INVOICE SHOWING A DISCOUNT IS ACCEPTABLE?
INVOICE SHOWING A DISCOUNT IS ACCEPTABLE?
LC IS SILENT ABOUT THE DISCOUNT.INVOICE DRAWN EXCEEDING THE LC VALUE BUT DISCOUNT GIVEN MAKES THE AMOUNT DRAWING WITHIN THE LC VALUE.IS THIS KIND OF INVOICES ACCEPTABLE?
INVOICE SHOWING A DISCOUNT IS ACCEPTABLE?
This issue would seem to be covered by Sub-Article 37b of UCP 500, which reads:
b. Unless otherwise stipulated in the Credit, banks may refuse commercial invoices issued for amounts in excess of the amount permitted by the Credit. Nevertheless, if a bank authorised to pay, incur a deferred payment undertaking, accept Draft(s), or negotiate under a Credit accepts such invoices, its decision will be binding upon all parties, provided that such bank has not paid, incurred a deferred payment undertaking, accepted Draft(s) or negotiated for an amount in excess of that permitted by the Credit.
This provision of UCP seems to be often misunderstood or overlooked.
b. Unless otherwise stipulated in the Credit, banks may refuse commercial invoices issued for amounts in excess of the amount permitted by the Credit. Nevertheless, if a bank authorised to pay, incur a deferred payment undertaking, accept Draft(s), or negotiate under a Credit accepts such invoices, its decision will be binding upon all parties, provided that such bank has not paid, incurred a deferred payment undertaking, accepted Draft(s) or negotiated for an amount in excess of that permitted by the Credit.
This provision of UCP seems to be often misunderstood or overlooked.
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JudithAutié
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INVOICE SHOWING A DISCOUNT IS ACCEPTABLE?
If the discount arose in order to comply to the facial value of the credit, you have to be careful about overshipment in quantity of the goods, (if the quantity is given in the credit). Now the ISPB clearly states "the invoice may also evidence a deduction covering advance payment, discount etc., not stated in the credit", so there doesn't seem to be a problem any longer for credit notes, as long as the quantity and unit price (if stated) are respected.
INVOICE SHOWING A DISCOUNT IS ACCEPTABLE?
In our risk management workshops, we often remind the traders to make sure that in case of discount or pre-payment, where the drawing is only part of the total value of the goods, which are however shipped in full, the insurance cover must be at least 110% of the gross value, which may exceed the invoiced value.
Now ISBP supports this approach and does not deem this “over-insured” as a discrepancy. But if you don’t do it, it would be a discrepancy, unless the data content of the required documents can ease such “under-insured” worries.
[edited 12/3/02 5:23:04 PM by sean (Moderator)]
Now ISBP supports this approach and does not deem this “over-insured” as a discrepancy. But if you don’t do it, it would be a discrepancy, unless the data content of the required documents can ease such “under-insured” worries.
[edited 12/3/02 5:23:04 PM by sean (Moderator)]
INVOICE SHOWING A DISCOUNT IS ACCEPTABLE?
ISBP is now clear on the issue as correctly stated above. In my view the sub-art. 37(b) does not apply here. If the amount of the invoice (after discount) is as per L/C terms and conditions, that is it. The fact that the gross amount is higher, is of no importance here.
Best Regards,
Pavel Andrle
Best Regards,
Pavel Andrle