Agent's Commission

[AbdulkaderBazara]

In agreement with Hatem, I'm posting this query received from an Internet Acquaintance as well.

Quote

Could I ask you for your comments & if you are not free, to post the following
query in the DCPro forum.

Under additional conditions of a credit, there is a requirement that 'The
negotiating bank at the time of negotiation must deduct & remit the agent's
commission of 2% based on the invoice value to the agent's account with an
overseas bank . A certificate by the negotiating bank to this effect is
required.'

Upon receipt of docs from the beneficiary's bank, we as issuing bank determined
all docs to be in order except lacking a certification by the presenting bank
that they have deducted & remitted the agent's commission of 2% as required by
our credit. It could very well be that they have not negotiated the docs hence
they are not in a position to remit the 2%.

Given the above situation, would the omission to remit the agent's commission on
the part of the presenting bank constitute a valid discrepancy?
We are unable to agree on whether this is a discrepancy. I personally am of the
view that it is not a discrepancy as this is not the fault or doing of the
beneficiary.
Please note we are not in favour of issuing these credits from the outset but
the Indian importer is adamant in his application.

Unquote

regards

[PavelA]

In my opinion the failure of the negotiating bank to deduct the agents charges is clearly not discrepancy. It is only the issuing bank – negotiating bank issue, without any impact on the beneficiary in relation to the credit transaction.

Pavel Andrle

[T.O.Lee]

We agree fully with Pavel that any procedural wrong doing by the nominated bank affects the position of the nominated bank itself and it does not affect the right of the beneficiary who has presented compliant documents within validity of the DC and also meets the 21 day after shipment requirement.

There are lots of ICC opininons on this. Please make use of the search facility provided by the DC Pro.

www.tolee.com

[edited 4/12/02 4:03:49 PM]

[larryBacon]

This appears to me to be a means of utilising a nominated bank outside of India to circumvent Indian regulations concerning international movements of hard currency. Such actions may be legal outside of India, but what happens if the beneficiary presents directly to the issuing bank ? I agree with previous comments that the bene has complied and should be paid, but the issuing bank may be precluded from compliance with the instruction regarding payment of 2% by local law. My knowledge of such laws in India is out of date, so I would appreciate pertinent contributions if this needs to be corrected.

Laurence