Dear Gurus:
I am an agent for petroleum product based in Saudi. My customer issued IRREVOCABLE LC in favour to my supplier. But now, the customer wants to cancel, But the supplier indeed prepared all goods and is ready to ship. I am squeed in between. Now, the supplier says he wants to ship and produce BL to get his money. Is there any way the customer issuance bank stop payments to supplier ?? Under what circumstances the supplier fall into problems of being honest and performs his rights. ?? Please Help.
I am giving clauses mentioned in LC.
40A: IRRECOVABLE
42C: AT SIGHT
100 PERCENT CONFIRMED NONTRANSFERABLE LC AT SITE VALID FOR 30 DAYS
48: PERIOD OF PRESENTATION
21 DAYS FROM THE DATE OF SHIPPING DOCUMENTS
49 CONFIRMATION INSTRUCTION
CONFIRM THE CREDIT
There's more to this than the L/C
From your comments I understand that you are an agent but NOT a party to the underlying Letter of Credit. The L/C has been issued by the buyer directly to the supplier and is not transferable.
My question is, what separate agreement(s) have you entered into with the supplier and the buyer that are binding on you? How were you going to collect your commission? If the supplier ships and presents discrepant documents and therefore does not get paid, can you be pursued for payment or damages?
better comply with the LC terms
If you comply with the LC terms, applicant bank has to remit money. But it is already the vital "complying presentation"..
Go ahead with the shipment
I understood from your message, this is a confirmed L/C. So, You can go ahead with the shipment and submit the dox for negotiation. You will get the payment.
Contact: tulsipillaiex@hotmail.com or tulsiusha1@yahoo.com
Regards
Tulsi / Dubai
Thank You very much Tusli
Anees Quraishi, ALFA Global Saudi Arabia
Thanks a Lot Tusli, I appreciate your quick reply. I am new to LC's and trying to learn the way LC are performed.
Regards,
Anees Quraishi
Qureshi
Dear Qureshi,
Please be sure that documents strictly comply with the terms and conditions of the credit.
There should not be any discrepancies on the documents and no one can stop you to claim the payment.
THANKS TO TULSI, LC Specialist, ImramUmer and nratlos
Anees Quraishi, ALFA Global Saudi Arabia
Million of THANKS TO TULSI, LC Specialist, ImramUmer and nratlos
To add more, the clause 49 says WITHOUT
AND
CLAUSE 78 SAYS [PAY/ACCEPT/NEGOTIATE BANK]
1. Upon Receipt of Origingal Shipping Documents by us and confirming that the documents are in order and drawn in strict compliance of this credit terms. We shall make payment as per negotiating bank's instruction.
2. Negotiating Bank in their documents forwarding schedule should certify that they have endorsed the amount(s) negotiated/drawn on the reverse of the documentary credit.
3. Documents containing any discrepancies must not be negotiated even under gurantee or service without our prior approval.
AND LAST THE 72 CLAUSE SAYS
SENDER TO RECEIVER INFORMATION
This is operative instrument and no mail confirmation will follow. This credit is issued subject to UCPDC (2007 revision) ICC PUB. NO. 600
Qureshi
I agree with LC Specialist, you just have to be very much careful, even for dots and comas.
Wish you all the best.
Imran Umer
IamImranUmer@gmail.com
Buyer wants out
I recommend to use a document preparation service whose fee normally is about $ 100 - $ 300. This will give you a little more comfort.
Present the documents in time, so that you may correct them in case of discrepancy. Submitting them early would mean that after the 5 banking day examination period you still need some time before expiry of the credit to resubmit. (Also take into consideration that shipping documents older than 21 days will be rejected as "stale").
To put this into perspective: the confirming bank has a payment obligation which is independent of the issuing bank. If the applicant does not pay, or prevents the issuing bank from paying, this still means that the confirming bank has to pay.
Documentation Service
I can provide documentation service at a very nominal charges. Contact at my email directly.
Imran Umer
IamImranUmer@gmail.com