Usance L/C expires within 90 days

7 replies [Last post]
chinastyle
Offline
Joined: 09/26/2008
Printer-friendly versionSend by emailPDF version

What happens if a usance L/C expires within the 90 day period granted to the buyer?  If there is already a payment undertaking and the proceeds are paid by the advising bank into the seller's account but the buyer still has say 45 days left to pay the opening bank, what is the result?

Frammi
Offline
Joined: 08/17/2007
I hope I understood you correctly!

Dear Chinastyle,

first of all a very warm wellcome to this forum.

I understand that your situation is: 

L/C payable at 90 days after B/L date and docs presented at 45 days prior to L/C expiry date.

In this case please note that the expiry date is only the latest date for presentation of documents, not the latest date for payment.

Consequently, you will have to pay an irrevocability fee until the expiry date and a further deferred payment charge for the period thereafter in which the bank does not only have a possible liability towards the beneficiary (depending on whether conform docs will be presented within validity of the credit or not) but an existing liability towards the presenting party, thus expanding the exposure period of the banks involved.

However, do not forget that presentations containing transport documents have to be presented within a certain period after shipment of the goods (if not mentioned in the credit 21 calendar days as per Art. 14 c) of UCP 600).

   -Each long journey starts with a small step-

Best regards

Frammi

chinastyle
Offline
Joined: 09/26/2008
Thanks Frammi. The

Thanks Frammi.

The situation is as follows: Dox presented before the expiry date, but draft is payable 90 days after sight, L/C expires within that 90 days.  I assume in this case if the dox were presented in time, the draft will still be paid 90days after sight regardless of whether L/C has expired? 

Catalyst
Offline
Joined: 06/15/2007
LC expires before draft's maturity date

Dear Chinastyle,

You are spot on, absolutely correct. Once the LC has been properly utilised through a valid presentation and documents have been accepted, the LC has served its purpose. The commitment under the LC lives on till maturity.

 

Frammi
Offline
Joined: 08/17/2007
Excellent explanation, Catalyst

Expiry is only the latest date for presentation not for payment!

   -Each long journey starts with a small step-

Best regards

Frammi

chinastyle
Offline
Joined: 09/26/2008
Thanks to you both!

Thanks to you both!

Sameer Ahmed
Offline
Joined: 10/13/2008
reg. bills of exchange

Normal
0

false
false
false

EN-US
X-NONE
X-NONE

MicrosoftInternetExplorer4

/* Style Definitions */
table.MsoNormalTable
{mso-style-name:"Table Normal";
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-priority:99;
mso-style-qformat:yes;
mso-style-parent:"";
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin-top:0in;
mso-para-margin-right:0in;
mso-para-margin-bottom:10.0pt;
mso-para-margin-left:0in;
line-height:115%;
mso-pagination:widow-orphan;
font-size:11.0pt;
font-family:"Calibri","sans-serif";
mso-ascii-font-family:Calibri;
mso-ascii-theme-font:minor-latin;
mso-fareast-font-family:"Times New Roman";
mso-fareast-theme-font:minor-fareast;
mso-hansi-font-family:Calibri;
mso-hansi-theme-font:minor-latin;}

We have a transferable LC. Master LC was confirmed by the XX
bank. But in my transferable LC Drawee/ available bank is YY applicant bank. So,
in that case how should we submit the bill of exchange (draft) to bank. Shall I
mention confirmed bank name or drawee YY name . please advise my LC is going to
be expire. Advance thanks… Yr’ Mr. Sameer

smmujeeb
Offline
Joined: 07/29/2008
Drawee

Hello Sameer,

When LC is transferred, you can mention acutal issuing bank (buyers bank) as drawee.....

 

//
//