Hi,
I was issue an Lc to an egyptian supplier. After issue lc he asking for more new orders before give the old shipment. He saying his costing is increased so he need more quantity. I promise him that i will give him new order but ship the old order first.
For this issue he passed 20 days but don’t give any shipment. I told him you Don't even give my old shipment how i give you further order.At last we come to the point that he will cancel the LC. After 2 days when he come to know for cancellation bank charge him 280$ then he refused to cancel also.
He said i cant cancel it will Autometic cancel after expiry date.
In lc there have conditions that all cost outside of lc issuing country paid by beneficiary
Now already 30 days over after expiry date.Now i am asking from the beneficiary atleast give me letter that you can't give supply i submit it to my bank. He refused to provide any kind of Cooperation
Now i can cancel it myself? Or my bank can cancel it its own? And have any cancelation charge i have to pay?
Please help me to give some suggestion
Supplier Don't want to cancel the Lc
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Alamin
- Posts: 1
- Joined: Mon Jun 01, 2020 10:55 am
- First Name: Al amin
- Last Name: Fahad
- Organization: Al razi enterprise
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- Location: Bangladesh
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Ozoda
- Posts: 56
- Joined: Wed Mar 11, 2009 5:50 pm
Re: Supplier Don't want to cancel the Lc
Dear Alamin,
The issuing bank can not cancel the LC on its own.
For LC cancellation the agreement of the issuing bank, confirming bank (if any) and the beneficiary is needed.
I did not understand whether the LC has expired or not.
If the Letter of Credit has already expired 30 days over the expiry date as you mentioned and there were no documents presented within the LC validity, the issuing bank should release you from any obligations under subject LC immediately after the expiry date without any charges for you.
If the LC is still valid and you are willing to cancel it and to bear the beneficiary's bank cancellation fees you may approach the issuing bank requesting them to cancel the LC and instruct them to inform the beneficiary's bank that their cancellation fees will be paid by yourselves.
The beneficiary's bank upon receipt of beneficiary's consent for the LC cancellation will claim their charges from your bank.
If other bank besides the beneficiary's bank was involved in LC advising, you should take their charges into account as well.
If the matter is not urgent and to avoid excessive bank cancellation fees and SWIFT charges you may want to wait for the LC expiry date, if it has not yet, after which the LC will be deemed void with no charges for you.
Please bear in mind that payment of the beneficiary's bank cancellation fees will also lead to the payment of the issuing bank’s additional SWIFT charges related to that payment.
Kind regards,
Ozoda
The issuing bank can not cancel the LC on its own.
For LC cancellation the agreement of the issuing bank, confirming bank (if any) and the beneficiary is needed.
I did not understand whether the LC has expired or not.
If the Letter of Credit has already expired 30 days over the expiry date as you mentioned and there were no documents presented within the LC validity, the issuing bank should release you from any obligations under subject LC immediately after the expiry date without any charges for you.
If the LC is still valid and you are willing to cancel it and to bear the beneficiary's bank cancellation fees you may approach the issuing bank requesting them to cancel the LC and instruct them to inform the beneficiary's bank that their cancellation fees will be paid by yourselves.
The beneficiary's bank upon receipt of beneficiary's consent for the LC cancellation will claim their charges from your bank.
If other bank besides the beneficiary's bank was involved in LC advising, you should take their charges into account as well.
If the matter is not urgent and to avoid excessive bank cancellation fees and SWIFT charges you may want to wait for the LC expiry date, if it has not yet, after which the LC will be deemed void with no charges for you.
Please bear in mind that payment of the beneficiary's bank cancellation fees will also lead to the payment of the issuing bank’s additional SWIFT charges related to that payment.
Kind regards,
Ozoda
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mostafashakil
- Posts: 4
- Joined: Tue Jun 02, 2020 7:06 pm
- First Name: Mostafa
- Last Name: Shakil
- Organization: Logistician Club
- Filter: Two Plus Two =: 4
- Location: Bangladesh
Re: Supplier Don't want to cancel the Lc
Hi Alamin,
As you said LC has been expired it means it does not 'exist'. From my view nothing to do from your side. Just wait until your bank asking for a letter regarding that specific LC. Bank's has both options:
1. They can close the file from their own (as its expired).
2. Some banks may charge you some fees for LC cancelation.
So, it's all about your relationship with your bank as well as your negotiation power.
Best Regards,
Mostafa Shakil
Dhaka
As you said LC has been expired it means it does not 'exist'. From my view nothing to do from your side. Just wait until your bank asking for a letter regarding that specific LC. Bank's has both options:
1. They can close the file from their own (as its expired).
2. Some banks may charge you some fees for LC cancelation.
So, it's all about your relationship with your bank as well as your negotiation power.
Best Regards,
Mostafa Shakil
Dhaka