Re: Operative & pre-advised LC's
Posted 28 Feb 2008 19:02
Replying to [mikeo1313]:
I can only quote Article 11 of UCP 600:
'ARTICLE 11: TELETRANSMITTED AND PRE-ADVISED CREDITS AND AMENDMENTS
a. An authenticated teletransmission of a credit or amendment will be deemed to be the operative credit or amendment, and any subsequent mail confirmation shall be disregarded.
If a teletransmission states "full details to follow" (or words of similar effect), or states that the mail confirmation is to be the operative credit or amendment, then the teletransmission will not be deemed to be the operative credit or amendment. The issuing bank must then issue the operative credit or amendment without delay in terms not inconsistent with the teletransmission.
b. A preliminary advice of the issuance of a credit or amendment (“pre-advice”) shall only be sent if the issuing bank is prepared to issue the operative credit or amendment. An issuing bank that sends a pre-advice is irrevocably committed to issue the operative credit or amendment, without delay, in terms not inconsistent with the pre-advice. '
They are not B/S, as someone claimed. They are not extinct either! They are very much in use all over the world. Usually, a pre-advice is sent to satisfy the seller that a operative LC is on the way, to assure the exporter so that he can start production, to give him the credit number, date of issue and amount, so that the info can be used by the beneficiary somewhere (say, to obtain loans from his banker), and so on.
I suggest once again, PLEASE take the trouble to read the UCP and the ISBP at least once. Till one does that, it is better not to indulge in ill-informed or uninformed comments.