Forece Majeure

[AbdulkaderBazara]

Just want to refine my understanding of article 36 Force Majeure.

1) If the LC expires during the interruption period of the bank, beneficiary will be precluded from presenting documents when the bank resumes its business.
2) If the beneficiary presents documents just in time before the interruption period of bank, the bank will be allowed to exercise the remaining period of the five banking days allowed under article 14(b) to check documents and determine whether they comply or not.

That means for the purpose of examination of documents (article 14 b) and by definition of "a banking day" (article 2), the clock stops ticking for the bank during the interruption period but as per article 29(a) and article 36, for the beneficiary, the clock keeps ticking and the beneficiary is precluded from presenting documents under an LC that has expired during the interruption period. The beneficiary is also not allowed to cure discrepancies if the presentation period has elapsed during such interruption period.

Is my understanding correct?

regards
Abdulkader

[NigelHolt]

Abdulkader,

I would certainly agree that your 1. above reflects the express provisions of 500 16 / 600 36, but can only say that while your 2. above seems logical and reasonable I could well see some arguing that if a credit expired during the interruption of business then the fact that documents were presented before hand -but the honour / refusal process not completed before the interruption of business occurred- is irrelevant given what the article actually says, i.e. the bank’s obligations are totally at an end and therefore there is no obligation to examine documents or, if examined, to settle if compliant or to refuse if non-compliant on any resumption of business.

Regards, Jeremy

[edited 2/19/2007 2:26:27 PM: A clarification]

[AbdulkaderBazara]

Thanks for your comments. I can see your point and agree to it. Hope this is made clear in the commentary to UCP 600.

regards
Abdulkader