must honour the complying set of documents even when the covering schedule indicates full amount of all presentations.

It is advisable for the beneficiary to present sets of documents under separate covering schedules to avoid payment delay where one set complies and the other does not.

For your reference, please find attached below ICC opinion R670/TA581rev:

QUOTE
Where multiple presentations are made on the same day under the same L/C, a presenter would be well advised to create individual schedules in order to avoid any potential delays in situations where some presentations comply and others do not.
Where more than one complete presentation of documents is made under one cover letter or schedule for the full amount of all the presentations, the presenter should be advised of the discrepancies in respect of the presentation(s) that do not comply. An issuing bank or nominated bank may request the beneficiary or presenter to provide agreement for the settlement of individual amounts for those presentation(s) that do comply. This does not negate the issuing or confirming bank’s obligation to honour the presentation(s) of documents that do comply.
UNQUOTE

Best regards,
Mr. Old Man
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