transferable credit & tolerance

Ozoda · Post by **Ozoda** » Fri Apr 03, 2009 7:48 pm

Dear All,

If transferable LC states credit amount tollerance as +/-10%.
Whether it is possible to reduce the tolerance in transferred credt.

iLC · Post by **iLC** » Sat Apr 04, 2009 8:12 am

in my opinion, yes, we can reduce the tolerance since that's not going to have a detrimental affect the original credit

kinkidz · Post by **kinkidz** » Sat Apr 04, 2009 2:57 pm

u could deduct the amount of l/c , but not tolerant ,UCP elaborate on that quiet clearly

mini_tracy · Post by **mini_tracy** » Sat Apr 04, 2009 10:46 pm

agree with kinkidz

fionawang · Post by **fionawang** » Sun Apr 05, 2009 2:58 am

of course, you can not change, the items could change are just those specific in the UCP600

sunny · Post by **sunny** » Sun Apr 05, 2009 3:25 am

Sorry I differ in opinion with most of you but fully agree with ILC regarding changing tolerance.
In fact art 38 states: g. The transferred credit must accurately reflect the terms and conditions of the credit,
including confirmation, if any, with the exception of:
- the amount of the credit,
- any unit price stated therein,
- the expiry date,
- the period for presentation, or
- the latest shipment date or given period for shipment,
any or all of which may be reduced or curtailed.
There is no method on how the amount is to be reduced or curtailed but merely gives the liberty to the first beneficiary to reduce the amount to its best convenience and this includes tolerance as well.

SHAMEER · Post by **SHAMEER** » Sun Apr 05, 2009 1:41 pm

As per ucp we can do the alteration for certain items

except to that - it is your bank decision to alter the L/c - but the protection will apply acccoridng to the ucp rules

Regards,

power575 · Post by **power575** » Sun Apr 05, 2009 1:52 pm

i think tolerance can not be changed,only the exceptions ucp mentioned can be excluded.and amount tolerance is one item seperately in l/c,it should be complied with original l/c .

shahriar · Post by **shahriar** » Sun Apr 05, 2009 5:15 pm

in my opinion "yes we can!!"

consider the impact of tolerance. a 10% tolerance on 1000 allows drawing between 900 to 1100. that is one can technically say that the credit is worth of 1100. now UCP allows you to transfer any value between 0 to 1100. then why not do it with the tolerance.

and dont be so rigid on the UCP wordings. even Mr. collyer has mentioned some exceptions!

ybattia · Post by **ybattia** » Sun Apr 05, 2009 7:10 pm

Let me play out this scenario;

If upon request of the 1st beneficiary, the transferring bank transfered part of all the credit amount without any tolerance mentioned in the transferred credit to the 2nd beneficiaries, and subsequentially they have presented the required stipulated documents in return.

Then the 1st beneficiary have replaced his own invoice on the whole shipping doc's and the transferring bank forwarded the doc's to the issuing bank as a complying presentation..

Who would raise such question then? as far as the issuing bank is concerned with a complying presentation on the original LC, it would honour the presentation without looking back to the transferred credit. wouldn't it?

maqianyueer · Post by **maqianyueer** » Sun Apr 05, 2009 8:29 pm

i think tolerance can not be changed,only the exceptions ucp mentioned can be excluded.and amount tolerance is one item seperately in l/c,it should be complied with