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Hello everyone, please help me with this situation:

We have a deal going on between 2 banks located in different countries.

Bank A (Buyer) will issue a L/C.
Bank B (Seller) will use its Bank to confirm the L/C and receive it.

In this case, Bank A (Buyer) will pay for all banking charges (Buyer + Seller banking charges).
If Bank A (Buyer) issues the L/C, pay all the charges, and the Bank B (Seller) fail to show the documents required for the L/C to take effect, what is going to happen with Bank A (Buyer) money used to cover all the banking expenses?

Seller's bank confirmation charges will still be charged from Buyer's bank if the L/C is cancelled ?

Thank you.

Hi gblbf:


By banking charges, i would take it to refer to advertising charges, telex charges, amendment charges (if any), negotiating bank charges, DLC issuance charges etc. If it had been explicitly indicated in the DLC that buyer(applicant) bears all banking charges, then buyer have to bear them as it is being incurred. For example, once issuing bank had issued out the bank charge, then LC issuance fees is incurred and will be on buyer account.

For the confirmation bank charges, there wouldn't be any as confirming bank will never confirm a discrepant presentation. A presentation with missing documents required under the DLC is a discrepant presentation.

A confirming bank confirms or add its confirmation to a LC when it (1) certify presentation is clean & (2) issue out is advice of confirmation to the beneficiary (seller).

In this case, there woudn't be any confirmation charges to begin with.

But if the confirming bank had confirmed the LC despite the discrepant presentation, then it will be on buyer account.

Hi,

As all the charges are account of applicant and it is mentioned in the L/C, issuing bank is liable to pay advising charges, confirmation fee etc. even if there is no presentation under the L/C or discrepant presentation under the L/C.

Also note, L/C can not be cancelled without the consent of the confirming bank.

Senthil.