Hi Everyone,
We currently have an Export Standby Letter of Credit that had an Expiry Date of XX with a clause that states documentation must be received by the Issuing Bank no later than XX+21 days.
We have subsequently received an amendment on XXXX extending the Expiry Date until YY with latest receipt of documents by the Issuing Bank YY+21.
A question has been posed to us regarding the extending of the Expiry Date for a Standby Letter of Credit after the original Expiry Date has lapsed.
While we believe the Expiry Date of a Letter of Credit can be extended after its original Expiry Date has passed, we have been informed by someone within the organisation that they do not believe this to be the case.
We have reviewed UCP500, ISBP, ISP98 and DC Pro articles and can not find any references to support either argument.
Your Comments would be most appreciated.
Kind Regards
David
Dear Judith, Jeremy and Roland,
Thanyou all for your comments.
Many Thanks
David
[edited 9/12/2006 12:57:58 AM]
[edited 9/14/2006 6:44:52 AM: To Thank people for their comments.]
Expiry of a Standby L/C
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DavidConyers
- Posts: 2
- Joined: Fri Apr 05, 2019 5:17 pm
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RolandLeupi
- Posts: 115
- Joined: Fri Apr 05, 2019 5:26 pm
Expiry of a Standby L/C
We have some guarantees issued by Italian banks which indicate the validity in this form also with the add + 15 days mailing time. We have been learned that the documents have to be presented within the validity at our counters but they allow 15 days mailing time for receiving the documents at their counters.
It is however very rare and we do not use this practice.
Roland
It is however very rare and we do not use this practice.
Roland
Expiry of a Standby L/C
David,
Firstly, I would refuse to act as nominated or confirming bank where a standby laid down a time limit by which a presentation had to reach the issuing bank, after presentation to the nominated bank, given one could pay a complying presentation and then the presentation be delayed / lost in transit between nominated bank and issuing bank. I would insist on my rights against the issuing bank not being limited as to time, in line with the UCP or ISP98.
Secondly, the question of whether a documentary or standby letter of credit or demand guarantee (collectively a ‘documentary undertaking’) can be ‘extended’ after it has ceased to exist must be a question of the applicable law. I have heard it said, by lawyers, that it is questionable if an expired documentary undertaking can simply be extended under English law, for example. As a result there are those that state that expired documentary undertakings they have issued are ‘re-instated’ and the date ‘XXXX’ is deleted and the date ‘YYYY’ substituted therefor.
Regards, Jeremy
[edited 9/12/2006 10:05:51 AM]
Firstly, I would refuse to act as nominated or confirming bank where a standby laid down a time limit by which a presentation had to reach the issuing bank, after presentation to the nominated bank, given one could pay a complying presentation and then the presentation be delayed / lost in transit between nominated bank and issuing bank. I would insist on my rights against the issuing bank not being limited as to time, in line with the UCP or ISP98.
Secondly, the question of whether a documentary or standby letter of credit or demand guarantee (collectively a ‘documentary undertaking’) can be ‘extended’ after it has ceased to exist must be a question of the applicable law. I have heard it said, by lawyers, that it is questionable if an expired documentary undertaking can simply be extended under English law, for example. As a result there are those that state that expired documentary undertakings they have issued are ‘re-instated’ and the date ‘XXXX’ is deleted and the date ‘YYYY’ substituted therefor.
Regards, Jeremy
[edited 9/12/2006 10:05:51 AM]
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JudithAutié
- Posts: 195
- Joined: Fri Apr 05, 2019 5:20 pm
Expiry of a Standby L/C
Somehow my long reply got lost in transit (do I see a warning here?) so I'll try to repeat.
David,
In fact I have seen many such standbys. They are hangovers from issuing trade guarantees, such as bid bonds, performance bonds etc... mostly with Arab countries, particularly Libya. (note that in Libya, the standby's are issued in favour of the Libyan bank, who then reissues another one in favour of the beneficiary, just like an indirect guarantee -- not saying I approuve, but that's how they work).
The basic idea behind the mailing time is to give the applicant up to the last date to perform, and then give the beneficiary XX days to present his documents under the standby if the "guarantee" is to be called.
As a beneficiary of such a standby, I would make sure that the place for presentation is my local advising/confirming bank. (Of course as an issuing bank I would try to have presentation at my counters -- it all depends on which side you are
)
If presentation is at the counters of the advising bank, I would certainly consider that I am protected in the case of lost/delayed documents by the Opinion already given under UCP 500, while awaiting adoption of UCP600 for any new standby.
Jeremy, The same thing is true in France. Only in the Bible can a dead body be revived. An expired credit no longer has any legal existance and must be either "reinstated" or "reissued" with same terms and conditions except new expiry date.
best regards
Judith
David,
In fact I have seen many such standbys. They are hangovers from issuing trade guarantees, such as bid bonds, performance bonds etc... mostly with Arab countries, particularly Libya. (note that in Libya, the standby's are issued in favour of the Libyan bank, who then reissues another one in favour of the beneficiary, just like an indirect guarantee -- not saying I approuve, but that's how they work).
The basic idea behind the mailing time is to give the applicant up to the last date to perform, and then give the beneficiary XX days to present his documents under the standby if the "guarantee" is to be called.
As a beneficiary of such a standby, I would make sure that the place for presentation is my local advising/confirming bank. (Of course as an issuing bank I would try to have presentation at my counters -- it all depends on which side you are
)If presentation is at the counters of the advising bank, I would certainly consider that I am protected in the case of lost/delayed documents by the Opinion already given under UCP 500, while awaiting adoption of UCP600 for any new standby.
Jeremy, The same thing is true in France. Only in the Bible can a dead body be revived. An expired credit no longer has any legal existance and must be either "reinstated" or "reissued" with same terms and conditions except new expiry date.
best regards
Judith
Expiry of a Standby L/C
Judith,
I have no wish to enter into a long running discussion with you, but if an issuing bank expressly states -in a standby, presumably available by sight payment- it must receive documents by a specific time then I believe it would be unwise for a nominated to rely on Unpublished Official Opinion TA566rev. I could well see a court distinguishing this from the typical "Upon receipt of full set of documents in conformity with the L/C terms, we will effect payment as per your instruction" that is usually found in credits available by negotiation and taking the view that the nominated bank had accepted the risk of delay / loss.
Regards, Jeremy
I have no wish to enter into a long running discussion with you, but if an issuing bank expressly states -in a standby, presumably available by sight payment- it must receive documents by a specific time then I believe it would be unwise for a nominated to rely on Unpublished Official Opinion TA566rev. I could well see a court distinguishing this from the typical "Upon receipt of full set of documents in conformity with the L/C terms, we will effect payment as per your instruction" that is usually found in credits available by negotiation and taking the view that the nominated bank had accepted the risk of delay / loss.
Regards, Jeremy