Home › Forums › Letters of Credit

Additional clause

1 reply [Last post]
Wed, 03/10/2010 - 18:59
minuthomas
Offline
Joined: 03/10/2010
Posts:
Printer-friendly versionSend to friendPDF version

One of my customer (I am working in a bank) would like to open an LC mentioning the additional clause as "They (applicant) reserve the right to deduct any outstanding sum of debts not settled upon payment under baby LC." Is to OK to mention such clause in an LC. Please, anybody can help me?.

‹ Iraq LC Credit available with confirming bank's branch in the same country ›
Top
Thu, 03/11/2010 - 12:17
#1
LC Sam
Offline
Joined: 08/09/2007
Posts:
It can be done, but I would not do it

Hello Minuthomas,

This wording could be  included, but it would cause headaches that you probably would not want to have and the beneficiary would probably not accept it.

 If you do choose to include this clause, I would word it differently as follows:

"It is a condition of this credit that any payment made under this credit is subject to a deduction as instructed by the applicant for any outstanding debts not settled upon payment under letter of credit number XXXX issued by XXXX."

Also, you need to make sure that the credit is available with your bank by payment and that their is no reimbursing bank.

I hope this helps you out.

Best regards,

LC Sam

 

Top