We recently set up an L/c with a bank in Italy for delivery of furniture for a new hotel.
Partial shipments permitted.
On the schedule of the first set of documents presented they stated 'subject to ICC 522'
We therefore treated them on a collection basis.
We have since been advised that the Italian bank made a mistake and the schedule should have been subject to UCP 500.
Given that the treated the first presentation as a collection are we entitled to treat all future presentations under the L/C as collections?
Collection or L/C
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KimChristensen
- Posts: 404
- Joined: Fri Apr 05, 2019 5:21 pm
Collection or L/C
Dear Peter,
So many rules ...
I take it that you are the issuing bank – and that the L/C is subject to UCP 500. The fact that the Italian bank made a mistake in the first presentation does not change that. You are still bound by your L/C, and must treat future presentations according to UCP 500 and the wording of the credit.
My personal view without responsibility – liability.
Best regards
Kim
So many rules ...
I take it that you are the issuing bank – and that the L/C is subject to UCP 500. The fact that the Italian bank made a mistake in the first presentation does not change that. You are still bound by your L/C, and must treat future presentations according to UCP 500 and the wording of the credit.
My personal view without responsibility – liability.
Best regards
Kim
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larryBacon
- Posts: 689
- Joined: Fri Apr 05, 2019 5:26 pm
Collection or L/C
Peter,
the applicant is likely to make a dangerous assumption in the given circumstances.
For example - LC opened for $100k,
presentation under URC for $50k. Applicant, if deciding to accept presentation under URC, should only do so upon agreement of the beneficiary to a reduced value by means of amendment to $50k. Otherwise the applicant may assume that his exposure is $100k, but in fact it is $150k ($50k under URC + $100k under UCP). The possible exposure for the bank is obvious.
Laurence
the applicant is likely to make a dangerous assumption in the given circumstances.
For example - LC opened for $100k,
presentation under URC for $50k. Applicant, if deciding to accept presentation under URC, should only do so upon agreement of the beneficiary to a reduced value by means of amendment to $50k. Otherwise the applicant may assume that his exposure is $100k, but in fact it is $150k ($50k under URC + $100k under UCP). The possible exposure for the bank is obvious.
Laurence