I have receieved the following question and would be interested to hear your opinions on same:
"As a beneficiary of a transferable LC can you clarify the following in respect of a situation we face;
We received a transferred credit from transferring bank for full amount of original credit issued. The transferring bank was a nominated transferring bank but it had not confirmed the Credit.
We drew up documents but the transferring bank advised us that as our documents were for full amount of Credit as originally issued and transferred we could proceed with presenting documents directly to Issuing Bank and bypass the transferring bank.
Then we (second beneficiary) presented documents direct to the Issuing Bank and issued our invoice with our name as required in transferred credit but in this circumstance we made the invoice out in the name of the applicant of the original credit and not in the name of First Beneficiary as per transferred LC.
We presented documents to the Issuing Bank directly but they have notified us of one discrepancy as follows:
Invoice made out in name of applicant of original credit and not in name of First Beneficiary as required in Credit as Transferred.
Is this a discrepancy?"
[edited 1/24/03 12:36:40 PM]
second beneficiary's invoice
second beneficiary's invoice
Leo,
If you ring me I'll give you my views.
Jeremy
If you ring me I'll give you my views.
Jeremy
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JudithAutié
- Posts: 195
- Joined: Fri Apr 05, 2019 5:20 pm
second beneficiary's invoice
Unfair reply -- why not share them with us all ??
Now we are jealous
Judith
Now we are jealous
Judith
second beneficiary's invoice
Without liability or responsibility:
This is a very interesting question.
Article 48a. states:
A transferable credit is a credit under which the benef (first benef) may request the bank authorised to pay, incure a deferred payment undertaking, accept or negotiate (the "transferring bank"), or in the case of a freely negotiable credit, the bank specifically authorized in the credit as a transferring bank, to make the credit available in whole or in part to one or more other beneficiary(ies)"
First of all, a transferring bank should not transfer a credit unless it is made available with them (ICC Opinion R246) and therefore the second beneficiary's documents should be presented to the transferring bank even if the credit has been transferred in its entirety. The transferring bank should make a notation on their remittance schedule to the issuing bank that the credit was transferred in its entirety.
Nevertheless, the risk that the second beneficiary may choose to bypass the first beneficiary and present their documents directly to the issuing bank is always present. In your case it appears that the transferring bank instructed the second beneficiary to present his documents directly to the issuing bank most likely because the credit was transferred in its entirety and I assume, the transfer did not bear their confirmation.
The issuing bank, upon receipt of documents directly from the second beneficiary {or a bank not authorized to effect the transfer) would customarily want to protect the first beneficiary's (and their own) interests. This is probably what they were attempting to do by calling the "discrepancy" - invoice made out to the applicant instead of the first benef.
A simple check with the nominated transferring bank would have cleared that up and avoided the naming of such a "discrepancy". (ICC Opinion R488).
In conclusion: whenever there is a transfer, article 48i states that the first benef may replace documents on first demand and should he not, the second beneficiary's documents are valid against the credit. If the credit was transferred in full, then the applicant would also be named as the first beneficiary in the transfer and it follows that the invoice would be made out in the name of the "first beneficiary".
The issuing bank's discomfort with having received the documents direct from the second beneficiary does not validate their naming of the discrepancy. Contact with the nominated transferring bank could have cleared up the matter.
So NO, I do not believe the named discrepancy is valid for all the reasons stated above.
This is a very interesting question.
Article 48a. states:
A transferable credit is a credit under which the benef (first benef) may request the bank authorised to pay, incure a deferred payment undertaking, accept or negotiate (the "transferring bank"), or in the case of a freely negotiable credit, the bank specifically authorized in the credit as a transferring bank, to make the credit available in whole or in part to one or more other beneficiary(ies)"
First of all, a transferring bank should not transfer a credit unless it is made available with them (ICC Opinion R246) and therefore the second beneficiary's documents should be presented to the transferring bank even if the credit has been transferred in its entirety. The transferring bank should make a notation on their remittance schedule to the issuing bank that the credit was transferred in its entirety.
Nevertheless, the risk that the second beneficiary may choose to bypass the first beneficiary and present their documents directly to the issuing bank is always present. In your case it appears that the transferring bank instructed the second beneficiary to present his documents directly to the issuing bank most likely because the credit was transferred in its entirety and I assume, the transfer did not bear their confirmation.
The issuing bank, upon receipt of documents directly from the second beneficiary {or a bank not authorized to effect the transfer) would customarily want to protect the first beneficiary's (and their own) interests. This is probably what they were attempting to do by calling the "discrepancy" - invoice made out to the applicant instead of the first benef.
A simple check with the nominated transferring bank would have cleared that up and avoided the naming of such a "discrepancy". (ICC Opinion R488).
In conclusion: whenever there is a transfer, article 48i states that the first benef may replace documents on first demand and should he not, the second beneficiary's documents are valid against the credit. If the credit was transferred in full, then the applicant would also be named as the first beneficiary in the transfer and it follows that the invoice would be made out in the name of the "first beneficiary".
The issuing bank's discomfort with having received the documents direct from the second beneficiary does not validate their naming of the discrepancy. Contact with the nominated transferring bank could have cleared up the matter.
So NO, I do not believe the named discrepancy is valid for all the reasons stated above.
second beneficiary's invoice
Judith,
I was very busy at the time and didn't have time to 'bash out' a reply, particuarly one that I would be confident was technically correct.
Jeremy
I was very busy at the time and didn't have time to 'bash out' a reply, particuarly one that I would be confident was technically correct.
Jeremy
second beneficiary's invoice
Dear Leo and all others,
you do not have to call me to know my views:
It is not a discrepancy. The invoice is made by the beneficiary (second beneficiary) and is made out in the name of the Applicant.
The second beneficiary may bypass the transferring bank. However the issuing bank had better contact the nominated – transferring bank to verify that no other presentation was made to it.
In „normal“ transfer of L/C scenario the second beneficiary would not know the name of the Applicant of the original credit. In the particular situation mentioned above the second beneficiary was instructed to bypass the transferring bank.
Pavel Andrle
you do not have to call me to know my views:
It is not a discrepancy. The invoice is made by the beneficiary (second beneficiary) and is made out in the name of the Applicant.
The second beneficiary may bypass the transferring bank. However the issuing bank had better contact the nominated – transferring bank to verify that no other presentation was made to it.
In „normal“ transfer of L/C scenario the second beneficiary would not know the name of the Applicant of the original credit. In the particular situation mentioned above the second beneficiary was instructed to bypass the transferring bank.
Pavel Andrle
second beneficiary's invoice
In the context of a Documentary Credit being a 'definite undertaking' of the Issuing Bank and your invoice (2nd beneficiary) being made out in name of applicant there is no discprepancy.
Perhaps the Issuing Bank did not expect to see the invoice made out to applicant of transferrable credit as originally issued and dare I say 'took fright' and felt they must issue a notice of refusal at that time.
There is no discrepancy based on the information provided and I am confident the issuing bank will not maintain that position.
Regards
Vin
[edited 2/19/03 1:25:31 PM]
Perhaps the Issuing Bank did not expect to see the invoice made out to applicant of transferrable credit as originally issued and dare I say 'took fright' and felt they must issue a notice of refusal at that time.
There is no discrepancy based on the information provided and I am confident the issuing bank will not maintain that position.
Regards
Vin
[edited 2/19/03 1:25:31 PM]