How to certify Document comply in this case?

[LeThao]

LC term:
42C: Draft at
45 days sight subject to FDA passage
47A: Additional conditions
Payment will be effect if the paying bank does not receive the FDA rejection report within 45 days after sight/ or payment. Can not be made in 45 days if FDA issued a notice of detention, or sample pending FDA review

Please help me in answer some question:
1. That means negotiating bank can not certify documents comply before issuing bank does not receive FDA rejection report within 45 days after sight/ or payment?
2. Can negotiating bank require the issuing bank a confirmation for the maturity date by swift message in the covering schedule before 45 days after sight?
3. Can you some advice for the negotiating bank in the case of discounting this document because we can't certify whether the document is complied or not at the time of presentation?
4. Review of FDA is the mandatory requirement when export the frozen fishy to America?

Thanks in advance.

[picant]

Hi Pal,

Fish or Birds down products are interested by this clause in l/c. It means that l/c is not an l/c, but only indicates that the buyer has enough money to pay goods(via its bank).This is the case that payments terms and delivery terms too, are for goods at destination, so no CIF, FOB etc.The only positive thing is that non-acceptance or reject of goods is determinated by third party, in this case official party, FDA, Health authority, Customs etc. IMHO, l/c has to be issued available by def payment with issuing bank and presenting bank can advance money as credit facility. In some clause it is clearly specified that in case of reject the undertaking of the issuing bank ceases immediately.

Other comments appreciated

Ciao

[iLC]

these type of LCs are much common in US trade involving FDA. i believe asking ICC will even recognize there clause. anyway i differ with dear picant. the calls for a draft (taking that there is no other requirement) and presentation of draft will be complying. unless FDA issues a rejection, payment will be effected. will i be wrong if i draw an analogy where the LC stipulates 10% of the payment will be made after a certificate from the buyer?

there are certainly higher risk in negotiating presentation under these LCs. rejection by FDA would end up with a non payment.