Best Trade Solution

dear friends,

today i faced a letter of credit transmitted by SWIFT. the LC has the following options

42C: At Sight

there is no 42a.

that means there is no instruction on whom the draft should be drawn. the lc available by negotiation with any bank. my simple understanding says that the draft should be drawn on the issuing bank. but what do you think?

regd

shahriar

Dear Shahriar,
I appreciate your question but frankly speaking I believe it is a riddle :lol: !!
You cannot receive such a letter of credit because the swift does not let the sender to transmit MT 700 in this format.
There are network validating rules and in respect to your question in quote you from swift:
C2. When used, fields 42C and 42a must both be present (Error code(s): C90 ).
Assuming you are right, my thoughs you have probably come to know about a would be copy/draft swift message sent to you by fax because swift message itself will return NACK. (not acknowledged)
The above is given when a swift MT 700 is transmitted. It is possible however that such a mistake may occur when an LC is sent via MT 799 or MT999 or MT 798 (proprietary message). But my reply is based on your subject ' MT 700'

dear cristian,

thanks for your reply. you are correct to say that it was indeed a scanned and email copy. Since my branch does not have a direct swift access and therefore beneficiaries often place the scanned copy for early opinions. i received the original one today and its just ok. thank you. but i was wondering on a different issue now.

say the letter of credit is a mail one duly signed by the authorized persons. such LC is scanned and emailed to the beneficiary / even posted by the applicant. meantime the issuing bank changes a clause. which one will be in effect?

regd

shahriar

Dear Shahriar,
I would not comment different scenarios regarding advising an LC to the beneficiary in a correct or legal form.
Just to remember you follwoing article of UCP600:
1. An issuing bank is irrevocably bound to honour as of the time it issues the credit.
2. Except as otherwise provided by article 38, a credit can neither be amended nor cancelled without the agreement of the issuing bank, the confirming bank, if any, and the beneficiary.
.
Any comment is pointless. Conclusion is very visible.
regards
Cristian

the visible conclusion is certainly very bad for me since its a common practice in my bank. we issue a LC. give a copy to the applicant in the form of draft but signed and wait that day. the applicant send that lc to the beneficiary. if the beneficiary requires to make any changes, then we change it and send it by DHL. if nothing is asked for, we usually make no correction unless something wrong detected by us. but now i see, things are not that simple. by the way, what would be the case if we mark the applicant copy with the word "copy"?

Dear Shariar,
This is indeed a tricky part where UCP is silent. as we know from article 7(b) of UCP 600:
"An issuing bank is irrevocably bound to honour AS OF THE TIME it ISSUES [EMPHASIS ADDED] credit."

UCP reamins unclear[silent] when "ISSUANCE" take place, in most of the case,[here most of the cases is used due to pre-advise credit] issuance will be take place when the credit leaves the operational control [emphasis added] as is indicated in ISP RULE 2.03 [CONDITION OF ISSUANCE].
.
REGARDS
NESAR

i agree with you nesar. unless the original operative LC leaves the control of the bank, that LC should not be considered as issued one. or else someday we will heard that beneficiary accepted the lc by being informed over phone by the applicant

Dear dholat,
I would like to make a slight correction to your last post as the intent is other than main subject.
I would say ' we sent a draft of L/C' rather than

dholat wrote:we issue a LC. give a copy to the applicant in the form of draft

.
When you issue an L/C is deemed to be the the operative instrument and nothing can be changed without the agreement of beneficiary or confirming bank (if any). Please also note that the second shahriar's posting refer to an issued L/C (i.e by mail and duly signed by the authorized persons ). I have never seen a draft copy signed by authorized persons in the bank.
regards
cristian

We are in the process of getting a draft lc, which will be divisible and transferable. We plan to use this lc for the purchase of different products. As such is there appropriate verbiage fro the sections relation to Product and Documents which can be left as general (open) as possible. Further can we have the ability to add the product and document requirements once we receive the DLC before we transfer it over to the different suppliers. Hope I was some what clear in my questions. Any feedback is much appreciated.

Hi Pal,

pay attention to the goods description, you are not authorized to transfer the l/c amount but the supply of goods, in few words you may transfer "shoes" but not "Laces" "upper soles" etc. Than Divisible just means that partial shipment are allowed. Your bank will be able to word l/c respecting all terms.
Other comments appreciated
Ciao