Letter of Credit Forum

Dear All

I received an LC from one of my clients with the following terms to be noted:

31C: DATE OF ISSUE: 06AUG2008
43P: PARTIAL SHIPMENT: NOT ALLOWED
45 A:  Description of Goods and/or service:

“NAME OF GOODS: 500MT IRON SCRAP
PACKED IN BAGS IN CONTAINER
TOTAL AMOUNT CFR PANJANG PORT FOR USD 380,000.00”

=====================
All of above is Description of Goods under quotes “ ” above.

L/C INDICATES THAT TOLERANCE OF +/-5 % IS ALLOWED IN QUANTITY AND AMOUNT

We made the shipment of 502MT as we mentioned description of goods in the docs as follows:

“NAME OF GOODS: 502MT IRON SCRAP
PACKED IN BAGS IN CONTAINER
 TOTAL AMOUNT CFR PANJANG PORT FOR USD 381,520.00”

We had no problems in the same as buyer paid the documents. It is to be noted that, in the whole LC, there is no mention of “quantity”, apart from what is mentioned in the description of goods above.

After that customer amended the same LC as follows:

DATE OF AMMENDMENT: 080908
NEW EXPIRY DATE: 30NOV2008
LATEST SHIPMENT DATE: 31OCT2008
Increase in Documentary Credit: USD 380,000.00
New Documentary Credit Amount after amendment: USD 760,000.00
Narrative:
+under field 45A,
Name of goods should be read:
“1,000 MT IRON SCRAP
PACKING IN BAGS IN CONTAINER
 TOTAL AMOUNT CFR PANJANG PORT USD 760,000.00”

--Other remains unchanged.
===================
Now we have shipped another 510 MT under the above amendment. The buyer wants to cancel the order and cannot take delivery. Now we are very concerned about the documents not to have any discrepancy as they should be 100% perfect, not allowing any chance to the buyer to point out any discrepancy. We are now double minded as how to prepare the documents as L/C does not indicate the partial shipment but has been amended in description of Goods, for quantity and amount, as indicated above. In this regard I have two questions:

1. Since we are utilizing the full L/C (Amount and quantity) would this be considered as partial shipment? If yes, then how can we utilize the full LC by sending another set of documents of the above 2nd shipment?

2. How the descriptions of goods to be mentioned, we have two options below;

OPTION 1:
“NAME OF GOODS: 510MT IRON SCRAP
PACKED IN BAGS IN CONTAINER
TOTAL AMOUNT CFR PANJANG PORT FOR USD 387,600.00”

OR
OPTION 2: (exactly as the amended description of LC?)

“NAME OF GOODS: 1000MT IRON SCRAP
PACKED IN BAGS IN CONTAINER
TOTAL AMOUNT CFR PANJANG PORT FOR USD 760,000.00”

If option 2 is correct then should we mention actual “QUANTITY” and “AMOUNT” separately in the docs as the quantity shipped now is 510MT

Any accurate and legal feedback on above would be priceless.

Thanks.
John