Non compliant document and beneficiary’s right

[CDCS2009]

Dear Experts

A credit includes a clause that the applicant retains the right to instruct the issuing bank to reduce payment in case of non confirming document.

To me this is a clause that can not be enforced. If a document is non complying, then the issuing bank has to issue refusal advice. In that case, it’s the beneficiary who is take decision whether to offer reduction or not as the owner of the document is the beneficiary. In case where the issuing bank refuses as per article 16 c iii and seeks applicant waiver and has the applicant gives the waiver, the document is no more non compliant and the reduction is not applicable.

Your opinion please

[picant]

Hi Pals,

Some l/c contain a penalty clause linked to delayed shipment or presentation. If not complying documents are accepted, the payment will follow less this little percentage. In effect this penalty should declared and authorized by the presenting bank, otherwise it could be a potestative action.
Normally banks should be neutral in l/c disputes, and any proposal should start "We understand that applicant......" otherwise bank could incurr in extra liabilities.

Other comments appreciated

Ciao