Discrepancies in transferable credit

[hassan]

1)Documents under transefered credit were presented to transefering bank.
2)first beneficiary substitued it,s own commercial invoice.
3)transefering bank,without cheking documents sent them to issuing bank .
4)issuing bank raised some discrepancies which belong to both docs presented by second benef and invoice presented by first benef.
please tell me whom the transefering bank should advise the discrepancies? to the first benef. or to the second benef. and or to both of them sepatately?
I DID NOT SEE ANY THING IN ART. 38 OF UCP 600 IN THIS CASE .

THANKS ALL

[cristiand969]

By forwarding documents to issuing bank without checking, the transferring bank presumably did not add its confirmation, nor did undertake to act under their nomination and very likely their instructions at the time of transferring was : 'upon receipt the funds from issuing bank we shall pay you according to your instructions'.
Therefore the manner in which they advise the discrepancy is not the same as they would have been checked the documents and give advice of discrepancy under art.16 of UCP600
They may merely relay the message received from issuing bank to both beneficiary as far as their documents are concerned.
The solution rests now with the issuing bank.

[LCstudent]

Dear all !
I think transfering bank should inform first beneficiary only, as he has substituted sec.ben´s invoice through his own to get the funds out of the L/C, but should state the discrepancies found in the sec. ben´s docs for further advice to his business partner. This is a clear view on transparency for the concerned parties. other comments appreciated. Rgds LC Student.

[richemon24]

hi,

in this case, transferring bank forwarded the document without checking means, 1st and 2nd beneficiary had the instruction to forward the doument to the issuing bank on approval basis. If discrepancies was advice to the transferring bank, bank has to inform only the 1st beneficiary and 1st beneficiary will arrange to accept the discrepancies to his applicant. once discrepancies accepted, on funds are remitted, 1st beneficiary and 2nd beneficiary will get their payment.

thanks

[Negotiator]

Dear all,

An interesting question. First, as most of you think, I also think that the transferring bank should notify all the discrepancies (which were raised by the issuing bank) to the 1st beneficiary.

Moreover, in my opinion, the transferring bank may also notify the 2nd beneficiary of discrepancies which were created due to the 2nd beneficiary's non-compliance to the transferred credit itself. The 2nd beneficiary is the beneficiary of transferred credit, therefore, it is entitled to know what discrepancies were caused by itself and what it should do to remedy the discrepancies.
The 1st beneficiary may arrange the discrepancies with the 2nd beneficiary of course. However, on the other hand, each parties' role and liability for the discrepancies may become clear when the transferring bank notifies of discrepancies to both parties.

More comments welcome. Regards.
Lee

[shahriar]

in my opinion, by not examining the document, the transferring bank is in breach to sub article 38 i. i believe on transferring bank a credit, the transferring bank is committed to examine the substituted documents. comments appreciated.