MIXED PAYMENT TERMS- LC WORKABLE.

[dinesh2476]

Team,

Dear Experts, Please advise if wordings in the below LC workable?

LC has been issued with below condition. Below covers the complete LC value of 450,000. There is no requirement for presentation of documents in field 46A in any of these mixed payments terms nor FAT and Acceptance test given below as requirement in field 46A. How does beneficiary ensure complying presentation to get these payments.

Is it approach being followed across? Though beneficiary has right to refuse and ask for amendment, Need expert opinion as I understand that it is the practice has been followed for decades.

+PLEASE READ PAYMENT TERMS AS BELOW:
30 PERCENT (USD 135,000) ADVANCE PAYMENT ALONG WITH ORDER
AGAINST SUBMISSION OF ADVANCE PAYMENT GUARANTEE - 15 PERCENT
(USD 67,500.00) OF THIS IS SELF FUNDING.
.
50 PERCENT OF PAYMENT BEFORE SHIPMENT ON COMPLETION OF FACTORY
ACCEPTANCE TEST (FAT) - SELF FUNDING. (USD 225,000.00)
.
20 PERCENT UPON FINAL ACCEPTANCE OF EQUIPMENT AT SITE ACCEPTANCE
TEST LATEST 90 DAYS FROM THE DATE OF SHIPMENT. (USD 90,000.00)

Thanks & Regards
Dinesh Kumar

[picant]

hi Pal,

a part some missing details as delivery terms, date of shipment, the l/c is covering an equipment commissioning, an advance payment under an AP Bond is to start, then when the equipment is ready,
tested by applicant/seller, delivered for dhipment under a FAT to be presented to the nominated bank
for further payment of 50% of the goods value and the balance payable against final acceptance test,
however not later than 90 days from shipment' date-
Now it is better to ask for a better wording, I assume that SELF FUNDING means that the applicant has already paid the issuing bank(escrow account or collateral?)

Other comments appreciated
Ciao

[dinesh2476]

Chief,

what i felt not clear was that LC did not say who had to present these documents.

It is just like another additional condition and did not preciously state that these documents(FAT and Site acceptance test) to be presented along with shipment documents according to the mixed terms and what is the examination requirements against these documents.

46A called for below documents:
1 coo
2.Invoice
3. PL
4.BL
5. Manufacturers certificate and beneficiary certificate.

Thanks& Regards
Dinesh Kumar

[dinesh2476]

Dear experts any opinion welcome

[picant]

Hi Pal,

being not aware of the l/c wording, I just indicate that the l/c beneficiary must present an advance payment bond and obtains rhe payment of 30% the bond must indicate that it will be valid untill presentation of the documents under l/c.
After FAT, the beneficiary will submit its invoice for full equipment value, showing the payment terms,
to the nominated confirming bank, documents to be cashed only for 50% gross value and by issuing bank's
undertaking to pay the balance 20% under a test report that all is in order, payment that will be effected
at least 90 days after shipment if a test report is not presented.
This is a common process in case of sale and commissioning, naturally the l/c must contain all proper terms.
So when beneficiary receives the l/c will read it with maximum care and eventually asks for an amendment.
Other comments appreciated
Ciao