WHERE THE ISSUING BANK DOES NOT ACCEPT THE WAIVER OF THE APPLICANT AND RETURNS THE DOCUMENTS TO THE PRESENTER

QUESTION

Hi bro,

Could you give me some advice concerning  the case where the issuing bank may refuse to honour and return documents even when the applicant agrees to waive the discrepancies?

What situations that the  issuing bank may do that ?

RN

ANSWER

Dear RM,

Thank you for your  question.

It is rare but  it may occur in the following situations:

– where the applicant accepts the discrepant documents but cannot afford to pay.

– where the issuing bank does not accept the waiver of the applicant, e.g., the applicant waives the discrepancies but accepts to pay part of the claimed amount.

-where the transaction is financed by the issuing bank which knows for sure that the applicant, cannot reimburse/repay the issuing bank if accepting the discrepant documents and taking delivery of the cargo. The reason may be various, e.g., the price goes down so dramatically that the applicant may suffer heavy loss.

– where fraud is involved, e.g., the collusion between the applicant and the beneficiary.

– etc.

Kind regards,

Mr. Old Man