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THE ADVISING BANK REPORTS THAT THE LC IS NULL AND VOID

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Wed, 07/21/2010 - 08:34
esi
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Joined: 04/08/2010
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HI AGAIN :)

THE LC ISSUE DATE :29/06/2010

EXPIRY : 13/10/10  AT OUR COUNTERS

LATEST DATE OF SHIPMENT :20/09/10

*49  : MAY ADD

WE RECEIVED A MESSAGE FROM THE ADVISING BANK SAYING THAT BECAUSE THEY ARE UNABLE TO ADVISE THE A/M LC THEY TREAT THE LC AS NULL AND VOID.AND CLOSE THEIR FILE.

--WITHOUT ANY PRIOR WARNING--

CAN AN ADIVISING BANK CANCEL AN L/C??? WITHOUT RECEIVING THE CONSENT OF THE APPLICANT BANK? 

ANY IDEA IS WELCOME,

TENKS :)

 

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Wed, 07/21/2010 - 09:37
#1
Abrar
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"Cancelled" LC

An advising bank cannot cancel the LC, as this remains an irrevocable contract between the issuing bank and the beneficiary, to which the advising bank is not a party.

Ordinarily, where instigated by the applicant, an LC can only be cancelled with the agreement of the beneficiary, the issuing bank, and a confirming bank, if applicable. In practice however, in the event that the beneficiary unilaterally advises that it does not wish to avail the LC (i.e requires cancellation) the LC would stand cancelled without requiring the banks' approval, as te beneficiary cannot be compelled to perform under the LC.

In your case, I should think that the advising bank is not suggesting that it is "cancelling" the LC, but simply refusing to "handle" the LC, i.e a willingness to act in the capacity of an advising bank. Art 9e of UCP600 states : " If a bank is requested to advise a credit or amendment but elects not to do so, it must inform, without delay, the bank from which the credit, amendment or advice has been received". This is a right of an advising bank, and in this case, the issuing bank would have to issue the LC direct to the beneficiary, or find alternative banking channels to advise the beneficiary   

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Thu, 07/22/2010 - 10:47
#2
esi
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Joined: 04/08/2010
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thank you,

thank you very much for your help abrar,  

if I send an amendment to the advising bank and insert field 57 Advise through- with a new bank's name- to the LC, it will solve the problem, is that right? or may the advising bank again refuse to advise the LC to another bank , is it possible?

greatest tenks :)

(ps. it is not our bank's policy to advice the lc directly to the benef, so I can not choose this option)

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Thu, 07/22/2010 - 11:24
#3
Abrar
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Advising LC

It looks as if the 'advising' bank has already closed its files, so the proposed amendment would not work. In any case, you would be requesting the first advising bank to advise further through a second advising bank, and if the first bank is refusing to advise the LC in the first instance, the situation is no different even if you introduce a second bank. Under the circumstances, I would reissue the LC through a bank which is likely to agree to advise. It might also be worth enquiring as to why the first bank refused to advise. Be advised though, that the bank is not obliged to give a reason.

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