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Regarding Expiry date

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Tue, 01/29/2008 - 18:56
prabhuseetharaman
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Joined: 01/29/2008
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Hi,

     I have a doubt regarding expiry date. Let us take the following case:

   L/C available with ABN AMRO Bank, China By Acceptance. Expiry date is 25/01/08.

   Benefeciary presented the docs to ABN AMRO, China on 25/01/08.

   In the above case what time limit does the nominated have to check the docs and forward the docs to the issuing bank. Since the credit is expiring on 25/01/08

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Wed, 01/30/2008 - 00:52
#1
nhduc.dng
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Joined: 06/14/2007
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Five Banking Day Rule

Dear Prabhuseetharaman,

Expiry date is understood as the last day for the beneficiary to present the documents to the nominated bank. The nominated bank has a maximum of five banking days following the day of presentation to determine whether the presentation is complying. If the documents are complying the nominated bank (may) honour or negotiate and forward the documents to the issuing bank on any day within  but  not later than the fifth day of the said period. 

As in your example, the beneficiary presented the documents on the expiry date, i.e., 25 Jan, 2008, the nominated bank (ABN AMRO) has five-banking days following the date of presentation to examine the documents and forward the documents to the issuing bank, that is to say, ABM AMRO may forward the documents to the issuing bank on any day from 26 Jan – 1 Feb, 2008 (23 & 24 Jan, 2008 are not calculated as banking days as they fall on Saturday and Sunday).

Regarding extention of expiry day or last day for presentation,  you are requested to further refer to Article 29 UCP 600.

Best regards,

Nguyen Huu Duc

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Wed, 01/30/2008 - 00:58
#2
John_Ferguson
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Joined: 12/28/2007
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The "when rule"

I would not think that the five day rule is directly relevant here – 14(b) does not mention anything about the forwarding of the documents. 

To me 15(c) would be most relevant: 

When a nominated bank determines that a presentation is complying and honours or negotiates, it must forward the documents to the confirming bank or issuing bank. 

The Commentary on UCP 600 qualifies this (page 70): 

The word ”when” does not mean immediately, but indicates that the process of honour or negotiation must begin. During the normal workflow for documentary credits, it can often take some time after the actual determination that the documents comply to conclude the processing of the transaction. 

Regards
Scottie

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Wed, 01/30/2008 - 02:40
#3
pan
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Joined: 09/13/2007
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Agreed

Dear Friends,

five days for examination are towards the presenter to lift discrepancies. A nominated bank could send documents to issuing bank asap, but not compelled to do in 5 days.

The issuing bank will have the same period of time to state that documents complied with or that are discrepant to the nominated bank, refusing to reimbourse or to call backthe amount paid-and naturally will start a problem.

Ciao

 

 

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Wed, 01/30/2008 - 05:09
#4
nhduc.dng
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Hi Scottie and Pan

Dear Scottie and Pan,

Thanks for pointing out my mistake.. It was just an absent-mined moment of mine. Actually I just tried to make Prabhuseetharaman understand that despite the documents are presented on the expiry date, the nominated bank still has five banking days following the day of presentation to examine and determine whether or not the documents are complying.  

UCP has no articles stipulating the deadline for the nominated bank to forward the complying documents to the issuing bank but just stating that when a nominated bank determines that a presentation is complying and honour or negotiate, it must forward the documents to the confirming bank or the issuing bank. However, it is common that banks normally try to forward the complying documents to the issuing bank within such a frame of time; or at least they try to date the covering schedules a date within such such a frame of time. There are reasons for them to do this: (i) they may receive reimbursement earlier; (ii) they do not want the documents to be rejected for alleged/disputable discrepancy regarding the presentation time.

Once again thank you, Scottie and Pan.  

Best regards,

Nguyen Huu Duc

 

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