LC Applicant Different From Consignee

[dieselica]

Hello everyone!

I would very much appreciate your opinion regarding commercial LC indicating applicant as Company ABC, whereas all documents, including invoice have to be consigned to Company XYZ.

Our client, applicant, Company ABC gave us order to issue LC, but indicating that all documents have to be consigned and made out to Company XYZ.

Company XYZ cannot give us order to issue LC as it is not our client (but also due to some other internal policies).
Company XYZ and Company ABC are both members of ABC Group.
Company XYZ and Company ABC are two different legal entities according to our local law.

According to our local law, if Company ABC is the proxy of Company XYZ in relation to LC's, and signs Contract with us to reimburse us for any value due under LC in question, there is no legal restraint for such LC.

We have two different opinions; some of our colleagues think that LC indicating applicant as Company ABC and documents made out to Company XYZ cannot be issued since there is no underlying Contract between applicant and beneficiary - only between receiver of goods and beneficiary.
Other colleagues have opposite opinion; since LC is separate transaction/undertaking from any Contract that may be, LC with described condition can be issued - Contract between applicant and beneficiary or Contract between receiver of goods and beneficiary, it is no concern of ours (i.e. issuing bank).

With which opinion would you agree and why?

Thank you in advance for all your inputs!
Regards,
dieselica

[picant]

Hi Pal,

it will depends on your Country' Laws. Issuing l/c in this way is for me ok.
In Italy it is possible for a company to instruct a bank to grant a credit to another company(mandato di credito) so you have to check if a similar action is allowed in your Country.
Let me know
Ciao