ICC Digital Library Forum

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

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

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

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

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

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