ICC Digital Library Forum

Advising Bank (AB) advises an unconfirmed LC to Beneficiary, which is available with any bank in Bene country. Please advise your views on the following scenario :

Day 1 - AB receives amendment requesting them to add their confirmation.
Day 2 - AB advises amendment by post and adds their confirmation.
AB receives presentation from Bene.
Day 3 - AB checks docs against LC.
Day 4 - Bene receives notification from AB of amendment plus (a) docs in order, payment made deducting confirmation charge (b) notice of discrepancies and details of confirmation charges pending.
Day 5 - Bene rejects the amendment and requests AB to return docs (a) disputing confirmation charge (b) disputing confirmation charge and discrepancies. Bene states an intention to present to another bank as permitted by the LC.

Question 1
Does the LC checker in AB include or exclude the amendment when checking docs ? On day 3, no information has been received from Bene accepting amendment or not. It is not apparent from docs whether or not amendment is incorporated in docs presented.
Question 2
If amendment is included in the checking of docs, is AB entitled to charge its confirmation fee (a) if docs in compliance (b) if docs discrepant ?
Question 3
What is the position of AB if Bene refuses amendment and therefore disputes confirmation charges (a) if docs in compliance (b) if discrepancies are claimed by AB, but disputed by Bene ?
Question 4
Should AB return docs to Bene, at their request, (a) if docs in order (may or may not have been sent to Issuing Bank) (b) if docs discrepant - and in each case are they entitled to their confirmation charges ?

Laurence

Laurence,

1. Assuming request to add conf rec’d from IB.

2. With respect (!) I do not see your questions, at least 1- 2, relevant given the non-impact of the amendment on dox compliance. Quite simply the benef is at liberty to refuse any amendment until they expressly or impliedly –by operation of sub-Art14d(iii)- accept it. Thus the benef is quite entitled to refuse the amendment in the circumstances you have outlined and certainly did not impliedly accept it per sub-Art14d(iii).

Thus benef entitled (a) to refuse amendment and to pay conf charge (b) to have dox back.

These are –of course- my personal views without liability etc.

Jeremy

[edited 3/29/2005 9:06:30 PM]

Jeremy,

all of these questions hinge around the subject of confirmation charges and whether such charges are valid in the given circumstances. If a document checker checks docs in the knowledge that his bank has confirmed the LC, I suspect that he/she will, even if subconsciously, give it a more thorough check than otherwise. We have seen examples where some advising banks don't even check unconfirmed LC's.
A document checker in the example given might feel justified in charging a confirmation fee, if docs checked were done in the knowledge that his/her bank had confirmed the LC, even though the Bene had not agreed to this.
I don't understand why you say that a Bene is entitled to refuse amendment and pay confirmation charge. Surely this is contradictory ?

Has Homer nodded ?

Laurence

Laurence,

I do not see that the state of mind of the document examiner -based on his / her bank’s potential risk- has any bearing on the matter. Documents are either complying or they are not to the same objective standard and whether or not the credit is confirmed has no bearing on this. (I am not sure of the relevance of a non-confiming nomniated bank not examining documents. This they are entitled (not) to do in principle. Here the nominated bank has -I understand- examined the documents.)

Also, what the document examiner feels ‘justified’ in doing is neither here nor there. What matters is what they are entitled to do.

Overall, I do not see any grounds for arguing the beneficiary has either expressly or impliedly (per sub-Art 14d(iii)) accepted the amendment, particularly as the beneficiary was presumably not even aware of the amendment at the time it presented documents (based on your timings). If they have not accepted the amendment at the time of presentation logically they can subsequently refuse it.

Lastly I do not say that the benef is entitled to refuse the amendment but must pay the confirmation charge. I said ‘benef entitled (a) to refuse amendment and [i.e. to refuse] to pay conf charge’. In other words ‘to refuse’ applied to both parts of ‘section’ (a). However, I can understand how this construction caused confusion.

These are –of course- my personal views without liability etc.

Yours helpfully,

Jeremy

[edited 3/30/2005 1:55:41 PM]

Jeremy,

thanks for your help. I wanted to explore if others felt the same as me as regards charging for confirmation without agreement of the Bene and clearly we think alike on this. However, by experience I know that this is not a universally agreed viewpoint. What I don't know is how the LC world is split on this. Have I encountered the odd exceptional quirks, or is this practice more common ?

Laurence

A common area of confusion regarding amendments I find is that sub-Art 14(d)(iii) can only apply if the presentation is WHOLLY complying if the amendment is taken into account AND would otherwise be discrepant if the amendment was not taken into account. Many documentary credit ‘operatives’ quite wrongly think that provided the benef seems to have taken account of the amendment sub-Art 14(d)(iii) applies even though the documents are still discrepant.
[edited 3/30/2005 3:23:44 PM]