We post query as received for your views:
Under Additional Conditions of an Export Credit, the following are noted:-
1.'One additional copy of document is required to be presented together with
the rest of the documents for the issuing bank'
2. Please acknowledge receipt & let us know the date of the
notification of the LC to the beneficiary.
Is requirement 1 addressed to the beneficiary or the negotiating bank? Would
failure to provide an additional copy of all the stipulated documents
constitute a discrepancy?
In 2 above where we are the first advising bank whereas HSBC is the second
advising bank.
Which bank is required to acknowledge receipt? We feel that HSBC should be
the one as they are in a better position to know the date of notification to
the beneficiary. Again if there was no acknowledgement
given to the issuing bank,could the issuing bank treat the omission as a
discrepancy?
Query received related to additional conditions
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AbdulkaderBazara
- Posts: 256
- Joined: Fri Apr 05, 2019 5:15 pm
Query received related to additional conditions
An interesting one.
As an Advising bank we sometimes see the requirement for additional copies and think - what a lazy opening bank, they could take copies themselves!
Presumably, the applicant has not asked for these conditions though, as we know, the applicant is not a party to the Credit.
We look to the beneficiary to provide these but if they have not we do not raise it as a discrepancy. I cannot see a court allowing this as a discrepancy.As I said, the opening bank can take their own copies if they want.
As for the notification and acknowledgement,again I do not think this can be considered a material part of the Credit. It is common practice to acknowledge Credits as it gives the opening bank your reference should there be any enquiries in future but surely a presentation would not be refused if this had not been done. I think the second advising bank should provide the acknowledgement as the first advising bank will probably not take any more part in the Credit.
As for the date of advising , we would not necessarily do that - why should we?
It takes time and effort to do that and who pays for it!?
As an Advising bank we sometimes see the requirement for additional copies and think - what a lazy opening bank, they could take copies themselves!
Presumably, the applicant has not asked for these conditions though, as we know, the applicant is not a party to the Credit.
We look to the beneficiary to provide these but if they have not we do not raise it as a discrepancy. I cannot see a court allowing this as a discrepancy.As I said, the opening bank can take their own copies if they want.
As for the notification and acknowledgement,again I do not think this can be considered a material part of the Credit. It is common practice to acknowledge Credits as it gives the opening bank your reference should there be any enquiries in future but surely a presentation would not be refused if this had not been done. I think the second advising bank should provide the acknowledgement as the first advising bank will probably not take any more part in the Credit.
As for the date of advising , we would not necessarily do that - why should we?
It takes time and effort to do that and who pays for it!?
Query received related to additional conditions
In my opinion not fulfilment of the first condition cannot be reason for non-payment of the L/C. It is obviously condition slipped in by the issuing bank. The second issue - it is only reguest which concerns the banks involved, it has nothing to do with the L/C payment undertaking.
Pavel Andrle
Pavel Andrle
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hatemshehab
- Posts: 220
- Joined: Fri Apr 05, 2019 5:19 pm
Query received related to additional conditions
Abdulkader
You probably know the Arabic proverb “ if an insane drops a stone in a well, a hundred wise men would be required to take it out”
It goes without saying that this is an act of an ignorant issuing bank. Sometimes, I used to encounter another similar stipulation although not so ridiculous as this. It states that "a copy of all documents to be sent by the beneficiary directly to the applicant." The second one although might be requested by the applicant it however still does not make sense as the issuing bank is not likely to hold documents at his custody if the applicant pays for them. Even, Why in the first place require that in the L/C when it can be done simply outside it, let alone it might not be complied with by the negotiating bank regarding it as a non-documentary condition?
Although I would not in any circumstances regard that (the condition you have raised) non-presentation of a copy of documents may constitute a discrepancy, I would not be surprised that this issuing bank may raise such one.
If I were you I would just drop them a note “ we are not a photocopy center”
As for the notification, I think they mean the second advising bank or at least logically speaking it should be so. Anyway may God save us!
Thank you Abdulkader for this wonderful query as I will be presenting a workshop on export L/Cs on May, we need some fun!!!
You probably know the Arabic proverb “ if an insane drops a stone in a well, a hundred wise men would be required to take it out”
It goes without saying that this is an act of an ignorant issuing bank. Sometimes, I used to encounter another similar stipulation although not so ridiculous as this. It states that "a copy of all documents to be sent by the beneficiary directly to the applicant." The second one although might be requested by the applicant it however still does not make sense as the issuing bank is not likely to hold documents at his custody if the applicant pays for them. Even, Why in the first place require that in the L/C when it can be done simply outside it, let alone it might not be complied with by the negotiating bank regarding it as a non-documentary condition?
Although I would not in any circumstances regard that (the condition you have raised) non-presentation of a copy of documents may constitute a discrepancy, I would not be surprised that this issuing bank may raise such one.
If I were you I would just drop them a note “ we are not a photocopy center”
As for the notification, I think they mean the second advising bank or at least logically speaking it should be so. Anyway may God save us!
Thank you Abdulkader for this wonderful query as I will be presenting a workshop on export L/Cs on May, we need some fun!!!
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AbdulkaderBazara
- Posts: 256
- Joined: Fri Apr 05, 2019 5:15 pm
Query received related to additional conditions
Hatem,
Thanks. I liked the Arabic proverb. My response to the query was similar to the responses given here (specially of Mr. Pavel).
I promised the inquirer to post the query in the DC-Pro to provide her with views of other LC practitioners.
[edited 2/1/02 7:12:55 AM]
Thanks. I liked the Arabic proverb. My response to the query was similar to the responses given here (specially of Mr. Pavel).
I promised the inquirer to post the query in the DC-Pro to provide her with views of other LC practitioners.
[edited 2/1/02 7:12:55 AM]
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larryBacon
- Posts: 689
- Joined: Fri Apr 05, 2019 5:26 pm
Query received related to additional conditions
I agree that the standard of the issuing bank appears to be poor. If they were capable of simple arithmetic, they could avoid such issues by simply calling for invoice in quadruplicate instead of invoice in triplicate plus one copy for issuing bank.
The fact that there are two advising banks may also be indicative of poor management on the part of the issuing bank.
Laurence
The fact that there are two advising banks may also be indicative of poor management on the part of the issuing bank.
Laurence