Best Trade Solution

Hi all,
Apologies if this question has been asked previously.

Scenario
Transferable L/C issued for USD100 by Bank A and advised to Bank B. No amount tolerance quoted and no other additional conditions that are relevant.
General description of goods "Widgets"
Partial shipments prohibited
Bank B transfers L/C to Bank C for amount USD75 (a single 2nd beneficiary only with no other transfer taking place to other 2nd bene's)
Bank C presents compliant documents to Bank B

Transferring Bank B customer does not/cannot present substitute documents so Bank B presents 2nd beneficiary documents received to Issuing Bank A.

The question is : in the above scenario I assume that Bank A may refuse the documents with the discrepancy L/C short/partially drawn?

and the thought was : if so, is there not an inherent risk for the transferring Bank where the "master" L/C states partial shipments prohibited?

Cheers
DKB

Since it is clear that there were no substitution of documents because the invoice is of the second beneficiary made our in the name of the first one, my best option is that the transferring bank is to certify on its covering schedule that the credit has been transferred to second benef in full for USD75 making reference to art 38g of UCP600.
The first beneficiary cannot avail himself of the difference of USD 25 because as per art 38g the the transferring bank cannot transfer the balance to another second beneficiary due to art 38d.
.
The issuing bank shoud understand that as the credit is a payment mechanism not a non-payment one

I would agree with Christian's comments, although Art 30c might throw up some unwarranted doubts

Perhaps the next revision of ISBP might address this apparent anomaly.

Dear DKB, it is understood from the scenario that credit is transferred to scnd benf. in full, and in accordance with the sub art.38(i) of UCP transfering bank may send the docs to issuing bank incase of the failure of the first benef. to subst. its draft and invoice.
presented documenst couldnot be considered as partial shipment if the qty of the goods isnot less than the credit stipulation.
By issuing a transferable credit, issuing bank and applicat accept to receive docs and goods from a third party other than the first benef., failure of the first beneficiary cannot preculede the second beneficiary's right if the documents are compliance.
Regards

DKB wrote:Hi all,
Apologies if this question has been asked previously.

Scenario
Transferable L/C issued for USD100 by Bank A and advised to Bank B. No amount tolerance quoted and no other additional conditions that are relevant.
General description of goods "Widgets"
Partial shipments prohibited
Bank B transfers L/C to Bank C for amount USD75 (a single 2nd beneficiary only with no other transfer taking place to other 2nd bene's)
Bank C presents compliant documents to Bank B

Transferring Bank B customer does not/cannot present substitute documents so Bank B presents 2nd beneficiary documents received to Issuing Bank A.

The question is : in the above scenario I assume that Bank A may refuse the documents with the discrepancy L/C short/partially drawn?

and the thought was : if so, is there not an inherent risk for the transferring Bank where the "master" L/C states partial shipments prohibited?

Cheers
DKB

[quote="kadir"]...presented documenst couldnot be considered as partial shipment if the qty of the goods isnot less than the credit stipulation.
.
If we look into description of goods as widgets, we cannot ascertain whether full qty has been shipped

cristiand969 wrote: If we look into description of goods as widgets, we cannot ascertain whether full qty has been shipped

.
i agree with your option ( indeed generally transfering banks inform the issuing banks with the tranfer details at the time of transfer by sending a swift notification. ) in this case partial shipment not allowed and credit is transferable, this is a badly issuance, if we cannot determine even the goods are fully shipped because of the absence of qty. in the credit. so issuing bank shouldnot claim about partial shipment and art.38(g) allows the first benef. to reduce the credit amount.
Second Benefiarcy's cliam should be honored.
Rgds
Kadir

Thanks everyone for comments.
Thankfully not a real scenario (yet, touch wood) described but more of a question that occurred to me as we were completing the transfer as "Bank B".

I would assume that logic would prevail if this actually happened given that we as Bank B would be seeking a reduced amount of payment from the applicant as a result of acting in accordance with 38(g), as noted the actual quantity of goods was not stated in the master L/C that was issued and we would merely be taking the available option as per Art 38(i).

I do like a bit of that elusive certainty though
DKB