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UCP Article 10 - LC Amendment

Fri, 08/22/2008 - 00:23 — andibiola

Hi LC experts,

Need your opinion on LC Amendment.

As we know the party involved in an LC transaction are Applicant, Issuing Bank and Beneficiary.

In my case, the issuing bank issue an LC in favor of, let's say 'ABC Co. Ltd, XYZ (Pte) Ltd'. Two company names on the same field 59 (SWIFT MT700 format).

Now the issuing bank sent us an MT707 (LC amendment) amending the beneficiary name to 'XYZ (Pte) Ltd.'

UCP600 Article 10.a says that '...a credit can neither be amended nor cancelled without the agreement of the issuing bank, the confirming bank, if any, and the beneficiary.'

UCP600 Article 10.c says that, the terms and conditions of the original credit will remain in force for the beneficiary until it communicates its acceptance/rejection of the amendment. And 'If the beneficiary fails to give such notification, a presentation that complies with the credit and to any not yet accepted amendment will be deemed to be notification of acceptance by the beneficiary of such amendment. ...'

Question: 

If XYZ (Pte) Ltd presents his acceptance letter of the amendment, and/or if XYZ (Pte) Ltd presents its documents drawn on the LC will be acceptable and the LC will be valid for all the subsequent presentation in the name of XYZ (Pte) Ltd?

Your kind comments will be much appreciated.

 Andy

‹ Confusion with LC Title of Documents ›
Sat, 09/06/2008 - 14:10 — Frammi

Dear Andy,

I agree to glad's and your position. The amendment is void without the approval of ABC company.

Otherwise you could kill any credit by issuing an amendment to applicant's sister company and as soon as they have "accepted" the amendment the original credit is done. This would render any credit worthless! 

   -Each long journey starts with a small step-

Best regards

Frammi

Sun, 09/07/2008 - 07:27 — Catalyst

UCP Article 10 - LC amendment

Dear Frammi,

Just read your post. I would be grateful if you could have a look at my response (posted some days back) to Andy and respond to my queries. Primarily, can an LC be issued in favour of two/joint beneficiaries? (Do respond to the other queries too.) Tks.

Tue, 08/26/2008 - 02:12 — linhcall

accept an Amendment of an expired l/C?

Hi,

I'm a new member and I have a question about L/C amendment. In my opinion, a L/c can not be amended after it's expiry date. But I have received an amendment from I/S bank of a l/c which i've closed because it's expired for 1 months. And I can't find any Articles in UCP 600 related to my problems. So pls give me yr opinions.

Thanks all.

Linh

Tue, 08/26/2008 - 10:47 — glad

Expiry date

Hi linhcall

You won't find solution for this in UCP.  This topic has been discussed already.  Please refer to topic on Expiry Date and comments attached thereto

Mon, 08/25/2008 - 21:31 — Catalyst

UCP Article 10 - LC Amendment

Excellent question. I would love to know the answer to this. As I see it, the issues in terms of the UCP are:

  1. If ABC keeps silent, and only XYZ presents documents, would it be taken that ABC has accepted or rejected the amendment(s)? Note that ABC is silent; the UCP requires a subsequent presentation to determine acceptance or rejection of any amendment.
  2. By extension, the act of XYZ should not be taken as a response (to the amendment) from ABC. Therefore, how do we know which way the cat has jumped?
  3. Under such circumstances, would the amendment be valid or operative, or would it stand rejected (assuming: no acceptance, rejection or response from XYZ)?
  4. Technically, would the orignal LC be assumed to be void, ab initio, since it was issued to two beneficiaries, not to one? Under what Rule?
Sun, 09/07/2008 - 13:04 — Frammi

Answers for Catalyst concerning amendments

1) If ABC keeps silent and doesn't present docs, how did they validly and bindingly consent to the amendment?

The answer is "in no way!" and the amendment has not (yet) been accepted.

2) As written under 1) I agree. ABC should be asked to either agree or disagree to the amendment. Whether they reply or not is the question.

3) It would stay unaccepted - it still can be accepted or rejected thereafter.

4) It was not really issued to two beneficiaries as at each time, there was only one. Until acceptance of the amendment it was only ABC and thereafter only XYZ.

Two beneficiaries under one credit is very difficult and I can't really think of a situation where this is really necessary.

I hope I have not forgotten to answer on any of your questions. In case I did, please do not hesitate to ask me again.

  -Each long journey starts with a small step-

Best regards

Frammi

Fri, 08/22/2008 - 10:56 — glad

lc amendment

Dear Andy

Normally there cannot be two beneficiaries in an lc.  When lc was opened, was there any proforma invoice whereby name of beneficiary is mentioned.  Esle issuing bank should have obtained clarification from applicant.

Is ABC Co Ltd and XYZ (Pte) Ltd sister companies and do they have the same address?

I think ABC Co ltd should give its consent for the amendment.  In the above case, we should presume that the Advising Bank has advised the amendment to ABC Co Ltd and given that documents presented complies with the amendment, we can assume that ABC Co Ltd has agreed to amendment.

Hope above clarifies your question.

Mon, 08/25/2008 - 05:43 — andibiola

LC Amendment

Dear glad,

Thanks for your response.

I have confirmed to the issuing bank, that ABC Co Ltd is not a sister company to XYZ (Pte) Ltd. It was sent by mistake from the issuing bank.

I sent an MT799 rejecting the MT700 requesting them to reissue the same LC with the correct beneficiary name. This is because, in my opinion I will face difficulties in obtaining 'ABC Co Ltd XYZ (Pte) Ltd' consent for amending the beneficiary name, since it is impossible to get its approval (as one entity).

Now I am waiting for the reissuance of the LC.

Anybody can give me another opinions?

Mon, 08/25/2008 - 11:13 — glad

Right Decision

Well Andi, I think you have taken the right decision in rejecting the lc and request for a new one because as per your comments above, it seems that ABC Co Ltd XYZ (Pte) ltd does not exist as one company but two different companies.  So you would never have received consent for the amendment.

Fri, 08/22/2008 - 10:55 — glad

lc amendment

Dear Andy

Normally there cannot be two beneficiaries in an lc.  When lc was opened, was there any proforma invoice whereby name of beneficiary is mentioned.  Esle issuing bank should have obtained clarification from applicant.

Is ABC Co Ltd and XYZ (Pte) Ltd sister companies and do they have the same address?

I think ABC Co ltd should give its consent for the amendment.  In the above case, we should presume that the Advising Bank has advised the amendment to ABC Co Ltd and given that documents presented complies with the amendment, we can assume that ABC Co Ltd has agreed to amendment.

Hope above clarifies your question.