Goods description under a Standby L/C

JudithAutié · Post by **JudithAutié** » Sun Oct 24, 2010 1:00 am

Hi

A standby l/c subject to UCP 600 had a amount of USD 100 000, a goods description of "cooking oil, rice, flour, various foodstuff". Partial drawings were authorised. Payment against beneficiaries declaration of non payment, copy of invoice and copy of relevant shipping document

Documents were presented for the full amount of the standby, but the invoice only covered "cooking oil".

Issuing bank refused documents stating rice, flour and various foodstuff had not been shipped.

What do you think?

Judith

JohnLim · Post by **JohnLim** » Mon Oct 25, 2010 1:00 am

Hi Judith

If i were the issuing bank, i would not mark this as a discrepancy, for whatever reasons.

Rgds
Yat

NigelHolt · Post by **NigelHolt** » Mon Oct 25, 2010 1:00 am

Judith,

Based on the information you have provided my view is that –on the face of it- the applicant has a payment obligation of USD100k if cooking oil, rice, flour, AND various foodstuff are supplied to it. (In other words, this standby seemingly covers a single contract and not on-going trading.) However, the invoice suggests only cooking oil has been supplied and yet the beneficiary is demanding the whole of –what would appear to be- the contract amount. Therefore, this does seem to me a discrepancy based on 18(c).

On the other hand, had the standby clearly indicated that it covered the on-going supply by the beneficiary of oil, rice, flour, and various foodstuffs I would have had a different view.

Regards, Jeremy

[edited 10/25/2010 2:12:44 PM]
[edited 10/26/2010 8:55:41 AM]

JudithAutié · Post by **JudithAutié** » Mon Oct 25, 2010 1:00 am

Thanks Jeremy

In fact it was an ongoing contract and beneficiaries showed the contract. However as we all know contracts and L/Cs are independant. It would have been uncontestable if the credit had and/or in the description but unfortunately ....

I think push is going to go to shove so I'll see what arguments we're going to make

Best regards
Judith

DanielD · Post by **DanielD** » Mon Oct 25, 2010 1:00 am

Maybe by arguing about the meaning of the "," that is "and", "or" (which is actually the case), "and/or". ISBP par. 2 and 7.

Daniel

JudithAutié · Post by **JudithAutié** » Wed Nov 03, 2010 12:00 am

Daniel

Thanks for your opinion Jeremy. It also is understandable, but I agree
with Daniel that the comma could mean "and" "or" "and/or" and without any further explanations or requirements in the credit, any ambiguity is the opener's risk.

Judith

NigelHolt · Post by **NigelHolt** » Wed Nov 03, 2010 12:00 am

Judith,

I do not claim to know the answer for definite and would not like to have to litigate with the beneficiary for wrongful dishonour or the applicant for wrongful honour on this.

One adage I would have in the back of my mind though, as issuing bank, would be that "it is easier to hold onto money than to try to get it back"!

Regards, Jeremy