ICC Digital Library Forum

Shipping documents were presented by the negotiating bank. Three full sets of documents covered under one draft. One of the sets had a shipping guarantee issued for the release of goods. The other two sets were not covered by the guarantee. The documents were presented with discrepancies. The applicant refused to accept the documents as they were discrepant. Since there was only one draft presented is the applicant responsible for the full amount of the drawing (since one set was covered by the guarantee) or are they only responsible to pay on the invoice covered by the guarantee. If the applicant is only responsible for the set covered by the guarantee doesn't the negotiating bank have to agree to the lesser amount?

Documents were either discrepant or not. There cannot be partial discrepancies. Since you say that docs were discrepant and a waiver was rejected by the applicant, the applicant is not responsible for any payment under this presentation.

Laurence

Here there are two arrangements. The LC that is subject to UCP favouring the exporter and the Shipping Guarantee that would be subject to local law but in favour of the shipping company (carrier) or its agent. These two instrument are independent of each other. Therefore,in case of discrepant documents, the issuing bank has the right to refuse the documents under the LC but would be liable to pay for the shipment he has instructed the shipping company (carrier) or its agent to deliver to the applicant.

The reimbursement agreement between the applicant and the issuing bank of the shipping guarantee may contain clauses that provide the issuing bank authority to waive discrepancies for documents covering a specific shipment. Notwithstanding such agreement, the applicant, in this case, would have the right to refuse the documents presented because beneficiary has made one drawing for three shipments. The applicant or the bank may not be authorized to make partial payment of the presentation unless all parties to the LC provide their agreement. Nevertheless, the applicant will still remain obligated towards the issuing bank for payment of the value of the goods he has taken possession based on the shipping guarantee.



[edited 7/3/2004 10:00:04 AM]