I have a query to this ISBP para 64 and like to have some thoughts from the floor.
According to this para, invoice may also show a deduction covering advance payment, discount etc not stated in the credit.
a) Should this para apply together with UCP500 Article 39c?
b) If LC prohibts partial shipment, with stated quantity and unit price mentioned, would we allow invoice showing a discount more than 5%? If yes, how to interpret Article 39c then?
c) If partial shipment allow and unit price no change, do we allow any perctange of deduction in the invoice?
d) If the invoice showing value same as LC amount, and whereas beneficiary present a credit note which is not called for by the LC, and the draft amount is the net value which exceeds 5% as in Art 39c, is this a complied drawing?
Is there any ICC Opinion regarding this point? So far I could only locate R367 which I could not get an answer when link with ISBP para 64
Para 64
Para 64
Raymond,
There is another opinion about an advance payment (R292) which concludes that "reference to this prior payment should be reflected in the credit terms to avoid any unnecessary problems at the time of presentation". Obviously, it should be the same with the discounts. 39 C does not refer to the amount of invoice but to the amount of the drawing. I think that this kind of issues (unless provided for in the credit) is guesswork.
Daniel
There is another opinion about an advance payment (R292) which concludes that "reference to this prior payment should be reflected in the credit terms to avoid any unnecessary problems at the time of presentation". Obviously, it should be the same with the discounts. 39 C does not refer to the amount of invoice but to the amount of the drawing. I think that this kind of issues (unless provided for in the credit) is guesswork.
Daniel
Para 64
Thank you Daniel for your sharing. As we do receive a drawing for which the quantity and the goods price same as the LC, whereas the invoice additionally show a deduction of discount which exceeds the 5% tolerance of Art 39c. As beneficiary drew the net amount, we are arguing whether we should treat it as a discrepancy "short drawn" or we treat it as a complied presentation when applying ISBP para 64 without concerning the percentage of deduction which the LC had not mentioned.
Para 64
Dear Raymond,
As 500's subart.39c stipulates "...provided that if the Credit stipulates the quantity of the goods,such quantity of goods is shipped in full,andif the Credit stipulates a unit price,such price is not reduced.", as long as the full quantity has been delivered and invoiced and the unit price is as per l/c, the docs aren't discrepant. I presume the l/c doesn't allow partial shipments. Or in your case you don't have a partial shipment.
I think a problem would have been raised only if l/c stipulates that partial drawings aren't allowed.
Regards,
Bogdan
As 500's subart.39c stipulates "...provided that if the Credit stipulates the quantity of the goods,such quantity of goods is shipped in full,andif the Credit stipulates a unit price,such price is not reduced.", as long as the full quantity has been delivered and invoiced and the unit price is as per l/c, the docs aren't discrepant. I presume the l/c doesn't allow partial shipments. Or in your case you don't have a partial shipment.
I think a problem would have been raised only if l/c stipulates that partial drawings aren't allowed.
Regards,
Bogdan
Para 64
Bogdan, Raymond,
In the ICC course about UCP 600 they say that "there is often confusion in the application and intent of art. 30C" (which is actually 500 39C). I fully agree (see my previous posting).
They give an example approx. like this
Amount of credit 10.000
covering 9 items at U.P. 1.000.--
freight amount 1.000.--
Invoice presented:
9 items at 1.000.-- 9.000.-- freight amount 750.--
Drawing 9.750.-- OK as "overall drawing is less than 5% below the amount of the credit". I conclude from this that, in the Raymond' case (full shipment), a drawing 5% over the amount of the credit is discrepant.
Daniel
In the ICC course about UCP 600 they say that "there is often confusion in the application and intent of art. 30C" (which is actually 500 39C). I fully agree (see my previous posting).
They give an example approx. like this
Amount of credit 10.000
covering 9 items at U.P. 1.000.--
freight amount 1.000.--
Invoice presented:
9 items at 1.000.-- 9.000.-- freight amount 750.--
Drawing 9.750.-- OK as "overall drawing is less than 5% below the amount of the credit". I conclude from this that, in the Raymond' case (full shipment), a drawing 5% over the amount of the credit is discrepant.
Daniel
Para 64
Thank you Bogdan and Daniel,
Our case is as follows:
Amount of credit: $10,000
covering 10 items @ $1
Partial shipment not allowed.
Invoice presented as:
10 items @ $1 = $10,000
Less: Claim under debit note no. 123 for $3,000
Net invoice amount: $7,000
We quote a discrepancy : "Short drawn - invoice showing a deduction not called for by LC". Why we call a discrepancy is because Article 39C allows a tolerance of 5% less in the amount of the drawing whereas in this case the net drawing amount is 30% less. We have opposite opinion from team members that we should apply ISBP para 64 ".... invoice may also show a deduction covering advance payment, discount etc not stated in the credit". Therefore the drawing is a complied one.
I like to have opinions from the floor how you would classify this presentation. Should para 64 be linked with Art 39c in this case?
Regards
Raymond
Our case is as follows:
Amount of credit: $10,000
covering 10 items @ $1
Partial shipment not allowed.
Invoice presented as:
10 items @ $1 = $10,000
Less: Claim under debit note no. 123 for $3,000
Net invoice amount: $7,000
We quote a discrepancy : "Short drawn - invoice showing a deduction not called for by LC". Why we call a discrepancy is because Article 39C allows a tolerance of 5% less in the amount of the drawing whereas in this case the net drawing amount is 30% less. We have opposite opinion from team members that we should apply ISBP para 64 ".... invoice may also show a deduction covering advance payment, discount etc not stated in the credit". Therefore the drawing is a complied one.
I like to have opinions from the floor how you would classify this presentation. Should para 64 be linked with Art 39c in this case?
Regards
Raymond
Para 64
Raymond,
In my view the documents comply. Sub art 39(c) is not applicable here, this sub article applies to situations where the amount of the credit has been rounded up for commercial reasons, or where the terms are CFR or CIF and the price quotation is based on a hypothetical quotation on the insurance premium and/or the freight charges. In such cases the beneficiary at the time of presentation of the documents, invoices for the actual insurance and freight costs, which may be less than those quoted originally in the purchase order. Therefore, a 5% tolerance is allowed in the beneficiary's invoice, always provided that the quantity of the goods, if stipulated in the credit, is shipped in full, and a unit price, if stipulated in the credit, is not reduced.
Regards, Khalid
In my view the documents comply. Sub art 39(c) is not applicable here, this sub article applies to situations where the amount of the credit has been rounded up for commercial reasons, or where the terms are CFR or CIF and the price quotation is based on a hypothetical quotation on the insurance premium and/or the freight charges. In such cases the beneficiary at the time of presentation of the documents, invoices for the actual insurance and freight costs, which may be less than those quoted originally in the purchase order. Therefore, a 5% tolerance is allowed in the beneficiary's invoice, always provided that the quantity of the goods, if stipulated in the credit, is shipped in full, and a unit price, if stipulated in the credit, is not reduced.
Regards, Khalid
Para 64
Khalid,
I agree the invoice complies but there are two things: invoice amounts and drawings. 39c deals with drawings. So the drawing should not be less than 9.500.--
Would you agree?
Daniel
I agree the invoice complies but there are two things: invoice amounts and drawings. 39c deals with drawings. So the drawing should not be less than 9.500.--
Would you agree?
Daniel
Para 64
Daniel,
I have to differ with you on this one. article 39 on the whole deals with allowances in credit amount, quantity & unit price & not with drawings. I feel that art 37(b) would be more relevant to drawings. Although I believe that an invoice showing a deduction of 'discount' being granted should not be a reason, in itself, to reject the documents.
Regards, Khalid
I have to differ with you on this one. article 39 on the whole deals with allowances in credit amount, quantity & unit price & not with drawings. I feel that art 37(b) would be more relevant to drawings. Although I believe that an invoice showing a deduction of 'discount' being granted should not be a reason, in itself, to reject the documents.
Regards, Khalid