Please urgent help with CDCS question number 27!

[u2l]

Please help me with this question. I'v been looking on the internet for the answer but found none ><. I would be eternally thankful to those who help I promise ><!

27. Case Study
Upon request by the applicant, the issuing bank finally waived the previously advised valid discrepancy for the first installment shipment made after the latest shipment date in a DC subject to UCP 600 that clearly stated the shipping period of three installment shipments.However, the issuing bank did not clarify whether or not the DC was still valid for subsequent installment shipments.

After a period of time, the beneficiary presented compliant documents for the second installment shipment made according to the shipping schedule stated in the DC. The issuing bank denied payment according to UCP 600 article 32.

The beneficiary sued the issuing bank for payment dishonor and negligence.

I. The expert's report from the beneficiary states that the confusion is created by the issuing bank that should have clarified in its waiver notice whether or not the DC is still valid for the second and the third installment shipments. So the issuing bank should bear the serious consequences for its negligence and should effect payment of the second installment shipment, since the documents are all compliant.
II. The expert's report from the issuing bank states that:
a. There is no stipulation in the UCP 600 that requires the issuing bank to state its intention/decision on the
validity of the balanced installment shipments after waiving the discrepancy in the first installment shipment.
b. Discrepancy and waiver are two separate issues. The wavier cannot change the nature of a discrepancy. A discrepancy always remains a discrepancy, whether being waived or not.
c. The discrepancy will trigger the following two consequences:
1. To dishonor payment according to UCP 600 articles 7, 14 & 16, and
2. To make the DC no more available for all future installment shipments according to UCP 600 article 32.
d. So the wavier only waives the first consequence regarding payment but the second consequence affecting balanced installment shipments remains unwaived.
e. As a result, the issuing bank has no payment obligation for the second and the third installment shipments.

If you were the Judge, what would you adjudicate? Please state the reasons of your judicial decisions.

[picant]

Hi Pal,

I think that you are referring to GIVEN PERIODS and not to the supply schedule first shipment not later than..., second shipment not later.... etc.
If given periods are requested, and presentation of document for one shipment is not complied, the successive shipments are not more possible, and if the presentation is furtherly accepted the applicant
must instruct the issuing bank about the validity of the remain shipments.
However, in my Country, when an applicant requests the issuing of documentary credit, the application
indicates that applicant is aware of UCP, and copy of UCP is attached to the terms and conditions relating to bank services, mandatory in every branch premises.
I think that the beneficiary should have the same knowledge and operate consequently. In advising credits
a bank inform beneficiry to check conditions and eventually obtain an amendment.
If I were a judge I check if the issuing bank has already cancelled the credit from the applicant risk position and acts consequentely.
So, please inform us, about the CDCS answer.