ICC Digital Library Forum

Kim,

Just to take the debate forward. Let us first determine what a discrepancy is & what constitutes compliance? To my mind compliance is determined by the presentation of documents which meet the requirements of the individual credit(s) in their terms and conditions, together with the stipulations that are written into the articles of UCP that may apply to that document(s).
In other words non compliance with any of the terms & conditions of the credit & in the absence of a specific credit requirement with the relevant provisions of UCP would constitute a discrepancy.

By incorporating a stipulation whereby the issuer agrees to accept all violations of the terms & conditions of the credit (I am including the expiry date also as a term of the credit) except variation in the amount & description of goods, the issuer has amended the UCP by invoking the “unless otherwise stated” doctrine of UCP.
Therefore in my view a presentation that is in line with the credit requirement would meet the test of compliance according to the above criteria.


Regards
Khalid

Dear Khalid,

Do you have such example?

In any case - if it is the intention that it would be allowed for the beneficiary to present documents after date of expiry (which to me would be very awkward), then I would think that the L/C should be much more precise to that effect.
What if documents are presented 10 years after expiry – would you think it fair that the issuing bank would be obliged to pay as it took more than 7 days to retrieve the file (if possible) from the remote archive.

Best regards
Kim

Dear Kim,
Unfortunately this particular stipulation is quite common in Asia. I agree with you that the issuer would be exposing itself to a presentation even after 10 years. In fact for me it becomes an evergreen credit. I know it seems harsh, but any issuer who is stupid enough to open such a credit must bear the consequences.

But do you agree with my definition of compliance & discrepancy, also that the expiry date stipulation is a term of the credit.

Regards
Khalid

Dear Khalid,

Interesting! I do actually consider the expiry date a term of the credit.

The expiry date is the date on or before which credit compliant documents must be presented in order to obligate the confirming/issuing bank. After that point in time, the LC does not exist. Following this I do not consider the fact that the LC is expired a discrepancy. Therefore if the credit indicates that “all discrepancies acceptable except the amount & the description of goods” this will in my view not affect the expiry date. It will of course amend the UCP for the specific credit quite a lot – but I do still think that the expiry date stands.

I do not think that “all discrepancies acceptable except the amount & the description of goods” is similar to “agrees to accept all violations of the terms & conditions of the credit”.

Best regards
Kim

hi everyone.
as you know under collections a b/l cannot be consigned to a bank or issued at a bank's order unless the bank previously agreed with.
in case of an expired l/c when issuing bank's undertaking is no longer valid and the l/c is closed,
what happens when the b/l is issued and presented (as requested under the dead l/c) to the order of issuing bank ?
bogdan.

Dear Bogdan,

Good questions … which the UCP 500 does not answer – since the LC is dead, gone and expired

To me it is no difference from documents being refused: The B/L may also be consigned to the order of the issuing bank – but part of the refused documents at the disposal of the presenter.

Best regards
Kim