Is It Possible To Amend An Amendment?

[jim]

hello,

is it possible to amend an amendment. i mean say an amendment was issued and later the issuing bank wanted to amend the content of the last amendment which is yet to be accepted or rejected.

Jim

[shahriar]

dear jim,

i am not sure what your are actually trying to mean by amendment of an amendment. anyway the answer is yes, its possible. but its not unconditional. under letter of credit operation subject to UCP 600, each amendment is independent. that is if a series of amendment is issued, the beneficiary may choose to accept anyone or all of them. however when you are talking about the amendment of the amendment, its possible that the later one is conditional over the previous one. in that case unless the first one accepted, the second one will not be effective.


regd


shahriar

[cristiand969]

There is no possibility technically speaking to have an amendment to the amendment, mostly appropriate a correction to an amendment because each amd is independent and is subject to acceptance or rejection by beneficiary.
Example: original credit issued for USD 100.000
Amendment 1: Decrease for an amount of USD 75.000.
Amendment 2: (issued due to the fact that applicant made a mistake in his instructions and the amount correct to be descreased was USD 50.000. Therefore there is a difference of USD 25.000 to be corrected). Instruction: Increase for an amount of USD 25.000.
In this situation the beneficiary can reject first amendment and accept the second one. Therefore this type of amendment can produce unexpected result as total amount of the credit becomes USD 125.000.
There may be of course ways to protect on that: Amendment 2 may carry a clause in field Narative: 'This amendment is operative provided beneficiary accept amendment no. 1' or words with similar effect. Alternativelly issuing bank may send an MT 799 (in no way MT 707) stating 'please read the correct amt in our amd no. 1 as USD 50.000 i/o USD 75.000. Please treat this msg as a correction and not as an amendment'. Confirmation of the same from advising bank is required in this case.
Regards
cristian

[cparial]

WHAT A NICE REPLY!!!!!


Thanks cristian


Regards

cparial

[jmitra]

dear cristian,

nice one indeed. good example as well. however im not sure about the word 'correction' though used often by the 'banker'. there is no such term in UCP and the only possibility is to issue an amendment.

regards

Mitra

[cristiand969]

Dear Mitra,
You may guess it is impossible that UCP or ISBP will be ever able to cover all words or wording existing in every L/C. One may say in the context of your query that when a credit states: 'invoice made out in the name of BUYER' we cannot recognize that word as no 'BUYER' is found on UCP or ISBP. The same principle is applying here. Not to mention that International Standard Banking Practice include practices that banks regularly undertake in determining the compliance of documents. Many of these practices are contained in ISBP Publication no 680. But Whilst ISBP include many of these banking practices there are others that are also commonly used in LC transactions veyond those rules related to examination of documents. For this reason 'complying presentation under art 2 of UCP 600 does not specifically refer to ISBP Publication.

[jmitra]

dear cristian,

my best guess is that UCP will never cover the word correction without definition. or else it will create a huge conflict. my understanding is pretty simple. correction means converting a wrong thing to a right one. in lc world, there is no such word like wrong thing. everything is suppose to be correct. or else someday we will hear bank saying, HEY!! I ISSUED THE CREDIT WRONGLY TO THIS BENEFICIARY!! PLEASE CANCEL IT AND ITS A CORRECTION!!

regd

mitra

[cristiand969]

Dear mitra
Just at the first stage I didn't want to say that you were wrong at the beginning and I tried to explain you, how to say, softly, hoping you will realize that. To get straight to the point, the word 'CORRECTION' at large does really exist in banking terminology and you may want to read art. 9,10,11 and 12 of ISBP.
On the other hand the UCP is not a kindergarden explaining each word in the world. In case you are still really confused pls do not quote a definition resulting from your assumption while the other tells something based on Publications, issues, lot of years of experience and kindly pay a little attention of what Websters Dictionary says before making any assumption: The word : CORRECTION
1. The act of offering an improvement to replace a mistake.

2. A quantity that is added or subtracted in order to increase the accuracy of a scientific measure.

3. Something substituted for an error.

4. A rebuke for making a mistake.

5. The act of punishing; "the offenders deserved the harsh discipline they received".

6. Treatment of a specific defect; "the correction of his vision with eye glasses".

I could not imagine the ICC to extract point no. 5 from above to define the word you are looking for in translation. Therefore, reasonable care must be applied and bear in mind also we are not required to be in experts in very fields but to recognize the intention of a particular document, message, etc.
I would consider your last observation with credit issued and cancelled by a 'correction' in your interpretation as a bad joke and I will take into account accordingly.
With my compliments
Cristian