Teletransmitted and Preadvised Credits and Amendments

Article 11 UCP 600 is identical to Article 11 a and 11c  UCP 500. Article 11b UCP 500 had been moved to Article 9 d UCP 600 ("A bank utilizing the services of an advising bank or second advising bank to advise a credit must use the same bank to advise any amendment thereto.")

A teletransmitted advise of a credit or its amendment will be operative unless and only if the issuing bank issues the caveat "full details to follow". The only point to remember is that the transmission needs to be authenticated. In practice only properly coded transmissions can be considered as valid amendment or openings of letters of credit.

As mentioned above: If the message does not contain the caveat "full details to follow" the secondary bank will disregard any subsequent mail confirmation.

Article 11 b UCP 600 confirms the provision of Article 11c UCP 500: A pre-advise binds the issuing bank and obligates the issuing bank to issue the letter of credit according to the pre-advice.
Despite the good intentions of the drafters, the enforcability of this
provision in practice is doubtful. A pre-advice commonly only contains the basic data of the LC (amount, expiration dates, goods). Already for
this reason it is difficult to enforce a pre-advice since the issuing
bank is completely free in the creation of the conditions not mentioned in the  pre-advice (shipping date, requirements for other documents). The consequence is: a frame contract that only contains basic data is not enforceable due to its lack of determinability. A claim for breach of contract or damages for non-issuance cannot be enforced.

Comments

Pre Advice

Could a pre advice be sent with conditions.?

I.e. we will issue an lc along the following guidelines provided you the following conditions are met?

Would it work in theory? Has anyone ever seen something like this actually sent?

Finance

You would not be able to do this

Article 11c of UCP600 states that a bank that issues a pre-advice "is irrevocably committed to issue the operative credit instrument or amendment, without delay, in terms not inconsistent with the pre-advice."

I agree with Peter

While the issuing bank does have the ability to hold the issuance of the letter of credit, they are bound to issue the letter of credit.  By failing to issue the credit, they have opened themselves up to litigation. 

For example a pre-advice is sent giving the details of the amount, exipiry date, beneficiary and applicant.  Upon receipt the beneficiary begins the process of obtaining raw materials for the contract. They do this because the issuing bank is irrevocably bound to issue the letter of credit.  If the issuing bank does not issue the letter of credit, then the beneficiary has possible recourse to the issuing bank as they have relied on their instructions.

Best regards,

LC Sam

stand by L/C

Hi, I need information about  STAND BY LETTER OF CREDIT (SBLC).

CAN SOMEBODY HELP ME IN THIS ISSUE? 

Standby Letter of Credit