Payment obligation

[jsheehan]

Appreciate comments considering the following:

-LC is confirmed
-LC is available with the confirming bank by payment at sight
-Confirming bank is authorized to reimburse themselves by TT at sight on their US office
-LC allows partial shipments
-It is a documentary LC not a standby
-The LC states "payment condition: 90 percent of the LC value will be paid against presentation of complying shipping documents. The remaining 10 percent will be paid....." The 10 percent portion is not an issue. The confirming banks position is that we cannot be paid 90% for our first shipment until and unless we present documents for the second shipment as well (we plan on two shipments but with partial shipments allowed we obviously can have more than two shipments). The banks position is that until we present documents which equal 90% of the LC value we cannot be paid for any shipments at all. We disagree. Our position is that since partial shipments are allowed we present documents for each individual shipment and receive payment separately for 90% each partial shipment. Obviously, the total cannot exceed the quantity the LC requires.

Comments appreciated

[asamaha]

It is clear from the terms of the credit that the 90 percent portion is payable immediately upon each presentation, whether it covers a partial or a total shipment of the goods subject of the L/C.
Regards
Antoine

[ChantalDuguay]

I agree with your position.
I would have the issuing bank amend the DC to read ''90 % of invoice value...'' instead of ''90 % of LC value...''
The term ''LC value'' as a different meaning than ''invoice value'' which would be more suited since partial shipment are allowed.
I believe it is a case of a badly worded DC.