Negotiation after Expiry of Credit

bdesh · Post by **bdesh** » Mon Jun 22, 2009 8:26 pm

Hi
Dear Friends,
Could anybody explain the following?
Case
* Credit is available with bank A in country L.
* Date & Place of expiry 22.05.2009 & beneficiary's country G.
* Dox presented at a bank in country G on 21.05.2009.
* Dox negotiated on 08.06.2009 by bank A.
Question: -
Is the dox discrepant?
Thanks
bdesh

picant · Post by **picant** » Mon Jun 22, 2009 11:49 pm

Hi Pal,

it seems to me to long, but 5 days to advise refusal of documents, are from the negotiating bank to presenter. No time limit for a negotiating bank to send documents to issuing bank, the latter will have 5 days to comunicate eventual rejection.
So, before stating something we have to observe the whole transaction.
Other comments appreciated

Ciao

Navi · Post by **Navi** » Tue Jun 23, 2009 2:18 am

Hi Friend,
.
Presentation means either the delivery of documents under a credit to the issuing bank or nominated bank or the documents so delivered. (UCP600-2) So the formal presentation should be done either to issuing bank or nominated bank.
.
Expiry date is the latest date for presentation and the place of the bank with which the credit is available is the place for presentation. A place for presentation other than that of the issuing bank is in addition to the issuing bank. (UCP600-6,d)
.
To sum up, docs must be presented to issuing bank or nominated bank before expiry date.
.
As far as I understand from your example, Bank A is the nominated bank (not issuing bank) because docs were negotiated by that bank. Issuing bank not stated. Docs were presented to another bank in beneficiary's country before expiry date but this does not constitute a presentation according to UCP definition. Therefore, we need to know when docs were received by nominated bank or issuing bank. From dates given (21.05.2009 to a bank in country G and date of negotiation by Bank A i.e. 08.06.2009) I guess that it was after expiry date. In my opinion, it is more than a discrepancy, lc expired.
.
On the other hand, if field 31d indicates a place of expiry other than nominated or issuing bank, it may cause problems. This may mislead beneficiary and make him feel that he fulfilled his obligation just by presenting docs in his country.
.
Other comments appreciated.

vcraj71 · Post by **vcraj71** » Tue Jun 23, 2009 11:41 am

If the the lc expires other than bene country, then document will be descrepant unless the courier
from bene bank reaches the nominated bank or issuing bank within one day say 22nd.Since lc expires, even rectification of docs also not possible for taking such a longtime 21 to 8th for negotiation. As such documents are discrepant

Armagedo · Post by **Armagedo** » Tue Jun 23, 2009 2:13 pm

1/ Agree with picant
There was possible delay in delivering docs from presenting bank in country G to negotiating/issuing bank A in country L plus 5 working days for check of docs...
There is one more altrnative
2/ What are conditions of payment/negotiation in Field 78 "Instrs to paying/nego/.. bank"?
What if there is stated that docs will be negotiated for example 10 days after complying presentation?

So, full scetch of transaction and LC is needed to understand.

bdesh · Post by **bdesh** » Tue Jun 23, 2009 7:34 pm

Hi Friends,
.
Navy quotes as follows: -
"If field 31d indicates a place of expiry other than nominated or issuing bank, it may cause problems. This may mislead beneficiary and make him feel that he fulfilled his obligation just by presenting docs in his country."
.
Can I conclude that place of expiry should be always at the counter of nominated bank or issuing bank,
Otherwise it will be misleading which to made clear from issuing bank before advising credit?
.
Thanks & regards.

Navi · Post by **Navi** » Wed Jun 24, 2009 12:34 am

Armagedo wrote: ...What are conditions of payment/negotiation in Field 78 "Instrs to paying/nego/.. bank"?
What if there is stated that docs will be negotiated for example 10 days after complying presentation?

Dear Armagedo,
.
Will it be O.K. if the above condition stated in field 78 i.e. to be negotiated 10 days after complying presentation despite docs reached to issuing/nominated bank after expiry date? Your comments highly appreciated.

bdesh wrote: Can I conclude that place of expiry should be always at the counter of nominated bank or issuing bank,
Otherwise it will be misleading which to made clear from issuing bank before advising credit?

Dear friend,
That's what I think should be in order to feel safer as a banker. Otherwise Lc may be ambiguous.
.
regards

Armagedo · Post by **Armagedo** » Thu Jun 25, 2009 4:18 pm

2 Navi

Maybe I didn't analyze more careful.

But here is once again - LACK OF DETAILS

The primary question is WHEN the documents has reached to nominated (or issuing bank, if presnting bank chosen to send docs directly to issuing bank skipping nominated).

Other thing.
If we'll look through UCP600 then we'll found that rules are silent reg such a term as "place of expiry".
So, as per my point of view - it is atavism.

And here I agree with Navy

If field 31d indicates a place of expiry other than nominated or issuing bank, it may cause problems. This may mislead beneficiary and make him feel that he fulfilled his obligation just by presenting docs in his country.

And to give answer "It's better to" to question of bdesh

Can I conclude that place of expiry should be always at the counter of nominated bank or issuing bank?

if one doesn't want to have surprises.

But, if LC is freely negotiable, this to be country/region the banks within which are allowed to negotiate.

shahriar · Post by **shahriar** » Thu Jun 25, 2009 9:40 pm

bdesh wrote:* Credit is available with bank A in country L.
* Date & Place of expiry 22.05.2009 & beneficiary's country G.
* Dox presented at a bank in country G on 21.05.2009.
* Dox negotiated on 08.06.2009 by bank A.
Question: -
Is the dox discrepant?

from the query i assume that bank A is nominated bank. based on the given information, the document is not discrepant. the document was presented with in the expiry date and there is official opinion allowing negotiation after the expiry. UCP ask for presentation (Not negotiation) with the expiry.

precisely; place of expiry should be the place of availability. if they are different, i wont call them misleading. in some special cases they are in fact useful. for example when the credit is only available with the issuing bank.

Navi · Post by **Navi** » Fri Jun 26, 2009 2:52 am

shahriar wrote: precisely; place of expiry should be the place of availability. if they are different, i wont call them misleading. in some special cases they are in fact useful. for example when the credit is only available with the issuing bank.

Dear shahriar,
.
Our customers often request us to issue non confirmed LC which is available with our bank but having place of expiry as country of beneficiary. In fact, it is usually beneficiary's will who wants to present documents to his bank before expiry date.
Here, what makes me confused is that whether we (issuing bank) are liable to pay to the beneficiary if the docs are lost in transit between the beneficiary's bank (not nominated bank) and our bank (issuing bank). I don't have a precise answer to this.
Regards.

Negotiation after Expiry of Credit

Negotiation after Expiry of Credit

reasons

Ä°t is difficult to answer

negotiaton after lc expiry

Details are needed

Expiry Place

place of expiry vs place of availability.

Maybe my analisys was not careful

no discrepancy

If docs lost in transit...