L/C at 90 days but drawn on sight

[PKTee]

Dear All,

We received an L/C from Customer which the clause 42c read:
Draft at 90 days


Under Clause 78 Instr to Payg/accpth/negotg bank
Negotiating Bank may pay 100 pct invoice value at sight on receipt of conforming
documents and claim reimbursement after 90 days from date of negotiation for 100 pct.
Invoice value plus interest at Libor rate plus 3 pct.

Upon receipt of credit conforming documents at our counter we shall effect value at maturity as per
instructions. Negotiating bank is required to enclose credit report of the beneficiary as to their standing means and commitment, operation in the account.
Negotiating bank should certify the libor rate on the date of negotiation in the covering schedule.
Reimbursement yourselves on the reimbursing bank at sight basis.
Acceptance commission and discount charges are for account of applicant.

We had instructed our bank to negotation at sight.

Question: Shouldn't our bank to pay to us at sight instead of 90 days ?

[Judith]

What role are you playing in the transaction?
Issuing Bank? Confirming Bank? Negotiating Bank? Reiumbursing Bank?

I think there is a direct conflict in the L/C:

Under Clause 78 Instr to Payg/accpth/negotg bank
Negotiating Bank may pay 100 pct invoice value at sight on receipt of conforming
documents and claim reimbursement after 90 days from date of negotiation for 100 pct.
Invoice value plus interest at Libor rate plus 3 pct.

V

Reimbursement yourselves on the reimbursing bank at sight basis.
Acceptance commission and discount charges are for account of applicant.

Have you sought a clarification from the Issuing Bank?

[PKTee]

Dear Judith,

We are the supplier and we receive the L/C from customer.
We have check with our bank and they say the maturity due on 90 days instead of
sight.

We had instructed our bank to negotiation at sight.

Any help will appreciate.

[Judith]

Dear PKTee,

What were your original terms with the buyer?
Was there a discussion on credit terms?

If you have agreed on sight basis, you can still ask your bank to negotiate on sight terms under the LC. If documents are compliant, they are authorised to give you 100% of the drawing amount on the date of negotiation and are authorised to collect the drawing amount AND interest from the issuing bank in due date.

If your bank is not willing to do this, you might want to contact the buyer and change the LC terms to sight.

Hope this helps.

[jmitra]

the lc is in conflict. you better seek clarification from the issuing bank. i believe its a drafting mistake on the part of the issuing bank