TOLERANCE?

Navi · Post by **Navi** » Fri Mar 27, 2009 2:58 pm

Hi friends,
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MAybe it is not so important but i would like to share it here.
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We received an LC amount EUR.420.000.- No tolerance stated in field 39A. However, 47A states that "minimum amount authorized on this lc is EUR.315.000.- and maximum amount is EUR.420.000.- After a few calculations I considered that correct LC amount should be EUR.367.500.- and aprroximately +/-%14 tolerance will match the above amounts. Do I need to demand an amendment from the issuing bank or accept LC as issued?

Regards

cristiand969 · Post by **cristiand969** » Fri Mar 27, 2009 6:24 pm

Dear Navi,
By putting this additionally condition, the issuing bank has presumambly prohibited partial shipments and wants the amount invoiced to be within limits indicated. There is no need to ask for an amendment as long as you have well defined such limits. The fact that issuing bank quoted absolute amounts (figures) rather than percentages does not make the credit not workable or with confusing clauses. Don't stick to much on swift simbols as the credit should firstly fit the customer needs.

shahriar · Post by **shahriar** » Fri Mar 27, 2009 7:46 pm

this is not a issue related to tolerance. the issuing bank just want to ensure a minimum shipment. not sure whether it is related to partial shipment especially as far as transport document is concerned. in my opinion both partial shipment and drawing is possible in this case.

cristiand969 · Post by **cristiand969** » Fri Mar 27, 2009 9:09 pm

While partial shipment is likely to be permitted , there is no logic for the issuing bank to state a threshold as minimum amount because it is uncontrolable by issuer and I tell you why:
from the practical point of view If benef during the LC lifetime has at a certain moment let's say 3 shipments amounting USD 314.900 is issuing bank entitled to reject 3 rd set of docs based that the overall amount has not reached to minimim. NO, because the benef may argue that there are still shipments to go and partial shipment are allowed. Likewise, after that beneficiary may decide to effect no more shipments. Is issuing bank entitled to call money back after ascertaining compliance of previous 3 sets? I guess not

shahriar · Post by **shahriar** » Fri Mar 27, 2009 9:58 pm

dear cristain,

i follow you fully. i in fact took the clause a the minimum amount to be drawn. otherwise the clause does not make any sense. my post was based on that. i think Navi should tell us whether the credit allows partial shipment.

Navi · Post by **Navi** » Sat Mar 28, 2009 4:38 am

Dear firends,

Thanks for your comments. Partial shipments not allowed. Applicant wants only one shipment and the minimum amount is expressly stated in the credit. I wondered whether this limit should be expressed by tolerance percentages. As I get from your replies, no need..
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Regards

jenny yuan · Post by **jenny yuan** » Sat Mar 28, 2009 9:32 am

IN my opinion ,the lc opens for the aggregate amount you can draw.It is ok if other terms and conditions complied with each other. :roll: :!:

ybattia · Post by **ybattia** » Sun Mar 29, 2009 3:56 am

I think tolerance here stated in MT700 is deemed to be for making life easier in connection with calculations, while however if the credit expressly states the exact Min. & Max. amounts to be shipped, especially when only one shipment is to be effected (i.e. Partial Shipment not allowed), it would be a perfectly acceptable L/C form.

Other opinions appreciated,
Thanks,

SHAMEER · Post by **SHAMEER** » Tue Mar 31, 2009 2:20 pm

Accept the L/c as issued.

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MS

TOLERANCE?

TOLERANCE?

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minimum drawing?

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need not be amended

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TOLERANCE?