Hi Everyone,
LC States Expiry date as 060821 London. It also states available with Bank X in London by Negotiation.The LC is not confirmed by any Bank.
Beneficiary presents document to his Bankers , Bank Y in London who have received the documents well before the expiry date. Bank Y forwards the documents to Issuing Bank directly. Issuing Bank ( Not in U.K.) receives the documents on 25-Aug and refuses the document on the ground that LC has Expired .
1. Is Issuing Bank correct in stating the above ? They state that Place of Expiry and Presentaion is applicable only when presented to the Nominated Bank else they would be at Issuing Bank’s counters.
2. What happens if the Beneficiary sends documents to Issuing Bank directly and the same is received by the Issuing Bank on 24-Aug.
Is there any official ICC opinion on the same , Iam not able to find one.
regards
Srinivas
Place of Expiry and Nominated Bank
Place of Expiry and Nominated Bank
Hi.
1st, you don't mention when Bank Y sent the documents to issuing bank. In case docs have been sent after expiry date Bank Y should have certified that docs have been presented to their counters within expiry date.
However,the l/c clearly states that it is available with Bank X by negotiation (so it isn't a freely negotiable l/c).Consequently docs should have been presented by the bnf to bank X and not to bank Y
Expiry place it in't just London,but the counters of bank X too.
Bnf had 2 options in your case :
a) to present the docs to bank X
b) to present trhe docs directly to issuing bank under condition of being receipt by the issuing bank prior expiry date.
Regards,
Bogdan.
1st, you don't mention when Bank Y sent the documents to issuing bank. In case docs have been sent after expiry date Bank Y should have certified that docs have been presented to their counters within expiry date.
However,the l/c clearly states that it is available with Bank X by negotiation (so it isn't a freely negotiable l/c).Consequently docs should have been presented by the bnf to bank X and not to bank Y
Expiry place it in't just London,but the counters of bank X too.
Bnf had 2 options in your case :
a) to present the docs to bank X
b) to present trhe docs directly to issuing bank under condition of being receipt by the issuing bank prior expiry date.
Regards,
Bogdan.
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KimChristensen
- Posts: 404
- Joined: Fri Apr 05, 2019 5:21 pm
Place of Expiry and Nominated Bank
Dear Srinivas,
I do agree with Bogdan – and would add:
The fact that they “present” the documents to a bank not being a part to the credit (Bank Y) does not change the issuing banks undertaking. Neither does it (unfortunately in this case) constitute a presentation from an LC perspective. The way I see it, is that bank Y acts as an agent for the beneficiary – and bank Y / the beneficiary has elected to present documents to the issuing bank rather than to the nominated bank. So in this case the expiry date would be at the counters of the issuing bank.
I have been able to find a couple of opinions – none however being a perfect match – but here they are anyway:
R416
Which deals with documents presented to the issuing bank by another bank not being the nominated/confirming bank.
[Search for R416 in the Opinions section of DC-PRO]
TA519
On beneficiaries right to choose to present to either issuing or confirming bank – and the consequence of that.
[Search for TA519rev in the Opinions section of DC-PRO]
(Happy reading – they are both rather long
Best regards
Kim
[edited 8/31/2006 8:54:51 AM]
I do agree with Bogdan – and would add:
The fact that they “present” the documents to a bank not being a part to the credit (Bank Y) does not change the issuing banks undertaking. Neither does it (unfortunately in this case) constitute a presentation from an LC perspective. The way I see it, is that bank Y acts as an agent for the beneficiary – and bank Y / the beneficiary has elected to present documents to the issuing bank rather than to the nominated bank. So in this case the expiry date would be at the counters of the issuing bank.
I have been able to find a couple of opinions – none however being a perfect match – but here they are anyway:
R416
Which deals with documents presented to the issuing bank by another bank not being the nominated/confirming bank.
[Search for R416 in the Opinions section of DC-PRO]
TA519
On beneficiaries right to choose to present to either issuing or confirming bank – and the consequence of that.
[Search for TA519rev in the Opinions section of DC-PRO]
(Happy reading – they are both rather long
Best regards
Kim
[edited 8/31/2006 8:54:51 AM]
Place of Expiry and Nominated Bank
Dear all,
yes indeed, I agree that the presentation must be done within validity of the credit to the nominated or issuing bank.
With kind regards,
Pavel Andrle
yes indeed, I agree that the presentation must be done within validity of the credit to the nominated or issuing bank.
With kind regards,
Pavel Andrle
Place of Expiry and Nominated Bank
Dear Bogdan and Kim,
Thanks for the response. R416 and TA519 do indirectly state that Art. 10(b) (i) and Art 42(a) have to be interpreted in conjunction.
But we do come across LC’s (Mail LC’s to be more specific) from Middle East and Bangladesh, which states Available with Issuing Bank and Place of Expiry as Bene’s Country.
If docs are sent by Bene to Issuing Bank directly with a statement in their remittance schedule stating documents are couriered on or before the expiry date.
Can the Issuing Bank still state LC Expired (Assuming it is received a day or two after the Expiry date). It’s clear that the LC is not constructed properly in these cases, but I would like to know what ICC Commission would decide in such a scenario?What is your take on this.
Regards
Srinivas
Thanks for the response. R416 and TA519 do indirectly state that Art. 10(b) (i) and Art 42(a) have to be interpreted in conjunction.
But we do come across LC’s (Mail LC’s to be more specific) from Middle East and Bangladesh, which states Available with Issuing Bank and Place of Expiry as Bene’s Country.
If docs are sent by Bene to Issuing Bank directly with a statement in their remittance schedule stating documents are couriered on or before the expiry date.
Can the Issuing Bank still state LC Expired (Assuming it is received a day or two after the Expiry date). It’s clear that the LC is not constructed properly in these cases, but I would like to know what ICC Commission would decide in such a scenario?What is your take on this.
Regards
Srinivas
Place of Expiry and Nominated Bank
Although the question is not addressed to me, if a place for presentation is specified in a credit then that is quite simply to where documents must be presented prior to expiry unless instead presentation is made to the issuing bank prior to expiry. Therefore, despatch by the beneficiary of documents to the issuing bank prior to expiry is, of itself, insufficient. They must be received by the issuing bank prior to expiry as well.
Jeremy
[edited 9/1/2006 10:42:32 AM]
Jeremy
[edited 9/1/2006 10:42:32 AM]
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KimChristensen
- Posts: 404
- Joined: Fri Apr 05, 2019 5:21 pm
Place of Expiry and Nominated Bank
Dear Srinivas,
I think it is impossible to foresee an answer from the BC. This would most likely also require a bit more information.
The way you describe it where the beneficiary makes a direct presentation to the issuing bank – I would agree with Jeremy. That would most likely not be the case however. My guess is that there would be an “advising bank” (with or without nomination) in beneficiary’s country, and that the “presentation” would be made to that bank. So in that case you could argue that the beneficiary has done his job and presented documents the right place. In addition to that the LC is – as you mention – not properly constructed, which would also talk against the issuing bank.
So my conclusion is that I do not know – but like in any other case where you have poorly drafted LC the beneficiary simply face a bigger risk, so no matter what would eventually be the outcome of this (in courtroom or BC), such LC could easily be the basis for may problems … and delayed payment.
Best regards
Kim
I think it is impossible to foresee an answer from the BC. This would most likely also require a bit more information.
The way you describe it where the beneficiary makes a direct presentation to the issuing bank – I would agree with Jeremy. That would most likely not be the case however. My guess is that there would be an “advising bank” (with or without nomination) in beneficiary’s country, and that the “presentation” would be made to that bank. So in that case you could argue that the beneficiary has done his job and presented documents the right place. In addition to that the LC is – as you mention – not properly constructed, which would also talk against the issuing bank.
So my conclusion is that I do not know – but like in any other case where you have poorly drafted LC the beneficiary simply face a bigger risk, so no matter what would eventually be the outcome of this (in courtroom or BC), such LC could easily be the basis for may problems … and delayed payment.
Best regards
Kim