Uncategorized WHETHER “LC EXPIRED” IS A DISCREPANCY AND WHETHER THE ISSUING BANK MUST GIVE NOTICE OF REFUSAL By Mr Old Man Posted on September 9, 2015 2 min read 0 0 2,633 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr QUESTION Hi Mr. Old Man, I still have a question today. One our import L/C expired. Documents presented with a Cover letter of Beneficiary’s Bank mentioned that L/C and noted ” Documents may only be released if at the same time you irrevocably undertake to remit us the proceeds” An opinion said that, the Ben. Bank made this presentation to collection form and the issuing bank needn’t refuse in 5 banking days following the day receiving docs. But in my view, the docs presented under our L/C. Although it presented when L/C expired, to ensure safe, we still need to send a refusal in time, if the applicant’s capital is not enough to receive the documents in that 5 banking days. In your view, do we need to send a refuse message like that? Thank you. Best regards QN ————- ANSWER Hi, There have been different views on this issue. Prudent banks would treat “LC expired” as a discrepancy and will send its notice of refusal in accordance with sub-article 16 (c) UCP 600. I hold a different view that “LC expired” should not be treated as a discrepancy and that the issuing bank may – but is not obliged to – send any notice of refusal to the presenter in accordance with sub-article 16 (c) UCP 600 because where the LC is expired, the issuing bank is released from its obligation under the LC. As for your case, I do believe the presenter would not protest against the issuing bank even when the issuing bank did not give its notice of refusal sub-article 16 (c) UCP 600. 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?