Tolerance

[Yahya]

We opened an L/C allowing +/- 10 tolerance in connection with the amount of the credit and the quantity.
The details ;
L/C amount : EUR 60.000
Quantity : 20.000 kgs (No unit price stated)
And we were presented a commercial invoice with the following details:

The amount of invoice: EUR 58.000
Quantity : 21.000 Kgs

In this case , As the amount of invoice is decreasing, on the contrary, the quantity of the goods is increasing,While the quantity and amount differences are in the allowed tolerance,may the doc be acceptable ?

Thanks in advance,
Yahya,

[NigelHolt]

Yahya,

I’m a great believer in ‘reciprocity’ and I think I have responded to a number of your queries recently. Given this, I’d be more than happy to post a reply to your latest query provided you were kind enough to post a reply to my (first) posting under ‘IN YOUR FACE (OR 'FACE/OFF'?)’. I’d be most interested to hear your views.

[LeoCullen]

In my opinion, as there is a +/- 10% tolerance for both the the amount (monetary) that can be drawn under the LC and the quantity of goods that can be indicated on the invoice, and these tolerances have been adhered to, there is no discrepancy.

[NigelHolt]

Yahya,

Thanks for your ‘on the face of it’ thoughts. I shall read them with interest shortly.

Personally, without liability / responsibility:

The D/C amount is: EUR 60.000 +/- 10%
The quantity is: 21,000 kg +/- 10%
The D/C does not quote a ‘unit’ (= weight) price.

Thus the credit authorises the beneficiary to:
1. Draw a minimum of EUR54,000 and a maximum of EUR66,000;
2. Ship a minimum of 18,900 kg and a maximum of 23,1000 kg;
and draw and ship any combination possible in between these figures, e.g. draw EUR66,000 and ship 18,900 kg or draw EUR54,000 and ship 23,1000 kg. Consequently, a drawing of EUR 58,000 in respect of a shipment of 21,000 kg is, of itself, compliant.

Incidentally, if part shipments are allowed, the beneficiary can ship up to another 2,100 kgs and draw up to another EUR6,000.

[larryBacon]

I agree that the amounts in the invoice are within agreed limits.

Laurence

[asamaha]

Idem. But why the bank accepted to issue such a L/C covering one type of goods without a U/P(whether fixed or variable within limits) ?

Regards
Antoine

[Yahya]

I didn't say that the goods are only one type,
If you always require applicants to give an U/P for each type of goods and you issue the credits putting them wholly in your openings.and if you refuse to issue l/c(s) without these details,good for you !..
pls accept my apology,I don't want to be rude,but pls consider that you cannot provide all the details regarding the goods and issue l/c (s) with all these details.

I agree with all the comments above and the presentation is compliant.
The invoice meets the requirement of the Credit and sub article 39a of UCP.
But I would like to draw your attention the combinations which reflect the situation righlty, made by Jeremy

The following presentations must be considered as compliant within the terms of the credit and UCP

1 - The quantity : 18.000 kgs
The inv.amt : 66.000 Eur

2- The quantity : 22.000 kgs
The inv.amt : 54.000 Eur

Which combination is chosen by the applicant or beneficiary ?
Dou you think that the applicant make these assumptions allowing the tolerance ?
Benef needn't to concern, because both of the presentation would be accepted because it would be within limits allowed in the credit.
Is there anything to prevent the benef to determine a variable cost and quantity which he'd like --- but within limits allowed the Credit )---
Yahya ,