Inoperative LC vs Unworkable LC

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Inoperative LC vs Unworkable LC

Postby ismailgzr - turkey on Tue Apr 02, 2013 12:07 am

Hi all forum members

I really want to know the difference between an inoperative L/C and an unworkable L/C, of course, if there is a difference.

Thank you very much

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ismailgzr
 
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Inoperative LC vs Unworkable LC

Postby webbizgold - Malaysia on Tue Apr 02, 2013 9:49 pm

An inoperative LC is more strictly defined as having some conditions that literally render the LC inoperative until some other event or activity 'activates' the LC, such as "LC to become operative upon the issuance of a performance guarantee", or any document to be issued by the applicant, who could actually choose to make the presentation discrepant anytime at will. Even clauses such as "Payment is to be made only upon clearance of goods through customs" would create an inoperative LC, since it defeats the very nature of the LC itself.

An unworkable LC refers more to an LC with conflicting terms that would be practically difficult if not impossible to implement, such as an LC available with the issuing bank by Negotiation (an issuing bank only honors per Article 7).
Some other examples:
- transferring an LC inappropriately by allowing the transferred credit to violate the permissible changes in article 38 (eg. increasing instead of curtailing shipment period)
- LC calling for full set of BL but requiring one original to be sent to applicant

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webbizgold
 
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thanks

Postby ismailgzr - turkey on Sat Apr 13, 2013 12:05 pm

Thank you very much,

I really appreciate your answer

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ismailgzr
 
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Joined: Tue Mar 26, 2013 12:23 am
Location: turkey


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