Delivery Method - 2 Lots

PeterCheah · Post by **PeterCheah** » Thu Apr 08, 2004 1:00 am

Some issuing banks insert a clause in their documentary credit, under additional conditions, to deliver documents in 2 lots.

I am of the opinion that delivery method is not a binding term and condition within the body of the DC and coupled with the fact that we are not delaying the dispatch of documents, issuing banks should not pick it up as a discrepancies if the negotiating bank sends documents in one lot instead of 2 as required in the DC.

Would appreciate some feedback on this issue.

larryBacon · Post by **larryBacon** » Tue Apr 13, 2004 1:00 am

Welcome to the Discussion Forum Peter !

If you object strongly to sending docs in 2 lots, the time to object is when the DC is first received. If the instruction is valid within the DC, to contravene it is a discrepancy. The standard reason for this requirement is in case of loss in transit of one of the 2 lots, but it is not for you or I to look beyond the instruction in the DC.

Laurence

LeoCullen · Post by **LeoCullen** » Wed Apr 14, 2004 1:00 am

This would appear to me to be a non documentary condition and as such can be disregarded.

I do not see how presentation of documents in one lot could be a discrepancy.

[edited 4/14/2004 9:39:45 AM]

larryBacon · Post by **larryBacon** » Wed Apr 14, 2004 1:00 am

If docs sent in one lot went missing in transit, I would not like to be the person to tell the issuing bank that this was a non-documentary requirement. Not all requirements in a DC are documentary. Late presentation is one example. Article 2 requires that a bank authorised by the issuing bank to pay, negotiate etc, does so on the basis that terms and conditions of the DC are complied with.

Laurence

AbdulkaderBazara · Post by **AbdulkaderBazara** » Wed Apr 14, 2004 1:00 am

I don't believe we should disregard this type of instructions.
For the beneficiary who has submitted documents to the bank specified in the credit, it may not be regarded as a discrepancy since it has followed the instructions provided in the credit; nevertheless, the presenting bank maybe held responsible in case the documents that were sent, in one lot, by such bank were lost in transit.

NigelHolt · Post by **NigelHolt** » Sun Apr 18, 2004 1:00 am

I agree with Abdulkader.

The documents despatch instruction is a term of the contract between the issuing bank and nominated bank, and not the contract between the issuing bank and the beneficiary. If a nominated bank ignores this instruction, it is in breach of its contract with the issuing bank. However, if the issuing bank does not suffer any loss from this breach it has no claim, I believe, against the nominated bank. However, if the documents –in one lot- are lost –where the credit stipulates two- the issuing bank may well have a claim against the nominated bank. The extent of that claim, if any, logically will flow from the financial loss, if any, suffered by the issuing bank as a result of this breach of contract.

If the consequence of the breach of contract is that the issuing bank loses its right of recourse against the applicant then logically the issuing bank is entitled not to reimburse the nominated bank or reclaim any payment debited to it's a/c with the nominated bank / a reimbursing bank from the nominated bank.

[edited 4/18/2004 2:07:25 PM]