Dear all,
Is following workable?(assuming a very good relation between nominated and issuing bank)
A nominated bank (ABC Bank) does not want to hold discrepant docs pending instructions from presenter , they request issuing bank to put an additional statement in L/C with the wording:
“ If discrepant documents are presented , ABC Bank can, at their own discretion , forwarding documents to issuing bank for payment and approval without prior obtaining presenter’s approval to do so. In such case, sub article 16 C (iii a) of UCP 600 is not applicable.”
If above wording is input in L/C , can the nominated bank send docs to issuing bank without violation art. 16 C?
Which is the appropriate field in L/C for those wordings to be input? Field 71A Additional Conditions or Field 78: Instr to Payg/Acceptg/Negotg Bank.
I don’t think the above wordings are good enough. Kindly have your suggested wordings .
Thanks a lot.
I think the relation between the beneficiary and the nominated
bank should not be detailed or ruled in the credit but only in the advise and in the presentation letter of beneficiaries.
From my own experience, I can only support the idea of speeding up the presentation of docs to the issuing bank and applicants if the documents are discrepant rather than asking for these idiotical "cable negotiations" which only take time and lead to further costs!
However, I also agree with Peter and Sam that any action may only be taken with the explicit content of the beneficiary and any presenting bank involved.
Any action must be taken in such a way that the beneficiary doesn't get "burned". If a correction/ representation can still be done, it should be done - even the applicant prefers complying docs as they minimize problems with tax and customs boards!
If docs cannot be made complying (for example because shipment has been effected too late), why not sending out the docs on approval basis to issuing bank? The goods are on their way anyhow! The buyer needs the documents and in any case you want to sell the goods elsewhere, they should be there where the goods are.
-Each long journey starts with a small step-
Best regards
Frammi
Sam is right
This is a good example of the tail wagging the dog. Because this nominated bank does not want to fulfil all of the requirements of being a nominated bank, they want additional clauses added to the L/C which would get them off the hook but negatively impact the beneficiary.
This is shameful behaviour for a bank - they should either do the whole job or get out of L/C's completely.
Harsh words.
Even if I accept this aspect can play a roll, I wouldn't see it that black and white. If docs are discrepant what are nominated bank's obligation but to write a timely notice of rejection? And which nominated bank openly expresses its wish to act as nominated bank?
And what is the only way of solving it: Sending out really discrepant docs on approval basis. So it's somehow not only bad intention but in many cases bad experience with beneficiaries who just do not seem to be able to read or fulfil their contracts.
-Each long journey starts with a small step-
Best regards
Frammi
Anything is workable in a letter of credit
Almost any item is workable in a letter of credit as long as it is spelled out in the letter of credit. For a more exact wording, I would suggest that the ABC Bank and the issuing bank draft language in the company of their legal counsel.
With that said, the issuing bank could state that article 16C (iii) not apply and then manually list what would happen with the documents that are discrepant.
Even if they add this wording, it is still bad business. You have just taken rights away from the beneficiary. The smart beneficiaries would request an amendment upon receipt of the letter of credit before they ship. The inexperienced beneficiaries would ask for an amendment once they are burned.
Best regards,
LC Sam
Dear L/C Sam and Peter.
Dear all,
Thanks for your comments.
I can get what a nominated bank should do.
Thanks again.