Home Mr Old Man WHETHER THE BENEFICIARY CAN NEGOTIATE THE DOCUMENTS WITH THE 1ST ADVISING BANK

WHETHER THE BENEFICIARY CAN NEGOTIATE THE DOCUMENTS WITH THE 1ST ADVISING BANK

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QUESTION

Hi Sir,

Can the 1st advising bank contact the beneficiary and negotiate documents directly even there is a 2nd advising bank indicated in the LC?

Regards,

DC

———–

ANSWER

Hi,

Where the L/C is available with any bank by negotiation, the beneficiary may present the documents to any bank including the first advising bank for negotiation, that is to say, the first advising bank can negotiate the complying documents and is entitled to the issuing bank ’s reimbursement.

Where the L/C is restrictedly available with the second advising bank, the beneficiary who wishes to negotiate the documents should present the documents to the second advising bank for negotiation. The first advising bank in this case is not the bank that is nominated/authorized by the issuing bank to negotiate the documents. Therefore, if it accepts to negotiate the documents, it cannot sue the issuing bank in its own name in the event the issuing bank refuses to reimburse for whatever reasons.

Kind regards,

Mr. Old Man

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2 Comments

  1. Faisal Zaheer

    December 6, 2023 at 1:17 am

    In a SWIFT MT700 advice of a credit, field 39a shows a tolerance of 02/02 in relation to the credit amount.

    Partial shipments are not allowed.

    Documents are presented for a value 4.5% under the credit value.

    Is this a discrepancy?

    Yes – sub-article 30 (b) applies
    No – sub-article 30 (b) does not apply

    please guide in both yes/no case , with little real example

    bundle of thanks

    Reply

    • Mr Old Man

      December 6, 2023 at 9:06 pm

      It’s a discrepancy. Bill amount is less than the tolerance allowed by the L/C (2/2). Article 30(b) does not apply when the LC specifies a specific tolerance.

      Reply

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