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Dear All,

I have come accross a statement on one of LCs stating that;

"LC will not become operative unless the Performance Security is delivered within 10 days of LC establishment".

Please share your views.

Rgds,

Ghubshawi

dear ghubshawi,

does the LC give any clue about to whom (and by whom)the performance security is to be delivered. anyway, i would not consider it a non documentary condition as it clearly relates to performance security. comments appreciated

dear, treatment of non documentary condition come into existence when there is an operative instrument in one's hand. Here i think the condition as stipulated in the credit- performance security- is a prerequisite to become an inoperative credit into operative one.......... Nesar

Dear Shahriar,

Unfortunately, there is no stipulation to whom or by whom P.S has to be delivered, further more even there is no stipulation whether the P.S has to be presented through LC or delivered directly to applicant, hence I would consider it as non documentary condition, putting in mind that the instructions has given to bank under terms "SPECIAL INSTRUCTIONS"

Rgds,

Ghubshawi

i understand the point raised by gubshawi. however i would consider it as a documentary condition irrespective of the fact that its mentioned under special condition. there is ICC opinion supporting this view.

when a condition (especially related to a document) is mentioned in a letter of credit, the general idea is that the issuing bank is looking for those documents and the presenter has to submit them to make a complying presentation. if someone write "certificate of origin stating that ....." then general idea is that a certificate of origin is to be submitted. of course ISBP and article 14 will apply to these documents. so in my opinion, the document is to be submitted.