Dear All,
The case of this LC goes like this....
1.LC is openend for qty 40,000 mt and value 1 million USD
2.LC needs 4 b/l split into 10,000 each
3.Following documents are mentioned in 46A - invoice,certificate of origin,certificate of sampling and analysis and certificate of weight
4.Has an additional condition 47 A - 16 as " each negotiation is restricted to 0.3 million USD"
I had following comments from finance
"how do you want to negotitate total quantity shipped if the lc restricts the negotiation to usd 0.3 mio ?since partial shipments are not allowed, we have to present all four invoices (and all the other docs) in ONE negotiation - i.e. the NEGOTIATION will be for the total lc amount, it wants to keep field 47A: 16. they have to amend it to read:each invoice not exceed usd 0.3 mio"
First this is not partial shipment for sure. One vessel carrying from single source to single destination.Now since as per bank rules they have mentioned a cap on maximum value negotiation(i dont know why...).they want to restrict each negotiation to certain value.
Now I have following questions
1.At the time of negotiation if we prepare 4 drafts total of which covers the entire shipment value and each draft is accompanied by individual set of documents (in total 4 sets of documents to be prepared), whether it is permitted even if there is not partial shipment allowed( is finance correct)
2.Can we negotiate for part quantity more than single time (i,e how many times negotiation is permitted) under one LC
3.negotation is for drafts drawn on a bank. If i am right then do we always have to give one draft covering the entire LC value. or we can give more than one draft totalling the entire LC value.
Appreciate your comments
Negotiation of Same LC More Than Once
This LC is not workable, IMHO.
We had discussed the issue of 'multiple B/Ls' not being defined as 'partial shipments' in this forum under another query posed some days ago. Article 31(b) referred to presentation of more than one set of transport documents not being termed as 'partial shipment' only if it was covered by a single presentation, not if there were multiple presentations. (Pl refer the concerned topic; http://letterofcreditforum.com/content/partial-shipment-1#comment-2530). There, VV has given the exact clarification with reference to the UCP article 31(b). Under certain conditions, even for more than one B/L, as per article 31(b) of UCP 600 it would not be considered a 'partial shipment' but only if it is 'A presentation...'.
Since your LC restricts each negotiation to a certain amount (ence you cannot utilise the LC in full at one go), while at the same time it demands multiple B/Ls, but does not allow partial shipments, this LC seems badly structured. It cannot work for you.
[Sorry, I have not looked at the other associated queries; just thought that this should be helpful as a starting pont.]