Non-performance of an unconditional L/C
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SharifElkasaby
- Posts: 2
- Joined: Fri Apr 05, 2019 5:17 pm
Non-performance of an unconditional L/C
In this case, the Buyer will issue an unconditional L/C payable after one day and one year. The Seller, will issue a L/G and his bank will also provide a Bank Warrenty. My question is, if the Seller fails to perform the contract will the buyer be able to cancel the Unconditional L/C? What are the ICC rules in such an event?
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AbdulkaderBazara
- Posts: 256
- Joined: Fri Apr 05, 2019 5:15 pm
Non-performance of an unconditional L/C
The question you have indicated is not very clear. Letters of credit by their nature contain certain conditions. The expression "one year and one day" is not commonly used in LC's and we must be cautious when we receive such expressions. Letters of credit must have a definite expiry date.
Why would a bank issue a guarantee and a warranty certificate for the same purpose? This issue needs to also be clarified. I am not comfortable with the whole deal.
From the details you have given, the two instruments i.e. the LC and the guarantee are independent from each other. Therefore, if the seller fails to perform, the buyer can claim under the would be guarantee. Logically, in normal circumstance, this failure would not make the seller comply with terms & conditions of a normal letter of credit. However, one would not be able to cancel a letter of credit before its expiry date unless the parties involved in the letter of credit agree to it i.e. the issuing bank, the beneficiary and the confirming bank (if applicable).
[edited 2/11/01 6:18:26 PM]
Why would a bank issue a guarantee and a warranty certificate for the same purpose? This issue needs to also be clarified. I am not comfortable with the whole deal.
From the details you have given, the two instruments i.e. the LC and the guarantee are independent from each other. Therefore, if the seller fails to perform, the buyer can claim under the would be guarantee. Logically, in normal circumstance, this failure would not make the seller comply with terms & conditions of a normal letter of credit. However, one would not be able to cancel a letter of credit before its expiry date unless the parties involved in the letter of credit agree to it i.e. the issuing bank, the beneficiary and the confirming bank (if applicable).
[edited 2/11/01 6:18:26 PM]
Non-performance of an unconditional L/C
As a regional associated firm (Hong Kong and Toronto) of the ICC Commercial Crime Bureau, we have to alert you that "one year and one day" is a very popular jargon used by the Nigerian school of fraudsters, such as in "Grade A" (actually there is no grading for sugar trade) sugar trade.
We would suggest that you consult your legal counsel, an LC expert and/or a fraud expert before you take further action.
RWA (ready, willing and able) is another jargon used by the fraudsters. If you find this jargon in your transaction, then you should take the necessary precautions.
DISCLAIMER: Our comments above are made without any responsibilities and liabilities on our part for any damages, losses, or other consequences whatsoever, whether directly or indirectly related to our comments above. You should consult your legal counsel, LC and/or fraud experts before you act upon our comments.
I am from www.tolee.com
[edited 5/22/01 3:19:50 PM]
[edited 10/28/01 12:32:22 AM]
We would suggest that you consult your legal counsel, an LC expert and/or a fraud expert before you take further action.
RWA (ready, willing and able) is another jargon used by the fraudsters. If you find this jargon in your transaction, then you should take the necessary precautions.
DISCLAIMER: Our comments above are made without any responsibilities and liabilities on our part for any damages, losses, or other consequences whatsoever, whether directly or indirectly related to our comments above. You should consult your legal counsel, LC and/or fraud experts before you act upon our comments.
I am from www.tolee.com
[edited 5/22/01 3:19:50 PM]
[edited 10/28/01 12:32:22 AM]