WHERE THE DRAFT IS OVERDRAWN

QUERY FROM Md.zakir Hossen
Post subject: bill of exchange overdrawn

Shipping gurantee issued against copy documents.

Original docs arrived and issuing bank found that invoice value is US$38115 whereas Bill of Exchange value is US$38145 and issuing Bank provide the discrepancy letter to the presenting Bank but presenting Bank remain silent. Opener released the goods by submitting the Shipping Guarantee.

Since Presenting Bank is silent, Issuing Bank is in uncomfortable situation. Can it send US$38115 that means US$30 less than the Invoice value.Presenting Bank Bill presentation. Schedule also shows US$38145.

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COMMENT
Post subject: Re: bill of exchange overdrawn

Dear Md.zakir Hossen,

ISBP Para 51 says the amount (of draft) must agree with that of the invoice, unless as a result of UCP 600 sub-article 18(b).

Sub-article 18 (b) refers to the case where a nominated bank acting on its nomination, a confirming bank, if any, or the issuing bank may accept a commercial invoice issued for an amount in excess of the amount permitted by the credit, and its decision will be binding upon all parties, provided the bank in question has not honoured or negotiated for an amount in excess of that permitted by the credit.

Yours is another case which is not referred to in UCP as the draft is issued for an amount in excess of the amount of the invoice.

The difference between the draft amount and the draft invoice is USD30. Suppose that the difference is USD3,000.- or more and the presenting bank keeps silent to your inquiry, will you pay the draft amount ? The answer is certainly “No”.

Here is my solution for you. Check the invoice with other documents to ensure if the amount of the invoice or that of the draft is correct. And then pay the correct amount.

Best regards,
Nguyen Huu Duc …