early presentation

[THI THUY MYT_]

There is one set of docs which was presented to our bank early than L/C required (L/C required docs must be presented not early than 10 days after B/L date. However, docs presented with 05 days after B/L date). We advised discrepancy as early presentation. After 10 days from B/L, negotiating bank sent msg to state that the a/m docs presented as L/C required at this time and request us effect payment. Pls let me know their opinion is wrong or right? thanks so much

[ThuHoangAnh_]

Hi,

If the negotiating bank’s correction message is sent to the issuing bank within the period for presentation, i.e., not earlier than 10 days after bill of lading date and prior to the expiry date for presentation, the discrepancy of early presentation is regarded as corrected complying with the credit requirement and the issuing bank must honour.

Best regards,
N.H. Duc

[THI THUY MYT_]

HI,
Pls let me know which foundation you think so. In my opinion, early presentation is an action happened and it can't comply at the future time.

[ThuHoangAnh_]

Hi,

My comment was based on the common sense approach and my years of practical experience with L/Cs.

Hoping more comments from other experts would help clarify the point.

Best regards,
N.H.Duc

[GlennRansier_]

The beneficiary owns the documents until they are honoured or negotiated (without recourse). They have the right to cure any defect in which they are able. If they can cure a discrepancy within the time mandates stated in the LC then the documents must be considered as complying. The ICC has always supported the beneficiary's rights to cure discrepancies.

[THI THUY MYT_]

If set of docs is not considered as early presentation from new date in the future. Have we maximum of five banking days following the that date of presentation to determine if a presentation is complying?tks

[ThuHoangAnh_]

Hi,

Though UCP 600 allows each bank (nominated bank, issuing bank and confirming bank, if any) to have a maximum of five banking days following the day of presentation to determine if a presentation is complying, a fair bank should not make full use of such a period to delay the payment once the compliance is determined earlier, especially when L/C is payable at sight.

Best regards,
N.H.Duc

[edited 2/12/2009 7:35:32 AM]

[GlennRansier_]

If the documents are determined disrepant, the bank is expected to notify the presenter when that determination is made (see UCP 16 a.). In the case of "early presentation", the expectation is that a bank would refuse to honour/negotiate and contact the presenter notifying them of the refusal. Using Article 16 c. you could either: 1. agree to hold the documents on their behalf until the presentation is no longer early or 2. return the documents unpaid. Generally, UCP intends for banks to make the compliance determination within a "maximum" of 6 days (5 days plus day of receipt) and act promptly when the determination is made.

[JLee]

Hi there, if I were the presenter, I would state the following instruction in my covering letter addressed to the issuing bank.
Quote
IN THE EVENT THAT THE ATTACHED DOCUMENTS ARE RECEIVED BY YOU LESS THAN 10 DAYS AFTER BL DATE, PLEASE DO NOT CONSIDER THEM AS PRESENTED UNTIL 10 DAYS AFTER THE BL DATE.
Unquote
Jack Chan, Hong Kong

[GlennRansier_]

In response to JLee, The suggested statement may not be adequate. Some banks may decide to return the documents as they would not desire the responsibility to:
1. Take full responsibility for the care of such non presented documents (What happens if the documents are lost, destroyed, etc.); or
2. Determine if the UCP presentation/examination rules can be truly overridden based on the beneficiary's statement.