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