Partial Shipment and Partial payment
I am faced with a strange argument from a customer who claims that although the LC provided for partial shipment, it does not mean that partial payment (i.e., payment of an invoice covering the partial shipment) is permitted. Can anyone please help me with some legal precedents which establish that this is permitted and is an obligation of the LC opening bank?
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The customer's function is that the LC states coloured shipment is 70-432 exam allowed but makes no name of coloured drawings. However, applying the above UCP provision, and in the epilepsy of some LC conditions to 70-649 exam the contrary, coloured drawings would thence also be acceptable.It is black that one should have to vacation spot to citing the above supplying to 640-553 exam hold what is universally constituted to be a generalized principle, but your client is either existence disingenous, or naif of 640-816 exam LC principles.There are of instruction modify more burly arguments than the above, butwould exclusive be worth pursuing, if the client ease objects.
Article 31 (a) of UCP600 states 'partial drawings or shipments are allowed'. This is stating the default position, and will stand unless otherwise stated in the LC.
The customer's position is that the LC states partial shipment is allowed but makes no mention of partial drawings. However, applying the above UCP provision, and in the absence of any LC conditions to the contrary, partial drawings would therefore also be acceptable.
It is unfortunate that one should have to resort to citing the above provision to support what is universally recognized to be a general principle, but your customer is either being disingenous, or ignorant of LC principles.
There are of course even more robust arguments than the above, but would only be worth pursuing, if the customer still objects.
Thank you very much, that was a very good start. The customer is being deliberately obtuse and may carry on with the objections. Yes, it is like having to prove 2+2 = 4 but I would be grateful for more of the robust arguments you hinted at. Thank you again!
The LC allows partshipments. It is silent about "partial drawings", but does not prohibit. So therefore, it is allowed.
The bank is bound to honour the value of each and every compliant presentation made representing each and every partshipment, as per Art. 7(a). It cannot declare that it will for example, collect all the presentations and then make a single payment (which is what the customer appears to be wanting).
does every l/c application form which applicant fills,specify that he is going to be restricted with ucp principles?
my second question,if the lc mentions partial shippment,it means that the goods will be transferred in more than one turn and everytime beneficiary shows complying presentation ,will be paid.this all hints that the lc is red clause or green clause one.am i right?
Alikhan,
Without seeing the actual application form used by the issuing bank we cannot be absolutely sure, but it is usual practice that the application form is very clear in specifying that the resulting L/C will be issued in accordance with UCP600.
Re your second question, I don't see the connection between the usual kind of drawing upon each of several partial shipments being a red or green clause credit. The beneficiary is simply availing themselves of the L/C as and when they ship. It is not claimed that this particular L/C is a revolving credit, just the usual every-day kind of L/C which allows part shipment.
Bob
Thank you,
Remember also that the applicant has implicitly agreed to be bound by the terms of the UCP600, and this agreement should form part of the indemnity given to the issuing bank, on the LC application form. This would be a binding contract and is separately enforceable. You could perhaps bring this to the customer's notice.
Very clear explanation, Bravo
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