Is LC Overdrawn

honey · Post by **honey** » Thu Mar 11, 2010 3:57 pm

Lc value is 100000 usd
Lc has tolerance approximate (10%) for unit price. Lc indicates details as
100 mt paracetmol powder at 1000 usd per metric ton.
Shipment has done as

950 metric tones at 110 usd per a metric ton and value was 104500 usd, shown in invoice.

Beneficiary requested the issuing bank directly to pay 104500 usd as per invoice shown actual shipment done.

But issuing bank refused to pay 104500. If issuing bank pays 104500 will it be treated as lc
Is overdrawn?

Pls guide me

picant · Post by **picant** » Thu Mar 11, 2010 8:30 pm

Hi Pal,

IMHO, the issuing bank is right, the tolerance is refferred to the unit price only, permitting only prices under 100. As per art 30a UCP 600 ....as allowing a tolerance not to exceed 10% more or 10% less than the amount, the quantity or the unit price to which they refer.

A tip, if it is possible to represent the invoice, please, write it for 100000. Or ask for an amendment.

Other comments appreciated

Ciao

iLC · Post by **iLC** » Fri Mar 12, 2010 9:10 am

great answer dear picant. i fully agree

malla · Post by **malla** » Fri Mar 12, 2010 10:59 am

hi
could you give me further clarification on this topic?
if the invoice is rised anyone of the following 4ways
(say the draft rised for $1,00,000 if any,or there is no draft required)

quantity unit price value
950mt $110 $1,00,000 or

1000mt $110 $1,00,000 or

950mt $110 $1,04,500 or

1000mt $110 $1,10,000

should we rise the discrepancy for the invoices rised for more than credit value(1,04,500 and 1,10,000) or for the wrong mathematical caluculations of invoices 1 and 2?

thank you for the valuble assistance

regards
malla

pablo · Post by **pablo** » Sat Mar 13, 2010 5:14 pm

letter of credit open in not clear way, had to state also amount up to usd 110.000=.
The 5pc tolerance stated in sub article 30(b) does not apply where the credit is stated to be subject to a tolerance.

Is LC Overdrawn

Is LC Overdrawn

l/c overdrawn

great answer

Credit over drawn or Article 18(b)applicable

tolerance