Hi All I have already submitted this topic but I have not received any reply yet. So I am forwarding it again. If an lc has expired some 6 months back and have not been utilized or partly utilized and applicant wishes to amend the shipment and expiry date. Can the issuing bank amend this lc or should the issuing bank requests for a new application and reissue the lc? So my question is for how long does an issuing bank remains liable for an expired lc which has not been negotiated or partly negotiated. Thks. Glad
Amendment after L/C expiry
Hi glad,
I am agree with you and Catalyst, that the issuing bank should issue a fresh L/C, since they will not lose anything, but to earmark the customer's limit on their bank.
Some banks will have difficulties in restoring the long time expired L/C because of the limitation of their system. And it is also because to easen the accounting entries and local control, that it is easier for them to monitor the outstanding transactions than the already long gone one.
Sorry, that's all for now. Will revert again soon.
Thanks.
Amending LC after its expiry
Hi Andy
Just some afterthoughts. I know that it is an accepted practice for banks to reinstate or revalidate an expired LC. But, when an LC has expired, it is no longer a valid document/instrument! Even if all parties agree to any amendment, the provisions of the UCP should apply to a live, valid, operative document. An expired LC is no longer an operative instrument. Therefore, it can be amended no longer, can it?
Hence, revalidating or reinstating an expired LC, or amendingit in any manner whatsoever, should not be practised, nor should it be acceptable.
Will appreciate the opinion of the experts.
Amendment of LC after expiry date
Hi Catalyst,
Agreed.
Although UCP600 does not say anything about reinstating an LC after its expiry, as an applicant nor issuing bank should not make it as a common practice.
Appreciated for experts opinion...
Amendment after expiry of LC
I agree with Pan. I think that no final word on the issue, at least from the ICC, is available. UCP neither ascents to, limits or refuses permission to an amendment (if all parties agree) after expiry.
If the LC has expired, and the issuing bank can determine that no presentation (of the face value or the balance amount) has been made, it should consider the LC as expired and mark down the outstanding exposure in its books.
In my opinion, instead of amending and reinstating the expired LC, if the LC has long since expired as you stated, the concerned bank should insist on the issue of a fresh LC and creation of a fresh liability.
However, I would still like to know if as per the UCP, technically or legally, an LC that has expired can be amended (including being reinstated, revalidated) or not. I look forward to the opinion of experts on this subject.
sometimes necessary but...
Dear Friend, sometimes banks receive instructions to amend a L/C expired, I think that it is possible from the UCP point of view, but I am not sure from legal point of view, specially in the foreign country of beneficiary. So it is better to evaluate the situation and acting accordingly.
I will revert asap
Ciao
Amendment to LC that has expired
Hi,
For such a long time expired LC, it is suggested that the issuing bank issue a new credit instead of an amendment.
Yet, I do not mean that an amendment to an expired LC is impossible. An expired LC can be re-validated by an amendment to extend its expiry date if the issuing bank agrees to issue, the beneficiary agrees to accept and even the advising bank agrees to advise such an amendment.
Legally, there is no problem with such an amendment. But technically, such an amendment is sometimes not acceptable, for example, the LC management system of the issuing bank or the advising bank does not allow to revalidate the LC files that were closed after expiry date.
In reality, our bank now and then issues amendments to LCs that have just expired for a short time. And the result may be a bit surprise to you: Nine out of ten amendments are acceptable.
Best regards,
Nguyen Huu Duc
Dear Huu Duc,
I have missed you for some time - nice to see you are back!
In my role as mainly issuing bank, I would only amend such credits "retroactively" if they did not expire more than four weeks ago. After this time, the original credit should be cancelled and a new one can be opened, as already stated sometimes:
If a credit has expired, it's dead. And we don't want to have ZOMBIE-credits around.
However, if not expiring only at the counters of issuing bank, there is the latent risk of a claim being made under the old credit just after issuing the new one. After four weeks, I think the odds of being compelled to pay twice are only minor.
However, I would include a clause in the new credit that it has been issued as a replacement of the old one.
-Each long journey starts with a small step-
Best regards
Frammi
Dear Frammi and other members,
Many thanks for welcoming me back. I'll manage to join the forum whenever I can.
With warmest regards,
Nguyen Huu Duc
HI We are dealing with a
HI
We are dealing with a non-existent LC. On one hand, if the issuing bank is ready to accept further utilization of that LC it is a internal problem of the issuing bank to make it available for a new period. On the other hand the issuing bank however must explicitely mention in this amendment that the credit has now been rinstated. Just for the sake of good order