Article 78 problem in a confirmed L/C

[hulker]

Hi all,

We have an irrevocable and confirmed L/C - 90 days.

The problem here is; although Article 49 - CONFIRM, our bank informs they can not confirm because Article 78 is written as below :

UPON OUR RECEIPT OF THE DOCUMENTS IN ORDER, WE SHALL HONOUR THE
PRESENTATION AS INSTRUCTED.

and they require this article to be amended as below :

UPON RECEIPT OF YOUR SWIFT MESSAGE, CONFIRMING THAT THE YOU HAVE HONOURED THE COMPLYING PRESENTATION AND SEND THE DOCUMENTS TO US, WE SHALL EFFECT PAYMENT BY TELEGRAPHIC TRANSFER ON DUE DATE ACCORDING TO YOUR INSTRUCTIONS.

However when our importer tried to amend 78 as this, their bank insisted on the above description and informs becasue it is their format they can not amend that Article.

Now we are waiting their decision again but because this problem our importer had to amend latest shipment date twice.

Can I learn your recommendations and what we can, or the banks can do about this?

Thanks in advance...

[picant]

Hi Pal,

every bank has its own policy in incurring risks. In your case the confirming bank requires the possibility to act i/o wait for proceeds. Being this an usance d/c this action has no meaning:
-against confirming bank request the issuing bank does not cover,
-against remittance letter instructions, the issuing bank does not transfer funds.
But confirming bank follows its own rules and issuing bank must adhere to it.
Other comments appreciated
Ciao

[hulker]

Hi Picant,

Thank you for information.

Our bank has send a swift to issuing bank requesting this article to be amended, hopefully they will amend it soon.

Best regards,