Transferring Bank Found Discrepancy

[khratha]

Dear all,

As bank practice in transferable LC, does the tranfering bank bank must advise discrepancy to second beneficial bank, if the discrepancies have been found? If the first beneficiary does not accept discrepant documents and want them to be modified, should the transferring bank return documents to the presenter or present the discrepant documents without substituting first beneficiary invoice/draft to issuing bank for payment?

Thank for your comment,

Ratha

[shahriar]

I would say that the transferring bank should, if not must, advise the discrepancy to the 2nd advising bank. If a discrepant presentation is made to the transferring bank, the possible options are

1. Notify the discrepancy to the presented, which i suggested
2. Return the document to the presenter, which would give similar result like option 1
3. Forward the document without substituting the bill of exchange and invoice, which should be never done as by the the bank will be declining the right of the first beneficiary to get paid under the LC
4. Forward the document with substituting the the draft and invoice. Now this could be problematic as well. A owner of the document is the presenter. A transferring bank has no authority to waive a discrepant. So by forwarding the discrepant document without permission of the 2nd beneficiary, the transferring bank will be denying the right of the 2nd beneficiary to cure the document. Imagine a case where the LC has expired meantime..