Non compliant document and beneficiary’s right
Posted: Mon Jul 05, 2010 1:03 pm
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
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