Documents presented by a beneficiary to its bank under a L/C subject to UCP 600.
Documents contain some discrepancies including l/c expiry. Beneficiary requests it's bank to send the documents without examination on approval basis.
Should the beneficiary's bank send the documents to the issuing bank subject to URC 522 or UCP 600?
Your thoughts, please.
Shahed
Documents send on approval basis
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HOANGTHIANHTHU_invalid
- Posts: 189
- Joined: Fri Apr 05, 2019 5:15 pm
Documents send on approval basis
Hi
I have ever answered a similar question as follows:
In practice documents presented to the negotiating under L/C and found to be discrepant are normally sent to the issuing bank for payment:
(i) on approval basis with reference to L/C, e.g., the documents are sent to you under L/C no…. on approval basis; or
(ii) under L/C without indicating any discrepancies.
In either of the above cases, the issuing bank is obligated to pay at sight for sight L/C or accept the time draft or incur a deferred payment undertaking and pay at maturity for usance L/C once it has delivered the documents to the applicant.
The issuing bank’s payment obligation under the L/C is released if the covering schedule sent by the remitting bank states clearly that the documents are sent under URC 522, and the B/E (if any) is drawn on the buyer. In this scenario the issuing bank acts as a presenting/collecting bank. It will deliver the documents to the buyer in accordance with the remitting bank’s instruction, i.e., against payment (D/P) or against acceptance (D/A). Where the collection instruction has authorized the delivery of documents upon acceptance, the collecting bank delivers the documents to the buyer/drawee once acceptance has been made and advises the remitting bank of such an acceptance and the maturity date. However, please note that under D/A collection the issuing bank is not obligated to pay in the event the B/E, which has been accepted by the buyer, is not paid at maturity.
Notwithstanding that the LC expired, it is advisable for the presenter to send the documents to the issuing bank subject to UCP 600.
Best regards,
N.H.Duc
I have ever answered a similar question as follows:
In practice documents presented to the negotiating under L/C and found to be discrepant are normally sent to the issuing bank for payment:
(i) on approval basis with reference to L/C, e.g., the documents are sent to you under L/C no…. on approval basis; or
(ii) under L/C without indicating any discrepancies.
In either of the above cases, the issuing bank is obligated to pay at sight for sight L/C or accept the time draft or incur a deferred payment undertaking and pay at maturity for usance L/C once it has delivered the documents to the applicant.
The issuing bank’s payment obligation under the L/C is released if the covering schedule sent by the remitting bank states clearly that the documents are sent under URC 522, and the B/E (if any) is drawn on the buyer. In this scenario the issuing bank acts as a presenting/collecting bank. It will deliver the documents to the buyer in accordance with the remitting bank’s instruction, i.e., against payment (D/P) or against acceptance (D/A). Where the collection instruction has authorized the delivery of documents upon acceptance, the collecting bank delivers the documents to the buyer/drawee once acceptance has been made and advises the remitting bank of such an acceptance and the maturity date. However, please note that under D/A collection the issuing bank is not obligated to pay in the event the B/E, which has been accepted by the buyer, is not paid at maturity.
Notwithstanding that the LC expired, it is advisable for the presenter to send the documents to the issuing bank subject to UCP 600.
Best regards,
N.H.Duc