ICC Digital Library Forum

Letter of Credit is expired. Unused balance under L/C makes some amount or makes zero. Applicant requests us to effect amendment of L/C and prolong (increase amount etc.) it, although L/C is already expired. Is it possible to effect amendments when L/C has been already expired and undertaking under L/C of issuing Bank is over?

It is not an uncommon practice to reinstate an expired l/c although some banks would prefer to issue a new credit. It would probably depend upon length of time between expiry date and reinstatement request.

In France a credit has ceased to have a legal existance one minute after midnight of it's expiry date. Consequently any "extension" is in fact considered as being the reissue of a new credit, albeit with the same references. This is most important if the credit is collateralized in any manner -- by a cash deposit, guarantee or whatever. The legal formalities pertaining to the collateral must be made again or the bank may lose its protection of the collateral.

Check on that in your own legal requirements to be on the safe side.

Regards
Judith

As Judith intimated, it may not be possible to give a single answer to this question. Different countries pose different problems.

What at first appears to be a simple extension to the credit, may need to take account of local Central Bank restrictions on hard currency movements, time limits on import licences and whether extending the LC has risk implications if the collateral lien ceases to be valid or has lapsed.

Laurence