The applicant wants to get the penalty clause inserted in the letter of credit. The penalty clause says that 1 percent of the credit amount will be deducted from proceeds for each week the shipment is delayed from the last shipment date.

Now what I want to ask is that if shipment is to be made one week after the last shipment date, should this constitute a discrepancy under which payment can be rejected?

My understanding is that late shipment is acceptable subject to financial penalty under this letter of credit. Therefore it cannot be taken as discrepancy.

Am I right?

Quoting from [spider man]:


The applicant wants to get the penalty clause inserted in the letter of credit. The penalty clause says that 1 percent of the credit amount will be deducted from proceeds for each week the shipment is delayed from the last shipment date.


Now what I want to ask is that if shipment is to be made one week after the last shipment date, should this constitute a discrepancy under which payment can be rejected?


My understanding is that late shipment is acceptable subject to financial penalty under this letter of credit. Therefore it cannot be taken as discrepancy.


Am I right?

I can bring this up with Mr. Bose but personally I have never seen an L/C with a penalty clause and frankly don't believe it would even be possible.  The only way I see this happening is if this L/C is revolving and the L/C names specific dates for presentation of documents.  Then IM not even sure if it is possible.  The buyer can ask the seller for a performance bond that would remain non-active until such time as the buyer opens the L/C.   As a seller I wouldnt even entertain working with anyone in this way.   A performance bond yes up to 2% of the total L/C.   Be aware though if the L/C expires before you present documents that no bank is required to make payment to you.  Also if you even think that you will be late on presentation of documents and you still want this deal to go thru ask for an amendment to the L/C extending the time of expiry, the buyer may require that you pay the cost of the ammendment to the L/C.  Also if you as a seller have issued a performance bond on this L/C the buyer may at his choosing exercise the option of calling the bond. 

Ranger 

Replying to [spider man]:

I agree with Ranger completely. Just to complete the discussion, let me quote from the UCP 600 (article 14.c):

"c. A presentation including one or more original transport documents subject to articles 19, 20, 21, 22, 23, 24 or 25 (these relate to various modes of transport) must be made by or on behalf of the beneficiary not later than 21 calendar days after the date of shipment as described in these rules, but in any event not later than the expiry date of the credit. "

Anything else will be a discrepancy, without doubt, as would be a presentation of a 'stale' (transport) document.

The last nail in the coffin...?

Replying to [catalyst]:


 Well sir I see the Alibaba glitch got you in the double post by the way you will have to send me a message via trade manager when your book is done.

Best regards,

Ranger

Replying to [spider man]:

Another ALIBABA glitch to report: When I hit the reply button, I see "Replying to [a wrong person]" - as it has happened in this instance too. Happening far too often.

Who gets notified here by e-mail - you or spiderman?

Quoting from [spider man]:


The applicant wants to get the penalty clause inserted in the letter of credit. The penalty clause says that 1 percent of the credit amount will be deducted from proceeds for each week the shipment is delayed from the last shipment date.


Now what I want to ask is that if shipment is to be made one week after the last shipment date, should this constitute a discrepancy under which payment can be rejected?


My understanding is that late shipment is acceptable subject to financial penalty under this letter of credit. Therefore it cannot be taken as discrepancy.


Am I right?

spiderman would get the double tap to his email.