Gross Amount on Shipment Advice

[mia vervacke]

Picant wrote:

I have the following case between a minor bank and a major one, the first as presenting bank o/b of beneficiary, the second nominated as paying bank, with instructions to claim reimbursement from the account of issuing bank with a third bank. The nominated bank , even if required by issuing bank, refused to add confirmation, but still remain as nominated bank

a l/c ,I repeat, by payment with a nominated bank , but not confirmed, required:

-shipment advice must be sent within three days from the date of shipment to m/s ......Insurance Co, tel...
fax..., by telex/cable/fax stating: Bank name, l/c numbers, amount, brief particulars of merchandise and shipping marks therein. a copy of shipment advice must accompany the documents.

Presented shipment advice stating as "Amount" the invoice gross amount, as the invoice showed an advance payment of 50% of the supply value.Invoice showed, therefore, the gross and net invoice amount.
.
Nominated bank refused this document, avoiding to effect payment, and sending, under our authorization, documents to issuing bank , for the following reason: Wrong amount on Shipment advice.

We intervened with nominated bank but it confirmed its decision.
Could we insist with such bank, being it not confirming?
The nominated bank sent documents to issuing bank, not alerting about discrepancy, but not claiming reimbursement, so beneficiary has no money at disposal, waiting for issuing bank's decision
A competent clerk or checker should know that the goods must be insured for their gross value and not for the amount to be paid as per invoice.
Your comments appreciated
Thanks in advance
Ciao

[mia vervacke]

Kevintam wrote:

I agree with you. The shipping advice is for insurance purpose and the amount shown should be the gross amount. The nominated bank, without adding confirmation to the credit, is not bound to pay. As the nominated bank refused to accept the documents as complying presentation, you may act as the agent of the beneficiary and present the documents directly to the issuing bank.

[mia vervacke]

Commentary on UCP 600 by Kim Christensen:
Obligation of a nominated non-confirming bank (page 62)
It is clarified in the “Commentary” that presentation to a nominated non-confirming bank does not (unless agreed to by the bank) obligate that bank – and as a consequence of that the nominated bank is not obligated to observe the following provisions:
1. Sub-article 14(a); No obligation to examine the documents
2. Sub-article 14(b); The fact that the nominated bank do not refuse documents within the given time frame (maximum 5 days) does not obligate the bank to honour or negotiate.

Only confirming bank and issuing bank are obliged to pay provided compliant documents are presented. In your case nominated bank has sent the documents to issuing bank, as such issuing bank will be obliged to reimburse the nominated bank. You also mentioned within your question that you authorized that nominated bank to present documents to issuing bank (Nominated bank refused this document, avoiding to effect payment, and sending, UNDER OUR AUTHORIZATION, documents to issuing bank).

So I'am afraid you cannot insist with such bank. Maybe you can contact issuing bank directly and insist with that bank to effect payment.

About gross amount on shipment advice, I agree with Kevintam and picant that this doesn't constitute a discrepancy. A shipment advice
is not a document described in the UCP/ISBP and L/C must clearly mention what should be mentioned within this document. In your case L/C required the AMOUNT to be mentioned, but did not specify which amount (f.e. INVOICE AMOUNT, GROSS AMOUNT, NET AMOUNT) as such I would accept each amount mentioned within the shipping advice. That the shipping advice is for insurance purpose has nothing to do for me, we are not suppossed to know which information the insurance company needs to establish the insurance policy.

All comments appreciated

[ANKUSHMORE]

I agree, It is not a discrepancy.

[quang]

It's not a discrepancy, but I may advise Ben to show all of those: INVOICE AMOUNT, GROSS AMOUNT, NET AMOUNT