Letter of Credit Forum

Dear Ghubshawi,

you may also refer to Official Opinion TA638rev - Unpublished UCP 600, query no 5, which I quoted below regards, Jimmy

query 5. Acceptance of Amendments - UCP 600 sub-article 10 (c) UCP 600 sub-article 10 (a) states: "a. Except as otherwise provided by article 38, a credit can neither be amended nor cancelled without the agreement of the issuing bank, the confirming bank, if any, and the beneficiary." Sub-article 10 (c) states: "c. The terms and conditions of the original credit (or a credit incorporating previously accepted amendments) will remain in force for the beneficiary until the beneficiary communicates its acceptance of the amendment to the bank that advised such amendment. The beneficiary should give notification of acceptance or rejection of an amendment. If the beneficiary fails to give such notification, a presentation that complies with the credit and to any not yet accepted amendment will be deemed to be notification of acceptance by the beneficiary of such amendment. As of that moment the credit will be amended." A question has arisen regarding amendments which do not impact a presentation of documents. Example: where under a credit for USD 100,000 permitting part shipments, and the issuer amends the credit to reduce it by USD 50,000, if a beneficiary presents documents for USD 50,000 without stating it has accepted or rejected the amendment. In this case, the bank cannot construe the beneficiary's silence regarding the amendment as acceptance to reduce the credit to zero, because the amendment had no impact on the presentation, and therefore the beneficiary has neither expressed consent nor rejection of the amendment. A beneficiary may not even have received such an amendment, and to construe silence as acceptance when the documents are not impacted by the amendment directly conflicts with the rights of the beneficiary stated in sub-article 10 (a).

Please confirm that a presentation of documents which is not impacted by an as yet unaccepted amendment does not constitute acceptance of the amendment by the beneficiary. A position to the contrary is in direct conflict with sub-article 10 (a). An amendment which does not impact a presentation of documents may not be automatically enforced against the beneficiary.  

Analysis/Coclusion 

Query 5 - Sub-article 10 (c) The example provided in the query outlines the type of issue that the UCP 600 Drafting Group sought to clarify by proposing a change in the language that appeared in UCP 500 sub-article 9 (d) (iii), now UCP 600 sub-article 10 (c). Keeping the wording as appeared in UCP 500 sub-article 9 (d) (iii), would mean that the nominated bank or issuing bank cannot, in the circumstances shown in the query, make any determination as to whether the beneficiary has accepted the amendment. Even if the nominated bank or issuing bank were to ask the beneficiary as to whether it has accepted the amendment, the beneficiary could refer to the content of sub-article 10 (c) and state that it has yet to make up its mind. You are correct in saying that a presentation that is not impacted by an as yet unaccepted amendment does not constitute acceptance of the amendment by the beneficiary.

Hi friend,  It should be review case by case. For example, original credit allows partial shipments and credit amount is 100.000 usd then an amendment issued which decreases the credit amount to 50.000 usd.  In this circumstance you can't determine that such amendment is accepted or not .  Regards