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Dear All,

Recently I've been receiving draft LCs with a clause "PRE-SHIPMENT INSPECTION CERTIFICATE ISSUED BY
THE APPLICANT’S AUTHORISED REPRESENTATIVE, ........"
such clauses is considered "Joker Clauses" which is against of the nature of the LC. Accepting such clause is fully surrendering yourself against to applicant and such clauses are absolutely not acceptable for me.

However some business associates tell that its sometimes a common practice for LCs issued from South/North America or Far East Countries which I find tricky and hard to believe.
If the applicant does not issue such document in the last minute than the benef. is in a very big problem. I feel and think such clauses are enforced on fraud purposes

Is there any field experiences/opinions to be shared regarding to this matter.??
Thx in advance.

Hi,

We sometimes come across LCs with similar clauses which make the LC payment depend on applicant's instructions.

In our cases, applicant is either a state enterprise which has its own and hard procedures to make payment (such as receive, control and test of goods) or a supplier to a state enterprise. Some beneficiarys do not expect fraud action from a state enterprise an accept such clause or they request LG from applicant against such risk or they rely on the contract between applicant and themselves which is out LC concern.