Dishonouring L/C

[gtraders2010]

Have a typical problem and we would be thankful to you for guidance. Our buyer is willing to open L/C for X amount (full invoice amount). They are going to import the items which requires approvals from the concerned ministries first. We need to send them the docs once they open the L/C and after approval from the concerned ministry and advise from the buyer we can start production and ship the goods.

Thus they want to open the L/C for X/2 amount(they do not want to block their money keeping with their bank) and after getting approval they want to open L/C for the rest Half amount which is X/2.

In case they fail to open the L/C for the rest Half amount which is X/2 after getting approval if we do not ship the goods then can we be penalize? Can any one advise us the suitable solution to the above problem?

[shahriar]

a beneficiary is not bound to ship the goods or to perform under the LC. so there is no chance of getting penalized. however you may want to have a look the contract that you have made with the buyer. there may be something there.

[lukman.hakim]

LC will not penalized for un-utilized shipment, moreover you also said that "In case they fail to open the L/C for the rest Half amount .." it is mean that the LC for that part of shipment is not yet issued, so why would you have the obligation to send shipped them any goods? in my opinion although in your sales contract there is a penalty clause but you will free from that since they also fail to act the early process (opening the 2nd LC before shipment is conducted)
but yes i do agree that you should check your sales contract to check for more possibilities, it must be stated there.