Advising charges

berry · Post by **berry** » Thu Dec 11, 2008 12:13 pm

We issued a lc on 09-10-2008 available with xxx bank (which is also the advising bank) in singapore. The lc expired on 9-12-2008. Today i received a swift from advising bank saying that the lc expired at their counter and they remained unpaid of their advising charge. So they now claim advising charges as per article 37. Can the advising bank do so? Why did they advise the lc without realizing their charges?

phan hoang ngan · Post by **phan hoang ngan** » Thu Dec 11, 2008 12:56 pm

The advising bank can claim advising charge as per article 37.
The reason why it advises LC without realizing their charges:
1. The advising bank advise LC to the Beneficiary before collecting charges because the Beneficiary has been their customer. Then, when they collects their charge, the current account of beneficiary run out of money, and the beneficiary would not like to pay this charge.
2. The advising bank advise LC to the second advising bank (Beneficiary's bank). And the second advising bank can not collect the first advising bank's charges from the Beneficiary. So they can not pay this charge to the first advising bank

That is my opinion. Pls share your ideas.

shahriar · Post by **shahriar** » Thu Dec 11, 2008 6:38 pm

i agree with phan; though not sure about point 1

here is a quote from commentary on UCP 600

The second paragraph of sub-article (c) qualifies the rule in the first paragraph of (c) by referring to situations in which the charges are stated to be for the account of the beneficiary and are not capable of being collected, i.e., the credit expires unutilized or it is utilized through another nominated bank (when the credit is freely available)...

regd

shahriar