tolerance allowed - sub-article 30 (c)

[Snjezana]

Hello everyone!

I am in need of your help with interpretation of UCP600 sub-article 30 (c).

We received L/C in amount of EUR 12.000,00, without any tolerance indicated.
Description of goods states: + 100 pieces of goods A at price of EUR 100 per piece.
Additional conditions states: Tolerance of +/-7% in quantity and unit price allowed.
Partial shipment not allowed.

Would you consider such additional condition in conflict with L/C amount not indicating any tolerance?

One opinion is that the tolerance in quantity and/or unit price shouldn't be allowed if there is no tolerance allowed in regard to the L/C amount. Also, if there is tolerance in L/C amount, quantity and unit price allowed, it shouldn't differ from each other. E.g. if tolerance in L/C amount +7/-9% is allowed, than tolerance in quantity and/or unit price should also allow +7/-9% only (presumably there is quantity and/or unit price specified as part of description of goods). If there is no tolerance allowed regarding L/C amount, than no tolerance (whatever value) is to be allowed regarding quantity and/or unit price.

Other opinion is that the tolerance in quantity and/or unit price should be allowed in whatever value even though no tolerance has been allowed regarding L/C amount. E.g. tolerance of +3/-4% has been allowed regarding quantity, tolerance od +5/-6% has been allowed regarding unit price, but there is no tolerance allowed regarding L/C amount which is considered to be ok, as long as L/C amount is not exceeded.

Second opinion is backed up by UCP600 sub-article 30 (c) which states:
Even when partial shipments are not allowed, a tolerance not to exceed 5% less than the amount of the credit is allowed, provided that the quantity of the goods, if stated in the credit, is shipped in full and a unit price, if stated in the credit, is not reduced or that sub-article 30 (b) is not aplicable. This tolerance does not aply when the credit stipulates a specific tolerance or uses the expressions referred to in sub-article 30 (a).

All comments shall be greatly appreciated.

[RonvanderKolm]

My opinion is that such a condition as you mention, is not in conflict with the lc amount not indicating a tolerance, as long as the lc amount will not be exceeded.

The current stated lc amount exceeds the value of the goods as described in the lc (100 pcs at € 100 p piece makes € 10.000). So even if the maximum allowed tolerance for the number of pieces and unit price will be used, the amount drawn still stays within the lc amount (107 pieces times € 107 makes € 11.449,-).

But even when the lc amount would be € 10.000 it will be acceptable. Consequence of that would be that it would be acceptable for instance that the number of pieces shipped is 93 (7% less) with an unit price of € 107 (7% more). The amount drawn under the lc will in that case be € 9.951,-

Article 30b of UCP600 is not applicable as the lc states a quantity in terms of a stipulated number of items (100 pieces). And article 30c is meant for the event that the lc amount is not fully utilized and where partial shipments are prohibited, as explained in ISBP paragraph C14