Availability and Presentation with Letters of Credit

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Article 6 of UCP 600 deals with the subject of availability and place for presentation for Letters of Credit.

Availability has two meanings.

The first requires the Issuing Bank to indicate how the Credit will be paid

    • Sight payment
    • Deferred payment
    • Acceptance of time drafts
    • Negotiation

The second requires the Issuing Bank to indicate which bank the beneficiary should seek out to have the obligations of the Credit fulfilled, essentially which bank is

  • authorised to pay;
  • authorised to incur a deferred payment undertaking;
  • to accept drafts or negotiate

The place for presentation should always be the bank where the Credit is available.  However, there are occasions where the Credit indicates that the place of availability and the place of presentation to be different places.  In such circumstances the Beneficiary should argue that the Credit is incorrectly drafted and not accept the wording without amendment.

To accept such terms leaves the Beneficiary at a disadvantage.  For example, if the Credit is available with any bank by negotiation, but the place for presentation is detailed as the Issuing Bank’s premises, then the Beneficiary could find themselves in risk of a late presentation if compliant documents are presented to the nominated bank within the validity of the Credit, but the Issuing Bank receives them only after the Credit or presentation period expires.

The ICC (International Chamber of Commerce) issued an Opinion (TA 718) where they indicated that a place of availability differing to the place of expiry was bad banking and would cause “unnecessary and, often, unwarranted complications for the beneficiary, in determining to whom, where and by what date the documents may be presented”.

Hence, one of the checks that should be done on receipt of the Credit, is to ensure that the place of availability and the place for presentation are the same.  If they are not, then the Beneficiary should either request an amendment for the two to be the same, or undertake a risk analysis to mitigate the risk.

This is the ninth article in the series of How to Get Paid using Letters of Credit.

Maria Narancic from Point to Point Export Services is an independent international trade adviser who assists organisations world wide with their international trade projects, documentation, Documentary Credits and import/export training. She is based in the United Kingdom. If you require any further assistance with the matters mentioned above, please do contact us by e-mail on info@point-point.com or to access other articles on International Trade matters please do check out our website at www.point-point.com.

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