CASE STUDY ON UCP-600
Discuss the nature of the problems and possible solutions of the following cases (as per UCP-600):
Case No. 1: A B/.L tendered along with other documents for negotiation contained the words “shipped on deck” The nominated bank negotiated the document since the L/C did not specifically prohibit this. The issuing bank refused to honour the documents.
Answer-Article No. 26
Case No. 2: An L/C mentions 12500 lbs of “shrimps” should be shipped. The invoice indicates actual shipment of 13,560 lbs. The nominated bank has refused to negotiate since quantity of goods exceeded.
Answer-Article No.30.
Case No. 3: A transferable L/C was established for £15000. The beneficiary wanted to transfer £4000 in favour of A, £6000 in favour of B, and £5000 in favour of C. The advising bank refused to accede to the request on the ground that a transferable L/C can be transferred once only as per UCP. The UCP does not prohibit partial shipment.
Answer-Article No. .38
Case No. 4: A bank has negotiated a bill under L/C complying all terms and conditions of the L/C. The documents were sent to issuing bank for reimbursement as per L/C. By that time, the issuing bank has received authentic information that the goods shipped were of poor quality and it repudiated the documents on the ground that the nominated bank should have satisfied itself that the goods shipped confirmed to the requirements of L/C.
Answer-Article No. 5
Case No. 5: A credit was issued with a validity of one month for shipment and one month for presentation of the documents. The validity was extended twice but when the credit expired at the end of six months, no shipment had been effected, and the buyer suffered a financial loss.
The Research paper on KFC in India Case Study Assignment (Ethical Issue)
Abstract The case highlights the ethical issues involved in Kentucky Fried Chicken’s (KFC) business operations in India. KFC entered India in 1995 and has been in midst of controversies since then. The regulatory authorities found that KFC’s chickens did not adhere to the Prevention of Food Adulteration Act, 1954. Chickens contained nearly three times more monosodium glutamate ( ...
The buyer reported the matter to his Chamber of Commerce, which requested ICC to use its “good offices in persuading the sellers to honour their contractual obligations”.
ANSWER A buyer cannot compel the seller to use a documentary credit.
The problem is possibly a change in price which leads the seller to want to sell the goods elsewhere at a higher price.
On the basis of the purchase/sales contract, the only action available would appear to be for the buyer to see whether or not he has any claims on the seller owing to nonfulfilment of contractual obligations.
Case No. 6: Would it be in order for a bank to transfer a credit marked “transferable” if the cable/swift establishing the credit is not authenticated or the signature(s) of the issuing bank not verified in case of an airmail letter of credit?
Would transfer of an unauthenticated credit be valid? Is it obligatory for the transferring bank to check the authenticity of a credit before effecting transfer of that credit?
ANSWER Quite apart from the fact that Article a requires the advising bank to use reasonable care to check the apparent authenticity of the credit which it advises, it is not common sense to act on a document if you are not sure of its authenticity. It can be transferred mentioning that authenthenticity can not be established.
Case No. 7:
QUERY Sight payment credits are being issued in which the reimbursement clause indicates that the funds will be available eight working days after negotiation of the documents.
In our opinion, every bank is free to include its own conditions in its credit but these conditions must be consistent. If the credit explicitly indicates that it is available at sight, a bank must not impose reimbursement conditions which imply a veritable payment delay.
At any rate, if it is felt that this practice does not violate UCP provisions and that it can be unreservedly accepted, what then should be the altitude of the nominated bank? Should it regard the credit as a sight credit in the light of the explicit indication by the issuing bank or, to the contrary, as a usance credit?
The Business plan on Bankruptcy Among Young People Because of Credit Card
Consumer credit can be defined as a debt that someone incurs for the purpose of purchasing a good or service. Common forms of consumer credit include credit cards, store cards, motor (auto) finance, personal loans (installment loans), consumer lines of credit, retail loans (retail installment loans) and mortgages. The spread of credit card ownership and usage across developing Asia Pacific ...
ANSWER 1. Notwithstanding the reimbursement clause that funds will he available eight working days after negotiation, the credits should he understood and processed as sight payment credits. It is for the parties concerned to come to an agreement on the inevitable interest question.
2. The phrase “after negotiation of the documents” suggests that it is a negotiation credit and not a payment credit although apparently it is to be on the basis of sight payment.
The point has to he borne in mind in all negotiation credits that the negotiating hank is “buying” from the beneficiary the rights he may have under the credit and therefore makes allowance for the fact that it will be out of funds until reimbursed by the issuing hank.
Case No. 8:
QUERY It is current practice to subject the confirmation of a credit to the presentation of the documents directly to the confirming bank without intermediary of another bank.
Our view is that every bank accepts risks, not counting those ensuing from strict UCP interpretation, when it adds its confirmation to a credit. The acceptance of such risks should not be subject to the presentation of the documents since this affects the principle that the beneficiary is free to negotiate the credit with the bank of his choice according to the domiciliation of the operation or dependent on where the credits come from.
ANSWER According to Article 8, confirmation of a credit constitutes a define undertaking of the confirming bank to pay, to accept or to negotiate, provide that the stipulated documents are presented and that the terms and conditions of the credit are complied with.
A confirming bank must see the documents in order to ascertain that its payment acceptance or negotiation is effected against documents complying with the credit terms. The beneficiary is of course free to present the documents to the confirming bank through the intermediary of a bank of his choice.
Case No. 8:
QUERY If documents contain several discrepancies but the issuing bank only states one of them in its notice of refusal and if that discrepancy turns out to be invalid, can the issuing bank then legitimately raise the other discrepancies to refuse the documents?
The Essay on Access to Bank Credit to Small and Medium Enterprises
Finance function is the most important of all business functions. It remains a focus of all business activities. Financing SMEs has acquired enormous importance in contemporary world of finances. This is primarily due to the national focus and priority of various countries – developed and developing ones as well. In the Sri Lankan context , the government has provided impetus to the ...
ANSWER Article 16 gives the answer to this question because it clearly evidences that “such notice must state the discrepancies”. Since the discrepancies is to be understood to mean all discrepancies, the issuing bank would not be entitled to raise discrepancies which it had not raised in its notice of refusal.
CASE 10
QUERY It happens from time to time that a credit applicant is prepared to take up discrepant documents after these have first been refused and are being held by the issuing bank at the disposal of the remitting bank. Is the issuing bank free to release the documents to the credit applicant or does it need the consent of the remitting bank or, as the case may be, the beneficiary?
ANSWER 1. If documents are held at the disposal of the remitting bank, the issuing bank would need the assent of the remitting bank for a later taking up of the documents after their approval by the applicant.
Case No. 11:
QUERY A bank added its confirmation to a credit which contained the clause: “All bank charges abroad on account of beneficiary”.
When the documents were presented, the confirming bank informed the bank of the beneficiary that it was “prepared to pay provided beneficiary pays interest for the delay in receiving reimbursement from the issuing bank”.
The Bank of the beneficiary objected that the credit contained no stipulation for the payment of interest, and it pointed out that
– the Bank charges clause authorized the deduction of charges such as postage, negotiation commission etc., but not interest for delay in reimbursement;
– the confirming bank should look to the issuing bank for the payment of such interest. Beneficiary’s bank asked for the views of 1CC.
ANSWER It is unreasonable to claim interest from the beneficiary for delay in reimbursement on the basis of the clause “All hank charges abroad on account of beneficiary.”
Further, there is a difference between a credit available by payment with a confirming hank and a credit that is unconfirmed on the part of a bank which is requested to negotiate drawings. Under Article 13, such bank has no engagement vis-a-vis the beneficiary, and is quite justified in requiring him to bear the interest loss, pending reimbursement from the issuing bank.
The Essay on Alpen Bank: Launching Credit Card in Romania
As per the Case ‘Alpen Bank: Launching Credit Card in Romania”, the following explains strategy on Segment, Target, and Position. This Analysis also has attached Excel sheet with numbers to support this strategy. Alpen Bank has been very successful in Romania building a profitable business for the wealthy – over 200,000 customers in a country with 7.7 million households. As per Exhibit 5 and Table ...
The confirming bank should have been guided by the provisions of Article 13 (iii) that the issuing bank wilt be responsible to the paying, accepting or negotiating bank for any loss of interest if reimbursement is not provided on first demand.
Case No. 12:
QUERY A banking institute wrote that it is difficult to understand Article 13.
Does it mean that the issuing bank will be responsible to the paying, accepting
or negotiating hank for any loss of interest if reimbursement is not provided:
1. on first demand made to the reimbursing bank,
2. or as otherwise specified in the credit,
3. or as mutually agreed, as the case may be?
ANSWER: The issuing bank is responsible for any loss of interest if reimbursement is not made when it should have been made in accordance with the agreement between the issuing bank and the paying, accepting or negotiating bank. The wording used in Article 13(iii) is intended to cover various possibilities in this connection.
The reimbursement arrangements might be by debit to the issuing bank’s account with the bank claiming reimbursement, by credit to that bank’s accounts with the issuing bank, or by authority to claim from a third bank (reimbursing bank), or in some cases by an undertaking of the issuing bank to make payment to a hank nominated by the bank claiming reimbursement.
Case No. 13:
QUERY If a credit calls for a “copy” of a document to he presented, would it be in order for the beneficiary to present a photocopy?
ANSWER In principle, a photocopy is a copy but the answer may depend on the circum stances. If the credit should call for a photocopy of a document, a carbon copy would be unacceptable.
Case No. 14:
QUERY If a credit stipulates a signed invoice in several copies, some banks will accept carbon copies, of which one is manually signed whereas the other copies are carbon signed. Other banks are of the Opinion that all copies must be manual signed. What is correct?
ANSWER: There are conflicting views on this. Some bank’s insist upon each copy being a manually signed one. Other banks are content to accept the top copy signed, with the carbon copies “carbon signed”. Under particular circumstances and in order to be on the safe side, it may be advisable to require that all copies be originally signed.
The Business plan on Bank of America case analysis 2
Corporation launched the largest secure mobile banking service in the United States and has over four million mobile banking customers. BofA mobile banking service gives the customers access to their checking accounts for balance, transfers funds and to pay bills through a mobile application (app) on their mobile phones and the mobile web on their phone’s browser. In past years, BofA has been ...
Case No. 15:
QUERY Under a credit for the shipment of goods form any European port to Alexandria,
a bank raised an objection to the presentation of a document entitled:
BILL OF LADING
for Combined Transport or
Port-to-Port Shipment
which, in its opinion, did not comply with the credit stipulation that
“Bill of lading must be ocean B/L”.
The beneficiary argued that the credit thus called for a marine bill of lading, whose heading, in the end, was of little importance. He also pointed out that the document presented met the requirements of Article 19. When the bank did wit relent, the beneficiary contacted ICC.
ANSWER 1. The bill of lading meets the requirement of the credit of “ocean bill of lading”. It shows the name of the ocean vessel, the port of loading and the Poll of discharge and has the on board notation.
The normal use of the word “ocean” in connection with a bill of lading is to distinguish it from the “inland waterway” bill of lading. it is not customary for the shipping company to put the word “ocean” on its document.
The document in question is the modern type which can be used either for combined transport or for “port-to-port shipment”, i.e. ocean shipment. The content of this bill of lading shows that it is used as a port-to-port bill of lading.
2. Article 20 shows that the term “marine bill of lading” is synonymous with the term “ocean bill of lading”.
Case No. 16:
QUERY Can a forwarder bill of lading be accepted under UCP if the forwarder signs it with the word “carrier” underneath? Also, can a Forwarder bill of lading signed by the forwarder mentioning “agent of carrier” of another forwarder (not the shipping company) be accepted?
ANSWER The point to bear in mind is that a carrier has full liability for loss or damage to the goods as against the customary very restricted liability of a freight forwarder.
A forwarder cannot describe himself as a carrier unless he is the carrier. Signing as agent of a carrier of another forwarder, who is not a shipping company, sounds strange. But if the L/C Specially Permitted to do so.
The Term Paper on Central Bank Credit One Financial
GLIM WORKING PAPER SERIES WANT DOLLARIZATION? NO! NO! Sundara B Reddy GREAT LAKES INSTITUTE OF MANAGEMENT South Mada Street, Srinagar Colony, Saida pet, Chennai July 2004 We are indebted to Lakshmi Kumar, Bala V Balachandran, Gul shan, Shishi r, Praveen for useful comments and suggestions. Of course, we are solely responsible for any shortcomings. The views expressed herein are those of the ...
Case No. 17:
QUERY We think that “loading on board” means on a vessel or on a named vessel according to UCP; however, not everyone shares our opinion. Nevertheless we are sure that the bank examining documents on the basis of UCP will not apply “on board” in the broader sense of “on train” or “on aircraft”.
ANSWER According to UCP wording, the expression “loading on hoard” is to be understood as meaning on board a vessel.
It may, however, happen now and again that banks “through carelessness” will use a credit form containing a printed indication such as “loading on board” also for shipments other than those by sea.
And unfortunately, there arc also carrier showing in the small print on the back of their document that the expression “on board” used by them does not necessarily mean on board a vessel in the terms of Article 20. They mean it merely as the equivalent of “taking in charge”, i.e. possibly on hoard a road, rail or other inland conveyance as part of a combined transport.
Case No. 19:
QUERY We wish to bring to your attention difficulties experienced with regard to the interpretation of Article 20. The problem relates to “received for shipment” documents.
We have come across several cases where these documents carry only one signature and one date with the rubber stamp impression “on board” appearing close to the signature and the date at the foot.
If such a document can be regarded as a valid “on board” document, the possibility exists to convert a “received for shipment” document into an “on board” one, simply by means of a rubber “on board” stamp.
ANSWER The answer is in Article 20 itself. in the “received for shipment” case, the notation of loading on board on the transport document must be signed or initialled and dated by the carrier or his agent. This is so even if the “on board” notation is placed close to the date of issue of the transport document and the signature of its issuer.
Case No. 20:
PROBLEM Under a credit which prohibited transshipment, the goods were shipped by air but on arrival of the aircraft at destination, part of the cargo was missing. It arrived some days later
It turned out that although the transport had been carried out by one and the same carrier, it had been made in two stretches by two different aircraft. When the cargo was to change aircraft at the intermediate airport, one case could not be stowed and had to be left over for the next flight to its final destination.
When payment under the credit was withheld for these reasons, the beneficiary asked for ICC’s opinion.
ANSWER By the terms of Article 5 in documentary credit operations, all parties must consider the documents to the exclusion of the goods, the services and/or other performances to which the documents may refer.
Therefore, the decisive point is whether transhipment is evident from the face of the transport document. There is no indication of transhipment in the Air Waybill submitted in the case tinder discussion.
It is recommended to avoid transhipment prohibition in credits for the air shipment of goods since in air cargo traffic, transhipment often is unavoidable.
Case No. 21:
QUERY A beneficiary in France asked for interpretation of Article 14 as a paying bank had stated that his documents for a shipment of chemicals-contained the following discrepancy: “goods description in marine bill of lading incomplete”.
When the beneficiary objected, the bank replied that the goods had not been described in general terms hut in wording which was exactly the same as goods description in the commercial invoice, except for the missing word.
ANSWER A general description in the bill of lading, such as “polyethylene” or “chemical products” would have been sufficient to bring the documents under the protection of Article 14. Since, however, the description was a technical and detailed one, the missing word made it a description which was different from the description in the commercial invoice.
.
Case No. 22:
QUERY We arc seeking urgent confirmation of whether Article 30 of the Uniform Customs
and Practice for Documentary Credits would apply with respect to an L/C worded “XXX metric tons of fish, average weight 200-250 gm per fish”.
The question is whether the words “average weight” could be regarded as a “similar expression” as used in Article 30, therefore allowing the toleranc of 10% as stipulated.
ANSWER “Average weight” is not considered to be a “similar expression” in the terms of
Article 30. In the example, a range of 200-25() gm per fish is already given.
Case No. 23:
QUERY What does “quantity in terms of a stated number of packing units or individual items” mean?
is it the quantity in terms of piece, dozen or gross? Does it include kg or ml’?
ANSWER “Packing unit” covers such modes of packaging as cases, boxes, drums. “Individual
items” refers to “pieces”. The 5% tolerance would therefore not apply.
“Kgs” or “metric tons” are not packing units. Therefore the tolerance would apply.
Case No. 24:
QUERY With respect to Article 29(a), we would like to have your confirmation regarding the following. If a credit does not stipulate the expiry (late, may we regard the latest day allowed for presentation of the documents as the expiry date of the credit’?
ANSWER 1. The query refers to Article 29(a), which is the article providing for the extension of the expiry date in certain limited circumstances.
The correct article would be 6, which requires a credit to stipulate an expiry date.
Case No. 25:
QUERY A credit calls for “on board bills of lading”. The credit also calls [or presentation of documents “within 10 days after the date of issuance of the hills of lading” “Combined transport hills of lading” are issued. At a later dale these are stamped “shipped on board”, with the date of this stamp, and this stamp being signed.
For the purpose of calculating the ten days allowed for presentation, would the bank be correct in taking the date of issuance of the bills of lading as the earlier date of issue of the combined transport bills? Or should the hank take the date of the “shipped on board” stamp as the date of issuance?
ANSWER The answer is in Article 20 which indicates that n the case o[ an on board notation in accordance with Article 20 the date o such notation will be deemed to be the date of issuance of a transport document. The Article 20 period of time runs from the date of that notatio.
Case No. 28:
QUERY Under a transferable credit, the first beneficiary substitutes his draft for the draft of the second beneficiary but does not substitute his invoice for that of the Second beneficiary. The credit stipulates “only third party shipping documents acceptable” and the question arises whether there is a discrepancy.
ANSWER Under Article 38 (a), the first beneficiary has the right to substitute his own invoices (and drafts if the credit stipulates drafts to be drawn on the applicant) in exchange for those of the second beneficiary. He may make use of that right or not. Therefore, the documents seem to be in order.
It is puzzling that the first beneficiary does not substitute his own invoice. Since he is submitting the second beneficiary’s invoice, it apparently has no “difference” to draw for.
The meaning of “only third party shipping documents acceptable” is unclear. If it refers to Article 38, it is not a question of “only”. Such a document is acceptable unless the credit stipulates otherwise. As the credit is transferable, it is in order for documents to be in the name of the second beneficiary.
Case No. 29:
QUERY Issuers often feel that corrections and the like on transport documents such as bills of lading, air waybills and others do not require an indication of whom they ill were approved by, and that the stamp “Correction approved” is sufficient.
It is our opinion as a hank that this stamp should dearly indicate the name of the carrier or his agent and should he duly visaed or signed by them.
We shall be pleased to have your opinion.
ANSWER A correction stamp on a transport document should make it evident by whom
the correction was effected in order for it to be valid. ‘It is usually done by the carrier or his agent.
A correction stamp should he signed or at least initialled, although sometimes it is, in fact, not further supplemented by an initial or a signature.
Corrections or attentions on a transport document must he authenticated by a correction stamp as well as a signature or initials. Ii should be clear who has corrected the document and on what authority. Such documents are only acceptable if this procedure is, in fact, followed.
Case Study – 30
* A transferring bank transferred 80% of the quantity to a 2nd beneficiary a month
ago.
* And now the 1st beneficiary asks the transferring bank to transfer the remaining 20% to the same 2nd beneficiary.
* Must the bank transfer the balance to the same 2nd beneficiary?
> No
> The bank has no obligation to do so.
Case Study – 31
* A bank is going to transfer an LC.
* Does it need to book the risk against the issuing bank’s credit line?
> No
Further Transfer
* A 2nd beneficiary does not have the goods to supply.
* Can the 2nd beneficiary further transfer its transferred LC to a 3rd beneficiary?
> No, unless otherwise permitted by LC.
* Can the 2nd beneficiary then transfer its transferred LC to back to the 1st
beneficiary?
> Yes
* Can the 1st beneficiary transfer it to another 2nd beneficiary?
> Yes
* A 2nd beneficiary has a transferred standby LC subject to ISP98 fully transferred by the 1st beneficiary.
* Can the 2nd beneficiary further transfer its transferred LC to a 3rd beneficiary?
> Yes, in case of full transfer to the 3rd beneficiary
Full Transfer
* What is full transfer?
> The full LC amount and whole quantity are transferred to one 2nd beneficiary,
> The 1st beneficiary does not require substitution of documents,
> The 1st beneficiary gives up the right to the subsequent amendments.
Partial Transfer
* What is partial transfer?
> The full LC amount and whole quantity are not transferred to one 2nd
beneficiary,
> The 1st beneficiary requires substitution of documents, and or
> The beneficiary retains the rights to the subsequent amendments.
* Is it true that a transferable LC can -‘ always be transferred to more than one 2nd beneficiary.
> It depends on whether the LC prohibits partial shipments. In case of prohibition, the LC can be transferred to only one 2nd beneficiary.
* A transferable LC prohibits partial shipments.
Shipment Schedule
* A transferable LC requires shipment of cement as follows.
– 10,000 MT within March 2OXX
– 20,000 MT within April 2OXX
– 40,000 MT within May 20XX
* The LC allows partial shipments.
* The beneficiary transfers the LC to three 2nd beneficiaries.
* Are the transfers appropriate?
> No, they are inappropriate and very risky. The LC should not be so transferred.
* Is it appropriate for the LC to be transferred to one 2nd beneficiary that will ship the total quantity, 70,000 MT?
> Yes.
* Is there any way that the LC can be safely transferred to more than one 2nd
beneficiary?
> Yes, when the (transferable) LC excludes Article 32
Terms that can be changed
* UCP allows some terms to be changed in transferred LCs (in case of partial
transfer).
* What are the terms
> Expiry date
> Latest shipment date or period for shipment
> LC amount
> Unit price
> Presentation period
> All the above can only be reduced or shortened
Expiry Date
* A 1st beneficiary is going to partially transfer an LC with substitution of
documents.
* Can it keep the expiry date unchanged in the transferred LC?
> Yes, it can.
* A 1st beneficiary is going to partially transfer an LC with substitution of
documents.
* The expiry place of the MT700 is Hong Kong.
* The 2nd beneficiary is located in expiry place to Vietnam.
* Can the 1t beneficiary expiry place (Hong Kong) unchanged Can the MT720?
> Yes, it can.
* Can the 1s beneficiary change the expiry place to Vietnam in the MT720?
> Yes, it can.
Availability
* The MT700 is available with any bank.
* Can the MT720 also be available with any bank ?
> Yes.
Case Study 5
* An MT700 was transferable and available with the any bank to expire on 2OXX-06-30 in Hong Kong.
* The MT720 was transferred to the 2nd beneficiary located in Vietnam.
* The MT720 was available with any bank to expire on 2OXX-06-30 in Vietnam.
* The 2nd beneficiary made a presentation to a bank in Vietnam on 2OXX-06-30.
* The bank took 5 banking days to complete the examination and found documents no discrepancy
* The bank sent the compliant documents to the transferring bank on 20) (X-07-07 by airmail.
* The transferring bank received the documents on 2OXX-07-14.
* The 1st beneficiary submitted its own drafts and invoice for substitution on
2O XX-07-17.
* Did the 1st beneficiary present its documents after LC expiry?
> No. It is because the 1st beneficiary managed to submit its own documents on first demand for substitution. UCP Article 38 also refers.
Subsequent Amendments
* A beneficiary receives a transferable LC and applies for transfer.
* It does not know if the transferable LC would be amended after the transfer.
* Does it need to tell the transferring bank now how the subsequent amendments, if any would be handled?
> Yes, It must.
* What choices does it have?
(i) Give up all subsequent amendments.
(ii) Retain the right to all subsequent amendments.
(iii) Retain the right to the amendments that increase $ amount
* How must the transferring bank deal with the 1st bane choice?
> The bank must clearly indicate the choice in the MT720.
Case Study 6
* A 1st beneficiary is going to transfer its LC to two 2nd beneficiaries.
* The 1st beneficiary abandons its right to all subsequent amendments.
* Is such amendment workable?
> Unlikely
Case Study 7
* A 1st beneficiary transferred its LC to five 2nd beneficiaries.
* The 1st beneficiary chose to retain the right to all subsequent amendments.
* It received an amendment to shorten the expiry date from 11/25/20xx to
11/11/20xx.
* The amendment required beneficiary’s consent.
* The 1st beneficiary accepted it and notified the advising/transferring bank.
* What should the bank do?
> The bank cannot relay the bene consent to the issuing bank at this stage.
> The bank should ask the 1st beneficiary to transfer the amendment to the five 2nd beneficiaries.
* The amendment was therefore transferred.
* 2nd beneficiary A accepted it.
* 2nd beneficiary B rejected it.
Insured Percentage
* A transferable LC was issued for USD11,300.
* It was transferred for USD10,000 covering all the required goods.
* The LC (MT700) required insurance policy but did not indicate the insured
percentage.
Beneficiary’s Name
* 1st bene: ABC Trading Ltd
* MT700 says “BL consigned to order, blank endorsed’.
* The 1st bene (unilaterally) adds “Shipper, if shown in documents, must be ABC Trading Ltd in its transfer application.
* Is it okay?
> There is some risk
> There is no guarantee that the 1st beneficiary would be able to endorse the
BLs.
Unit Price / Amount
* A 1st beneficiary does not want the 2nd bene documents (except drafts and invoices) to show the unit price or goods value.
* It (unilaterally) adds the following condition in its LC transfer application.
* “Documents except drafts and invoices must not show unit price or value of the
goods.”
* Is it okay?
> ‘Yes, (unless otherwise required by the transferable LC)
Case Study 11
* A transferable LC requires
“Beneficiary’s certificate that the beneficiary has sent a set of copy documents to the applicant within 5 days after shipment’.
* How may this requirement be shown in MT720?
* Is it okay to change to:
– 2nd beneficiary’s certificate that the 2nd beneficiary has sent ‘a set of copy documents to the 1st bone within 5 days after shipment
> No
> There are 2 options, though.
(1) There is an amendment to delete the requirement.
(2) The same requirement is shown in the MT720.
Case Study 12
* A bank refuses to transfer a transferable LC because it does not have he condition “3rd ’’ party documents acceptable”.
* Is the reason for the refusal legitimate?
> No.
Case Study 18
* A confirming bank transferred an LC with its confirmation.
* The 2nd beneficiary was not comfortable with the confirming bank and asked to have its own bank confirm the MT720.
* The 1st beneficiary requested the transferring bank to authorize the 2nd bene bank to add confirmation.
* May the transferring bank do so?
> No, such authorization must come from the issuing bank.
Case Study 24
* Can the LC be transferred without asking for the label to be attached to the 2nd bene invoice?
> This is risky and not recommended.
> The transferable LC should be amended to add the following condition.
* If this LC is transferred, the 2nd bene must also submit an Invoice (for a bigger amount) issued by the 1st bene bearing the SGS inspection pass label even though the amount shown therein may be different from that of the 2nd bene invoice; in which case, the 2nd bene invoice (for a smaller amount) need not bear the label’.
Transfer Changes
* Which party (1st bene, 2nd ben, applicant) should bear the transferred charges?
> The 1st bene
* Can the 1st bene pass the transferred charges to the 2nd bene?
> Yes
