Unclear documentary instruction

GerhardH · Post by **GerhardH** » Tue Apr 15, 2008 1:00 am

Hello all,

we found the following clause within a letter of credit that says:

10 pct of the total ordder value, i.e. euro xx.xxx,xx shall be payable at sight against beneficiaries presentation of:
1. one(1) original commercial invoice
2. one(1) copy of certification of the final acceptance test OR
3. five(5) months after FCA delivery.

As I understand that clause the opening bank gives instruction to pay against presentation of invoice and final acceptance test certificate OR against presentation of invoice only, but payable at the latest 5 months after delivery.

Is this clause clear structured or may you see any problems with it ?

Thanks for your suggestions.

Best regards
GerhardH

LisaVC · Post by **LisaVC** » Tue Apr 15, 2008 1:00 am

The instruction does NOT say "whichever occurs first". You are simply making that assumption.

AsifMahmoodButt · Post by **AsifMahmoodButt** » Wed Apr 16, 2008 1:00 am

GerhardH,
It does seem that if both the invoice & final acceptance certificate (FAC) are presented on or before the expiry payment would be made at sight, but in the absence of the FAC payment would be deferred for 5 months after delivery. But it would be wise to clear this understanding with the issue bank in order to avoid any last minute surprises.
Regards,Khalid

GerhardH · Post by **GerhardH** » Wed Apr 16, 2008 1:00 am

So lets assume that there is no chance to clarify the instruction, so is it wrong in general or would a presentation of an invoice only after the mentioned period discrepant ? In case it would be discrepant what would the argumentation be from the opening bank to refuse the presentation ?
Thank you very much for your suggestion.

Best regards
GerhardH

DanielD · Post by **DanielD** » Wed Apr 16, 2008 1:00 am

Gerhard,
Guesswork and common sense makes me possible to conclude that the credit is payable against docs. 1 and 2 (by the way doc. 2 is not controlled by beneficiary, arrival contract?) presented within the validity. If doc. 2 is not presented, doc. 1 will be paid according to 3. Now I wonder if I would advise a credit issued in that manner. It would depend on the amount, I suppose.
Daniel

AsifMahmoodButt · Post by **AsifMahmoodButt** » Thu Apr 17, 2008 1:00 am

Any credit stipulation that is not controlled by the bene in my view is against the spirit of the DC. As Daniel said, guesswork & common sense makes us believe that we have made the correct interpretations, but there is enough ambiguity for my comfort to take on any exposure.
Regards, Khalid