Hi all,
I have a query about article 32 UCP600.
.
LC indicates that the shipment will be performed 3 times, before 15/04, before 15/05, before 15/06 and the payment will be effected correlatively
The 1st shipment on 16/04, so it's a discrepancy, the issuing bank created a MT734, showing that discrepancy and payment will be effected if they receive applicant's waiver. The result that applicant accepted discrepancy and the payment for 1st shipment finished.
The 2nd shipment on 14/05 (it means docs comply with LC) but issuing bank reject the docs. with the reason according to art.32 UCP 600, THE LC CEASE TO BE AVAILABLE FOR ANY SUBSEQUENT INSTALMENT BEACAUSE OF 1ST DISCREPANT DOCS.
.
IS IT RIGHT?
ACCEPTANCE THE DISCREPANCY OF THE FIRST SHIPMENT MEANS THE FIRST DOCS. COMPLY WITH LC? THE ISSUING BANK MUST HONOUR IF THE 2ND AND 3RD DOCS COMPLY WITH LC?
.
In my opinion, the issuing bank has the right to reject docs for 2nd and 3rd presentation follow art.32 UCP600
Plese clarify this query, and show me your ideas.
Many thanks
How to Protect?
In this case, if we want to protect our interest, should we request our customer to add the clause "UCP 600 article 32 is not applicable" on the L/C?
If the customer is not willing to add this clause, what other wordings or phases that we may use for protection of our interest?
Terms are tools, human are rationale
Hi !
UCP, Incoterms, L/C terms.......... all can be modified by the users in case of needs. They are not pre-set to favour any party. The answer depends on what the dues you can fight from your customer. What your customer and you compromise just put it on the credit.
P.S. your "UCP 600 article 32 is not applicable" is the most simple and straight to exempt the Article's effect. If your customer is not willing to add, don't think the others.
Hope it may help!
V.V.
Thanks for your help!
Thanks for your help!
It depends a lot on the wording of the credit.
And you have to be able to note from the documents which shipment is presented.
My advice is, if you have shipment schedules to reflect whether art. 32 is really usefull to you. In most cases it is not! So, maybe you better exclude it. For example you have a credit for USD 1 Million covering five consecutive deliveries of USD 200,000.00 each.
If the first was one day late and beneficiariy accepted the one late shipment - why should he not accept following punctual shipments?
_______________________________
My other advise is to issue call nos. for each shipment which must be noted in the documents and to state the schedule as follows:
call no. 151 for 15.000 pieces ... to be shipped until 31.5.2008 at the latest
call no. 152 for 15.000 pieces ... to be shipped until 30.06.2008 at the latest
call no. 153 for 15.000 pieces ... to be shipped until 31.07.2008 at the latest
call no. 154 for 15.000 pieces ... to be shipped until 31.08.2007 at the latest
.......
Then you always know which part delivery is now presented.
_________________________
The problem about stipulating delivery schedules is also that the beneficiary could present docs as the second shipment because it is two days later than allowed under the first deliveries. Issuing bank can't know when a possible separate "first presentation" will take place and has to pay as it cannot reject the docs within five banking days if quickly presented in the second period. So, this could also have happened under the credit presented by Brian1.
By what he wrote, I can't say for sure that the first docs represent the first delivery!!!! The delivery of 16.04.2008 could also be the second delivery and presentation of the first delivery (maybe effected on 14.04.2008) was just still outstanding?!
-Each long journey starts with a small step-
Best regards
Frammi
You are right!
Hi brian1 !
That is what UCP600 Art 32 talking about! The credit ceases to be available for any subsequent instalment, unless an amendment is issued for correction or cancel the original shipment schedule. Therefore the discrepancy is valid!
VV
the issuing bank is right in its stand.
hi brian,
the issuing bank is right in its stand to reject the documents stating article 32,
since the first presentation was discrepant, a waiver was sought from the applicant to accept the discrepancies.but that does not mean to benefciary that docs have become clean. discrepant docs are always discrepant. the issuing bank has approached for the waiver and has paid out the bene on applicant's request.
the issuing bank is not bound to honour the 2nd and 3rd presentations.! but however at the request of the applicant can issue new amendments and do so.! authority rests with the customer. leave alone ucp 600.!
article 32 ucp 600
Guidelines, rules, regulation etc. can be explained in different way but we should remember that the motto of UCP is to facilatating payment not make obstacle.
However, Issuing bank role is wrong.If the subsequent docs. are clean issuing bank should make payment. when issuing bank release the first installment then than can this rule applicable for Second installment?
Article 32 of UCP 600
Dear All,
I refer you an ICC Official opinion R-313, query-2, 1998-99,
The word "with in given period" in that article posses some weight. the proper wording of credit is inevitable in order to ensure shipment by installment. the best possible solution is to mentioned the shipment schedule with an start and end point, so that the beneficiary can not mixed up the shipment.
as per your credit shipment schedule i.e. before 15/04, before 15/05, before 15/06 , the beneficiary can mixed up the shipment i.e. the beneficiary can made full shipment by 15/06,
so issuing Bank can not reject the document solely based upon this.
nesarul
ICC opinion R313
Hi !
The follows are extracted from the contents of ICC opinion R313:
Quote:
Example No. 1 gives three "latest" shipment dates for which 3 x 10,000kgs may be shipped. In reality, 30,000kgs could be shipped by 31 October, OR, one shipment of 10,000kgs made by 31 October and the balance of 20,000kgs either shipped as one shipment by 30 November, OR, otherwise split to ship at least an additional 10,000kgs by 30 November. While this is not the requested wording that was intended by Article 41(UCP500), nevertheless if at least 10,000kgs is not shipped by 31 October the credit would cease to be available for all further shipments. Likewise, if at least 10,000kgs is shipped by 31 October but a total of 20,000kgs are not shipped by 30 November, the credit would cease to be available for any remaining merchandise.
Unquote
Just similar to the case, the first shipment is not shipped before first latest shipment date. Then the credit cease to be available for any remaining shipments.
Please check!
VV
I totally agree with you,
I totally agree with you, VV, I absolutely need ICC Opinion you give, to get up my mind
Thank you so much
Thanks all
article 32 of UCP 600
Dear V.V.
You are right. Sorry for wrong posting.
thnaks