Documents acceptable as presented


ISBP 745 paragraph A19(g) reads:

 

“documents acceptable as presented” – a presentation may consist of one or more of the stipulated documents provided they are presented within the expiry date of the credit and the drawing amount is within that which is available under the credit. The documents will not otherwise be examined for compliance under the credit or UCP 600, including whether they are presented in the required number of originals or copies."

 

This paragraph – which is new to ISBP – is a part of a number of definitions of expressions that should not be used in an LC, as they are not defined in UCP 600. 

 

I have received quite a number of questions about this paragraph. It is my impression that many LC people find it harsh – and perhaps going too far. So I thought that I would add a few words, trying to explain the context and background.

 

First however I will spell out how this new practice works.

 

1: The prerequisite is that the LC includes the phrase “documents acceptable as presented.”

Any other wording may lead to a different result.

Just as a subsequent elaboration would.

 

In that respect note ISBP 745 paragraph ii which reads:

 

“The practices described in this publication highlight how the articles of UCP 600 are to be interpreted and applied, to the extent that the terms and conditions of the credit, or any amendment thereto, do not expressly modify or exclude an applicable article in UCP 600.”

 

In other words: If the LC provide a different wording – or definition of the expression, then it is the wording in the LC that applies!

 

2: When this paragraph applies (subject to point 1 above), then ONLY 3 things will be examined:

* At least one of the documents required by the LC must be presented

* The presentation must be made within the expiry date of the LC

* The drawing amount must be within that which is available under the LC

 

This means that – as an example – if an LC calls for the following documents:

 

* Invoice

* Packing list

* Certificate of origin

* Bill of lading

* Quality certificate

 

Then the beneficiary may present ONLY the packing list, and the document examiner will ONLY check that 1) it is a packing list and 2) that the presentation is made within the expiry date of the LC and 3) the drawing amount is within that which is available under the LC.

 

I.e. no comparison of data between the LC and the document(s).

 

So yes: That is harsh.

 

The background for this is the following:

 

These “expressions” as defined in paragraph A19 should (as mentioned before) not be used. The reason is that they are not “complete.” I.e. they do not fully express the intention of the issuer. Therefore the best a bank can do is to avoid these expressions, and explain in clear and direct language what they want to achieve.

 

If they do not do that – but use an expression like “documents acceptable as presented” then the definition will get as wide as possible; i.e. making it practically impossible for the beneficiary not to comply with the requirement.

 

Is that fair?

 

I think it is! Bear in mind what an LC is – and how it works: It is based on the presentation and examination of the documents stipulated in the LC. By simply adding a phrase like “documents acceptable as presented” the whole foundation of the LC is shaken.

For example does article 14 (Standard for Examination of Documents) apply at all? Does article 17 (Original Documents and Copies) apply? Does article 16 (Discrepant Documents, Waiver and Notice) apply?

 

If no – then what applies?

If yes – then to what extent?

 

And what about article 35 and documents lost in transit? Is it fair – in this case – to say that the nominated bank “determined” that the presentation was complying?

 

In other words: The expression “documents acceptable as presented” opens a flood of issues that actually questions if this actually is an LC.

 

It is for that reason that this expression should not be used – and the issuing bank should have explained carefully their intention – keeping the above in mind.

 

It is for that reason that any bank that includes such expression must accept the widest possible interpretation

 

Harsh? Perhaps! But also fair when you think about it.

And most important: If the issuing bank does not like the ISBP 745 definition, then it has the option to explain in the LC what applies!

 

Have a great weekend and take care of each other and the LC!

 

Kim

 



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