Transfer LC with description of Goods as " General Merchandi

LawrenceC · Post by **LawrenceC** » Wed Mar 14, 2001 12:00 am

Here is a situation :
Master LC amount : USD 1MM
Description of goods in Master LC :

"General Merchandise"

Transfer LC amount : USD 100,000

Description of goods in Transfer LC application :
" Toys with PO No. 0282-333 unit price $10 qty 10000"

Is this conform with Article 48 requirment or not ?

PGauntlett · Post by **PGauntlett** » Thu Mar 15, 2001 12:00 am

Technically speaking the answer is no. However, if the first ben were to put 'general merchandise' on his substitution invoice followed by full description i.e. toys etc, the docs would be consistent. The risk you take is if you are obliged to present 2nd ben's invoice to the issuing bank. This invoice will obviously not include the description 'general merchandise'.
On another note, personally I would be reluctant to accept a credit which has such a description since it could contravene due diligence procedures i.e. what would happen if the goods turned out to be guns.

ChrisVriens · Post by **ChrisVriens** » Fri Mar 16, 2001 12:00 am

I fully agree with RGauntlett

ETomat Gabuzzi · Post by **ETomat Gabuzzi** » Fri Mar 16, 2001 12:00 am

I absolutely agree with the two points of view of PGauntlett

vobrien · Post by **vobrien** » Thu Apr 12, 2001 1:00 am

Changing the Description of the goods on the transferred credit does not conform with Article 48.

If there are sound commercial reasons for this then the original transferable credit issued may include stipulations to allow for this situation.

P.Gauntlett earlier points are the key points in this issue.

vob@obrico.com

T.O.Lee · Post by **T.O.Lee** » Wed May 23, 2001 1:00 am

I arrive the same conclusion - not complying with Article 48 of the UCP 500 - but based on a different perspective. It is less serious by changing the name of the merchandise as long as the new name fits in the scope of "general merchandise". With long time exposure in the court cases that I have handled, I would see the way a judge would decide. He would probably say that the transferring bank has narrowed the scope of merchandise down to a specific goods. By that, the transferring bank has changed the original "wide merchandise scope" intention of the applicant to a narrow scope of merchandise, whcih is not intended by the applicant. So in a court, the same decision will be made but rested on different grounds.

As an LC consultant and accredited expert, it is important to foresee what the judge would think and this skill can only be developed by getting involved in many legal cases. One cannot learn this by reading a book. When I retire, I would wirte a book named "What a judge would think?"

I am from www.tolee.com

[edited 12/15/01 9:20:30 PM]