Laurence, T.O.
There is only one type of goods.
regards
Transferable LC
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AbdulkaderBazara
- Posts: 256
- Joined: Fri Apr 05, 2019 5:15 pm
Transferable LC
Abdulkader,
Your case is interesting but quite unusual. In fact, I can hardly understand the importers who allow a drawing of 15% against a simple receipt only. What then if first beneficiaries neither transfer no utilize the export D/C.
Anyhow, my opinion is the following. Since the 15% is payable against simple receipt only, have this clause taken out from you D/C and have importers and exporters settle said payment outside D/C. You will then receive and transfer your incoming D/C for the same amount. This may however creates some accounting problems to the importers in addition to those already pointed out by Laurence (import licence and amount of goods not same).
Keeping your D/C like it is now you could do what some banks do, i.e. transfer your incoming D/C only once your are in possession of duly signed first beneficiaries invoices which you could fill in at time of negotiation. If however this practice is in use I discouraged same since if the bank think being fine with the credit risk, they may face legal problems. In fact, let's imagine the first beneficiaries company is declared bankrupt and you have to fill in the invoices later on !
My solution is the one which would be as per UCP and banking practices, i.e. to receive an D/C for 100% and then transfer same for the 85%. The only difference is that first beneficiaries would cash the 15% together with the presentation of the other documents, which however I find acceptable and logical.
I do not enter withing the other issues raised by other collegues (cumulative, part shipment, goods, units, a.s.o., a.s.o.) since I believe you will have alreday carefully checked them.
Roland
Your case is interesting but quite unusual. In fact, I can hardly understand the importers who allow a drawing of 15% against a simple receipt only. What then if first beneficiaries neither transfer no utilize the export D/C.
Anyhow, my opinion is the following. Since the 15% is payable against simple receipt only, have this clause taken out from you D/C and have importers and exporters settle said payment outside D/C. You will then receive and transfer your incoming D/C for the same amount. This may however creates some accounting problems to the importers in addition to those already pointed out by Laurence (import licence and amount of goods not same).
Keeping your D/C like it is now you could do what some banks do, i.e. transfer your incoming D/C only once your are in possession of duly signed first beneficiaries invoices which you could fill in at time of negotiation. If however this practice is in use I discouraged same since if the bank think being fine with the credit risk, they may face legal problems. In fact, let's imagine the first beneficiaries company is declared bankrupt and you have to fill in the invoices later on !
My solution is the one which would be as per UCP and banking practices, i.e. to receive an D/C for 100% and then transfer same for the 85%. The only difference is that first beneficiaries would cash the 15% together with the presentation of the other documents, which however I find acceptable and logical.
I do not enter withing the other issues raised by other collegues (cumulative, part shipment, goods, units, a.s.o., a.s.o.) since I believe you will have alreday carefully checked them.
Roland
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AbdulkaderBazara
- Posts: 256
- Joined: Fri Apr 05, 2019 5:15 pm
Transferable LC
Iroland,
Thanks for your detailed response. My response to my colleague who raised the issue was similar to yours. The transfer of the LC would not be workable unless the LC is amended. That is by deleting the advance payment portion from the LC and have the LC be issued for the 85% percent value. The first beneficiary to find another alternative for its 15% margin which he wants to secure in advance.
I have posted the question to hear other DC-PRO participants comments / feedback on the issue.
regards
Abdulkader
[edited 10/26/02 8:30:46 AM]
Thanks for your detailed response. My response to my colleague who raised the issue was similar to yours. The transfer of the LC would not be workable unless the LC is amended. That is by deleting the advance payment portion from the LC and have the LC be issued for the 85% percent value. The first beneficiary to find another alternative for its 15% margin which he wants to secure in advance.
I have posted the question to hear other DC-PRO participants comments / feedback on the issue.
regards
Abdulkader
[edited 10/26/02 8:30:46 AM]
Transferable LC
Hello Everybody,
After strolling along in the city of Rome, and getting very tired due to its hilly terrain, I am now taking a rest in an Internet cafe.
What a coincidence! On the way to Rome from Vienna, I met Mr. Heinz Hertl at the boarding gate! He looked more refreshed after withdrawing from the fireline in Bank Austria. We were entering the departure gate at different times, but taking the same plane, sharing the same flight number, and headed for the same destination.
So for those who knows the UCP 500 inside out, we were not making “partial shipments”.
Bye and see you all in Rome, if you happen to attend the ICC Banking Commission meetings there next week.
T. O.
www.tolee.com
[edited 11/3/02 5:57:52 PM]
After strolling along in the city of Rome, and getting very tired due to its hilly terrain, I am now taking a rest in an Internet cafe.
What a coincidence! On the way to Rome from Vienna, I met Mr. Heinz Hertl at the boarding gate! He looked more refreshed after withdrawing from the fireline in Bank Austria. We were entering the departure gate at different times, but taking the same plane, sharing the same flight number, and headed for the same destination.
So for those who knows the UCP 500 inside out, we were not making “partial shipments”.
Bye and see you all in Rome, if you happen to attend the ICC Banking Commission meetings there next week.
T. O.
www.tolee.com
[edited 11/3/02 5:57:52 PM]
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larryBacon
- Posts: 689
- Joined: Fri Apr 05, 2019 5:26 pm
Transferable LC
RED CLAUSE OR TRANSFERABLE ?
I have been out of the office for some time, so please excuse my tardiness in replying.
The clauses mentioned by Abdulkader may, effectively, be mutually exclusive. If 15% is payable against simple receipt, this completes the payment obligation of the first nominated bank. This is not the normal chain of events in a transferable credit. If the same first beneficiary makes a presentation, whether or not incorporating substituted documents, the bank will have no furhter payment obligation to him in this regard.
The second nominated bank will be aware that 15% has already been paid to the first bene and that no further payment is due to him. This may lead the second nominated bank to give instructions precluding substitution, as in the normal course of events, such substitution is allowed with the express purpose of allocating partial payment to the first bene.
HIDDEN DANGERS
It is customary for Arab countries to seek Chamber of Commerce certs. of origin. If the details on these do not match those on the invoice (e.g. substituted) they are likely to be rejected.
Laurence
I have been out of the office for some time, so please excuse my tardiness in replying.
The clauses mentioned by Abdulkader may, effectively, be mutually exclusive. If 15% is payable against simple receipt, this completes the payment obligation of the first nominated bank. This is not the normal chain of events in a transferable credit. If the same first beneficiary makes a presentation, whether or not incorporating substituted documents, the bank will have no furhter payment obligation to him in this regard.
The second nominated bank will be aware that 15% has already been paid to the first bene and that no further payment is due to him. This may lead the second nominated bank to give instructions precluding substitution, as in the normal course of events, such substitution is allowed with the express purpose of allocating partial payment to the first bene.
HIDDEN DANGERS
It is customary for Arab countries to seek Chamber of Commerce certs. of origin. If the details on these do not match those on the invoice (e.g. substituted) they are likely to be rejected.
Laurence