We have received an LC with the latest shipment date on 1 June 01. Credit was issued on 26 June 01.
The expiry date is given to be 30 July 01. No further special condition were given such as 'Late presentation of
doc within the validity of the credit' are acceptable.
Is it allowed to issue this kind of LC where the latest shipment date is already past.In the present case the expiry date of the LC
is more than 21 days from the latest shipment date?
Thank you.
Latest shipment date is earlier than issuance date of LC
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michaeltan
- Posts: 10
- Joined: Fri Apr 05, 2019 5:22 pm
Latest shipment date is earlier than issuance date of LC
LC ISSUED AFTER SHIPMENT A POSSIBILITY
In certain parts of Asia, quite often the LC arrives only just before the shipment deadline as stated in the sales contract, in order to allow the applicant to generate more cash flow. In acute cases, the LC may arrive even after the shipment has been made.
OTHER ALTERNATIVES FROM RISK MANAGEMENT POINT OF VIEW
However, from risk management point of view, such LC should have stated that Article 43 (a) of the UCP 500 does not apply and then puts the new deadline date or simply states that stale transport documents are acceptable or words of similar effect in order to protect the beneficiary from payment dishonour due to "stale" transport documents being presented (after 21 days from the date of shipment).
We are from www.tolee.com
[edited 7/18/01 9:27:49 PM]
In certain parts of Asia, quite often the LC arrives only just before the shipment deadline as stated in the sales contract, in order to allow the applicant to generate more cash flow. In acute cases, the LC may arrive even after the shipment has been made.
OTHER ALTERNATIVES FROM RISK MANAGEMENT POINT OF VIEW
However, from risk management point of view, such LC should have stated that Article 43 (a) of the UCP 500 does not apply and then puts the new deadline date or simply states that stale transport documents are acceptable or words of similar effect in order to protect the beneficiary from payment dishonour due to "stale" transport documents being presented (after 21 days from the date of shipment).
We are from www.tolee.com
[edited 7/18/01 9:27:49 PM]
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larryBacon
- Posts: 689
- Joined: Fri Apr 05, 2019 5:26 pm
Latest shipment date is earlier than issuance date of LC
The apparent contradiction should be pointed out to the issuing bank and clarification sought.
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bassilkelany
- Posts: 3
- Joined: Fri Apr 05, 2019 5:16 pm
Latest shipment date is earlier than issuance date of LC
with respesct to mr. tolee opinion,there is no need here to stop applying art. 43 of ucp, as this art.
appies only when the l/c does not stipulate a specified period of time after the date of shipment during which presentation must be made in compliance with credit terms, so we just need here to stipulate that specified period which will over ride the period of 21 days , as art. 43 states clearly.
appies only when the l/c does not stipulate a specified period of time after the date of shipment during which presentation must be made in compliance with credit terms, so we just need here to stipulate that specified period which will over ride the period of 21 days , as art. 43 states clearly.
Latest shipment date is earlier than issuance date of LC
GIVE MORE ALTERNATIVES
To respond to the comments from Mr. Bassilkelany, there are many alternatives to achieving the same result. To follow our consultancy practice, we give more alternatives for the enquirer to choose from.
RISK MANAGEMENT POINT OF VIEW
We have seen many applicants adding new terms and conditions in their Ls/C without stating that the related UCP 500 articles do not apply. Changing sub Article 39 (b) on tolerance percentage (10% to replace 5%) is a good example. This sub Article gives the applicant only two choices, either no tolerance or 5%. If this sub Article is not deleted, then 5% in UCP 500 and 10% in the LC may create confusions and this may also be deemed as a discrepancy if the issuing bank wishes to dishonour due to bankruptcy of the applicant. In LC operations, it is important for the beneficiary to leave no excuse for the applicant or the issuing bank to fabricate discrepancies for the purpose of payment dishonour, in case of down market.
So it is always a good habit to "delete" the original UCP 500 article first before we add a new term or condition in lieu thereof, from a risk management point of view.
We are from http://www.tolee.com
[edited 7/2/02 10:23:12 PM]
To respond to the comments from Mr. Bassilkelany, there are many alternatives to achieving the same result. To follow our consultancy practice, we give more alternatives for the enquirer to choose from.
RISK MANAGEMENT POINT OF VIEW
We have seen many applicants adding new terms and conditions in their Ls/C without stating that the related UCP 500 articles do not apply. Changing sub Article 39 (b) on tolerance percentage (10% to replace 5%) is a good example. This sub Article gives the applicant only two choices, either no tolerance or 5%. If this sub Article is not deleted, then 5% in UCP 500 and 10% in the LC may create confusions and this may also be deemed as a discrepancy if the issuing bank wishes to dishonour due to bankruptcy of the applicant. In LC operations, it is important for the beneficiary to leave no excuse for the applicant or the issuing bank to fabricate discrepancies for the purpose of payment dishonour, in case of down market.
So it is always a good habit to "delete" the original UCP 500 article first before we add a new term or condition in lieu thereof, from a risk management point of view.
We are from http://www.tolee.com
[edited 7/2/02 10:23:12 PM]
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bassilkelany
- Posts: 3
- Joined: Fri Apr 05, 2019 5:16 pm
Latest shipment date is earlier than issuance date of LC
let me explain that there is no term in ucp 500 called (stale),but we have the term late presentation,which some d/c
users have confusions about it.
we also use (Ls/c)for the plural of l/c and not LCs . as the right is letters of
credit and not letter of credits.
concerning the A/M issue, i repeat,if we stopped applying art.43, then we give the beneficiary the opportunity to determine the specified period of time which complied documents should be presented in, but when we specify that period of time,the beneficiary should comply with that period of time, and so keeping this issue subject to UCP 500
if any conflict arises in that regard that needed courts of law.
i hope i have made it clear .
users have confusions about it.
we also use (Ls/c)for the plural of l/c and not LCs . as the right is letters of
credit and not letter of credits.
concerning the A/M issue, i repeat,if we stopped applying art.43, then we give the beneficiary the opportunity to determine the specified period of time which complied documents should be presented in, but when we specify that period of time,the beneficiary should comply with that period of time, and so keeping this issue subject to UCP 500
if any conflict arises in that regard that needed courts of law.
i hope i have made it clear .
Latest shipment date is earlier than issuance date of LC
"STALE" & "LCs" SOLELY FOR EASY COMMUNICATION PURPOSE
Mr. Bassilkelany, please note that when we use the word "stale", we put it in brackets ("stale") to indicate that this is not an official UCP 500 term. We use it just for easy communication purpose as we are aware that the viewers of the DC PRO may not be all bankers and in fact some bankers also use the term "stale" in their discrepancy(ies) advices.
NO OFFICIAL ABBREVIATIONS
Of course we understand that the plurals of B/L and L/C should be Bs/L and Ls/C. This is simple grammar. But in informal discussions, we take the easy approach by typing BLs and LCs to save time. This is not worse than using "i" to mean "I" in the internet discussions, where there is no capitals being used. We also use FYI (for your information), CU (see you), U2 (you too) in the internet. This is cyber culture that should be respected by members of the DC PRO.
In fact many abbreviations of the term letter of credit are used in the marketplace, such as L/C, LC and LOC. For bill of lading, they may be B/L, BL or BOL. There are no official abbreviations for these terms yet.
DC OR LC AS A BETTER TERM?
In fact, we should have used the term DC (Documentary Credit) or DCs (Documentary Credits) since Ls/C nowadays are no more in letter format. However, for easy communication, we still prefer to use the term LC.
In Canada, certain big banks use the term "Documentary Letter of Credit". Should the abbreviation be "DLC, DL/C or D/L/C"? What about the plurals and abbreviations?
To respect the comments from Mr. Bassilkelany, we are glad to use Ls/C from now on.
"STANDBY DOCUMENTARY CREDIT" A BETTER TERM?
We have one interesting question for Mr. Bassilkelany who cares so much about the right terms and abbreviations. Should we call "standby letter of credit" as "standby documentary credit"? But there is no such term "standby documentary credit" in both the UCP 500 or ISP 98.
As a consultant, we have to focus more on practicality and effective solutions to problems and leave the theories to the academics.
We are from http://www.tolee.com
[edited 7/2/02 10:19:39 PM]
Mr. Bassilkelany, please note that when we use the word "stale", we put it in brackets ("stale") to indicate that this is not an official UCP 500 term. We use it just for easy communication purpose as we are aware that the viewers of the DC PRO may not be all bankers and in fact some bankers also use the term "stale" in their discrepancy(ies) advices.
NO OFFICIAL ABBREVIATIONS
Of course we understand that the plurals of B/L and L/C should be Bs/L and Ls/C. This is simple grammar. But in informal discussions, we take the easy approach by typing BLs and LCs to save time. This is not worse than using "i" to mean "I" in the internet discussions, where there is no capitals being used. We also use FYI (for your information), CU (see you), U2 (you too) in the internet. This is cyber culture that should be respected by members of the DC PRO.
In fact many abbreviations of the term letter of credit are used in the marketplace, such as L/C, LC and LOC. For bill of lading, they may be B/L, BL or BOL. There are no official abbreviations for these terms yet.
DC OR LC AS A BETTER TERM?
In fact, we should have used the term DC (Documentary Credit) or DCs (Documentary Credits) since Ls/C nowadays are no more in letter format. However, for easy communication, we still prefer to use the term LC.
In Canada, certain big banks use the term "Documentary Letter of Credit". Should the abbreviation be "DLC, DL/C or D/L/C"? What about the plurals and abbreviations?
To respect the comments from Mr. Bassilkelany, we are glad to use Ls/C from now on.
"STANDBY DOCUMENTARY CREDIT" A BETTER TERM?
We have one interesting question for Mr. Bassilkelany who cares so much about the right terms and abbreviations. Should we call "standby letter of credit" as "standby documentary credit"? But there is no such term "standby documentary credit" in both the UCP 500 or ISP 98.
As a consultant, we have to focus more on practicality and effective solutions to problems and leave the theories to the academics.
We are from http://www.tolee.com
[edited 7/2/02 10:19:39 PM]