purchasr order
Dear Expert,
May I ask for your opinion of the following :
we have been discouraging issuing banks from attaching purchase orders, sales confirmation or the like to their LCs. However, some issuing banks alternatively require presentation of a PO and/ or sales confirmation copy.
The PO or sales confirmation shows the ship date as July Vessel whereas the LC shows the latest shipment date as 2009-07-15.
The PO also shows the Incoterm as FOB, vessel as Evergreen, quantity as 72,000 pieces, unit price as USD127, etc. All these could be different from or in conflict with the other stipulated documents but we wouldn’t know until document presentation.
Here come the questions.
(a) To what extent must banks examine the presented PO or sales confirmation? If included as an other document, I think most banks would probably examine under 14f and 14d
(b) Must banks ensure that there is no conflict between the PO or sales confirmation and the other stipulated documents?
Assuming (a) above applies then yes
For examples, Purchase Order and sales confirmation showing Tenor:60 days after sight whereas L/C required tenor at 60 days after B/L date.
Must we treat it as a discrepancy?
Thank you for your assistance.
Regards,
LEUNG, KS
yes sir iam aggread yours command.
May I ask for your opinion of the following :
we have been discouraging issuing banks from attaching purchase
orders, sales confirmation or the like to their LCs. However, some
issuing banks alternatively require presentation of a PO and/ or sales
confirmation copy.
regards,
phe9oxis,
http://www.guidebuddha.com
Dear Leung,
I would like to draw the reference to following article and para in this regard:
Art 4.a of UCP 600 states that documentary credit is a separate contract between the Issuing bank and the beneficiary and it is a separate transaction from the commercial contract between the applicant and beneficiary and the contract between the applicant and the Issuing bank (credit application with agreement).
Para 5 of ISBP681 states - Even if the credit expressly refers the underlying contract (contract between the applicant and beneficiary), the terms of the credit is independent. It states the documents against which issuing bank will honour their undertaking.
In my view to avoid any future complications at the time of payment, it is better to quote these provisions and have an amendment issued with out reference to such underlaying contracts.
Regards,
Sairam
www.paramshree.com
Well, I don't profess to be an expert, but do fully endorse Mr Bose's view.
I would add however, that the primary applicable provision in my view, would be sub-art. 14 (d), and not also 14 (f).
The LC belongs to the beneficiary, and if they have not rejected or requested amendment to the LC, they must bear the risk of being required to comply with both the P/O and the LC. The issuing bank/applicant in this case, is in a more favorable position.
The negotiating bank if choosing to act on its nomination, cannot exclude the P/O from the examination process.
The issue is whether the P/O has been presented in advance of the formal presentation (and this is not clear), to allow the bank to compare the P/O against the LC, or whether it forms part of the presentation. In the latter case. I suggest it would be too late to seek an amendment, as the presentation would be deemed to be an acceptance of LC terms.
Dear Leung,
To the best of my understanding, the answers would be "yes" to all your observations and comments. Articles 14(d) and 14(f) would come into play, conflict in data would be the primary cause for treating the presentation as discrepant.
If the issuing bank has dug the grave, it must lie in it. The beneficiary should demand amendment to such LCs.
I am interested in what the experts say.
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