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    What to do when the export documentary credit (LC) contains discrepancies 

    Question:
    I have presented documents under an export documentary credit (LC), sight payment, to my bank, the negotiating bank. After checking the documents my bank informed me that the documents contain discrepancies. What shall I do?

    Answer:
    Correct the documents as far as possible. Pay attention to the time limits stated in the LC, i.e. the validity date and the latest date of presentation. Default presentation period if no other stipulation in the LC: 21 calendar days after shipment, provided that the documents include original transport documents.

    Present the documents anew to your bank and discuss incurable discrepancies with the buyer, perhaps he needs new documents due to customs regulations or out of any other reasons.

    Probably the applicant will accept the discrepancies and instruct the issuing bank accordingly, if not, you have to negotiate with him.

    What would happen if the 1st beneficiary fails make an LC compliant presentation of his own invoice? 

    Question:
    What would happen if the 1st beneficiary fails make an LC compliant presentation of his own invoice?

    Answer:
    The transferring bank has the right to submit to the issuing bank the documents it received from the 2nd beneficiary without further responsibility to the
    1st beneficiary.

    Which is the main reason for applying for transferable LCs? 

    Question:
    Which is the main reason for applying for transferable LCs?

    Answer:
    The 1st beneficiary can obtain the goods from another source and through other channels than the 2nd beneficiary. The final buyer (the applicant) and the final seller (the 2nd beneficiary) are usually not familiar to one another.
    The 1st beneficiary is a trader not having to take care of the goods. He might have limited working capital. The 1st beneficiary does not have to utilize his own credit facilities as the LC issued in his favour constitutes security for his own LC issuance in favour of the 2nd beneficiary.
    The 1st Beneficiary might even be an agent in one country for an overseas buyer.

    Which particular risks is the 1st Beneficiary running? 

    Questions:
    Which particular risks is the 1st Beneficiary running?

    Answer:
    The 1st Beneficiary is running the risk of not receiving
    documents or goods in case discrepant documents are
    presented by the 2nd Beneficiary and refused by the applicant.

    Which particular risks is the applicant running? 

    Question:
    Which particular risks is the applicant running?

    Answer:
    The applicant is trading with an intermediary trader and not the exporter.
    He must be prepared to assume this risk.

    Who pays usually the transfer fees? 

    Question:
    Who pays usually the transfer fees?

    Answer:
    Unless otherwise agreed all transfer charges must be paid by the 1st beneficiary.
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