Mr Old Man Q&A WHETHER DRAFTS ARE PART OF DOCUMENTS REQUIRED UNDER FIELD 45A By Mr Old Man Posted on November 5, 2015 4 min read 2 0 3,074 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr QUESTION Dear Mr. Old Man, We appreciate your urgent help please! LC issued by our bank stipulates: ———————————————— 41D: Available with ANY BANK BY NEGOTIATION 42C: Draft at SIGHT FOR 100 PCT OF INVOICE VALUE 42A:Drawee (OUR BANK SWIFT CODE) 46A: Documents required Signed commercial invoice in triplicate. 3/3 set of Originals of clean ‘Shipped on board’ ocean Bill of Lading marked ‘Freight prepaid’ made out to order of the issuing bank and notify applicant. Packing list in triplicate. … 47A: Additional Conditions DRAFT(S) MUST BE ISSUED… —————————————— Documents presented to our bank do not include drafts as required. However, all documents required under Field 46A comply with the LC terms and conditions. We’ve read somewhere in your blog and understood that drafts are not part of documents required under Field 46A and discrepancies on drafts do not constitute good reasons to refuse the documents. So, we intend to accept the documents without notifying the applicant of the fact that no draft has been presented because we are afraid that if we notify the applicant of such a fact, the applicant may refuse to take up the documents while such a discrepancy may be rejected by the presenter. So, here are our questions: 1) Can we accept the documents and honour without notifying the applicant of the fact that no draft has been presented? 2) Can the applicant refuse to take up the documents once he knows that no draft has been presented? Thank you in advance for your help. Best regards, BHV ———— ANSWER Hi, It is true that I have ever said that drafts are not part of the documents required under Field 46A and therefore, discrepancy, if any, on drafts does not constitute good reason for the issuing bank to reject the documents. ISBP 745 A19 (a) defines shipping documents as all documents required by the LC, EXCEPT DRAFTS… So, it should be agreed that the rejection of the documents based on discrepancies on drafts is not justified. So, here are my answers to your questions: 1) Yes, your bank can accept to honour the documents without giving any notification of discrepancy, i.e., drafts not presented, to the applicant. 2) No. Drafts is drawn on the issuing bank and if presented it will be kept by the issuing bank. The applicant would take up the shipping documents, i.e. the documents required under Field 46A. Kind regards, Mr. Old Man
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
CAN THE ISUING BANK CITE “LATE PRESENTATION” AS A DISCREPANCY SOLELY BASED ON THE DATE OF THE COVER LETTER?
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
CAN THE ISUING BANK CITE “LATE PRESENTATION” AS A DISCREPANCY SOLELY BASED ON THE DATE OF THE COVER LETTER?