Transferable credits

[MichaelFlanagan]

A QUESTION HAS BEEN RAISED IN REGARD TO PLACE OF EXPIRY FOR TRANSFERABLE CREDITS. IN THE UCP 500 ARTICLE 48H WE ARE ALLOWED TO REDUCE OR CURTAIL THE EXPIRY DATE.
DOES THIS ALSO RELATE TO CHANGING THE PLACE OF EXPIRY?
I.E., IN SWIFT MT700 ETC., THE EXPIRY DATE FIELD INCORPORATES PLACE OF EXPIRY.
IS THERE A RULE OR AN OPINION THAT CAN BE REFERRED TO?

[T.O.Lee]

Since different countries/cities have different time zones, or even different dates, expiry must be specific to a named place. Otherwise it is meaningless, unless GMT time is specified as the standard time.

UCP 500 sub-Article 48 (j) deals with change in place of payment or negotiation (at least for the second beneficiary). That means it should cover automatically place of presentation of documents or place of expiry for the presenter (or at least for the second beneficiary) in normal circumstances according to UCP 500 sub-Article 42 (a).

www.tolee.com

[edited 9/4/02 7:03:07 PM]

[BuddyB]

I'm not sure what T.O.'s point is, so I'll just respond to the original question.

You cannot change the place of expiry any more than you can change the documents required. This does not mean you cannot confine the place of expiry to something more specific than what is provided in the L/C. (You can do the same with documents.) For example, the original L/C may say simply that it expires at the counters of the negotiating bank--the transfer may specify a particular country or even a particular bank. If the original L/C specifies a country, the transfer cannot change that, but it can specify a bank within that country. Presentation of documents under the transfer must comply with the parameters specified in the original L/C.
[edited 11/20/02 7:16:13 PM]

[PGauntlett]

Although not clearly worded Art 48j allows the 1st ben to change the place of payment to enable 2nd ben to present docs locally. This must mean that the expiry date then refers to the latest date that docs can be presented by 2nd to the place (i.e. bank) stated in the transferred credit. In this instance the 1st ben is not limited by the original expiry date in presenting his substitute invoice/draft provided he does it on first demand.
A bank issuing a transferable l/c should be aware of the implications of Art 48j and, if concerned, they can always add a condition that place of payment cannot be transferred. The transferring bank also has an option not to transfer on this basis (see 48c).

[T.O.Lee]

Hello Buddy,

Welcome to the party!

We have edited our last posing as follows in the hope that you can understand clearly what we actually mean.

Quote

UCP 500 sub-Article 48 (j) deals with change in place of payment or negotiation (at least for the second beneficiary). That means it should cover automatically place of presentation of documents or place of expiry for the presenter (or at least for the second beneficiary) in normal circumstances according to UCP 500 sub-Article 42 (a).

Unquote

Please bear in mind that the original DC and the transferred part of the DC may have different terms and conditions, such as those allowed in Article 48 (h).

Hope now everything from us is clear.

www.tolee.com

[edited 9/5/02 5:17:51 PM]

[PGauntlett]

The original expiry date does not apply to the presentation of substitute docs by the 1st beneficiary. Such substitutions must be made on 1st demand and can take place after expiry of l/c.
See R.83 in ICC Opinions 1980-1981

[T.O.Lee]

Philip,

You are quite right and we have to edit our last posting.

T. O.