Te2011UCP-Case-study

1、Case Number 1 The Case of the Unspecified Country of OriginUCP 600 Article 2 and 3（Irrevocable, a definite undertaking of the issuing bank to honour a complying presentation）and 18 c (Invoice)BackgroundType of Credit: IrrevocableApplication: UCP600 Issuing Bank: Bank IAdvising Bank: Bank ANegotiatin

2、g Bank: Bank AExpiry: At the counters of Bank ACircumstancesIssuing Bank: Bank I issued its irrevocable negotiable Credit and advised it to the Beneficiary through Bank A.Advising Bank: Bank A advised the Credit to the Beneficiary.Credit: Among the terms and conditions, the Credit asked for:1. Certi

3、ficate of Origin: E.E.C. Countries.(Note: the reader should be aware that the normal usage is EEC and not E.E.C., as a matter of interest. However, the case was presented as stated E.E.C.)Beneficiary: The Beneficiary presented the documents required by the Credit including the commercial invoice and

4、 the certificate of origin, which showed:1. The commercial invoice showed: “Country of Origin: E.E.C.”2. The Certificate of Origin indicated: “Country of Origin: E.E.C. Countries”.Negotiating Bank: Bank A examined the documents presented by the Beneficiary and determined they were in compliance with

5、 the terms and conditions of the Credit. Bank A negotiated the documents and forwarded the documents to and claimed reimbursement from Bank I.Issuing Bank: Upon receipt of the documents, Bank I examined the documents and determined that they were discrepant. Bank I immediately notified Bank A by tel

6、etransmission that I rejected the documents for the following discrepancies:1. The phrase on the commercial invoice “Country of Origin: E.E.C.” does not appear on its face to be in accordance with the terms and conditions of the Credit, which states “Country of Origin: E.E.C. Countries”.2. The decla

7、ration of origin on the commercial invoice is inconsistent with the declaration appearing on the certificate of origin as “Country of Origin: E.E.C. Countries”.Bank I informed Bank A that the documents were being held at their disposal.Negotiating Bank: Upon receipt of the notice of rejection, Bank

8、A replied by telex as follows:“We consider the documents negotiated by us as conforming to the documentary credit for the following reasons:1. There is no requirement in the credit for a statement relating to the origin of the goods. Moreover, the country of origin was indicated in the certificate o

9、f origin as required by the Credit, that is, Country of Origin: E.E.C. Countries.2. The declaration or statement of origin on the commercial invoice as to Country of Origin: E.E.C is not inconsistent with the statement made in the certificate of origin.“We do not accept your rejection of the documen

10、ts as non-compliant and demand immediate reimbursement of the amount negotiated and our charges.”Questions for discussion:(1) Should Bank I reject the certificate of origin as presented?(2) Should Bank I reject the documents based on the inconsistencies between the commercial invoice and the certifi

11、cate of origin?(3) Should Bank I reject the documents based on the inconsistency between the words “country” and “countries”?(4) Could an argument be made by Bank A that Bank I violated UCP600, relative to the instructions to issue Credits in a complete and precise manner?Notes: 1. negotiable Credit

12、 可議付信用證，議付信用證2. as a matter of interest 出于好奇，順便說3. reimbursement 償付4. reject the documents for the following discrepancies因下列不符點(diǎn)拒絕該單據(jù)付款5. the documents were being held at their disposal 保留單據(jù)聽候他方處理6. your rejection of the documents as non-compliant你方以不相符理由拒絕單據(jù)付款7. the amount negotiated and our charge

13、s 已議付金額與我方費(fèi)用Reference answers to the queries in Case No.1Attention: All answers which should be arguable are conducted based on the related explanation of the Banking Commission of ICC and the basic articles of UCP600. (1) No, it should not reject the certificate of origin as presented, because the

14、presented certificate of origin indicating “Country of Origin: E.E.C. Countries” is exactly the same as required in the credit. And a matter of fact, the certificate of origin presented is obviously accepted by the issuing bank as a conforming document. (2) No, it should not reject the documents bas

15、ed on the inconsistencies between the commercial invoice and the certificate of origin. This is because E.E.C or EEC itself encompasses a number of E.E.C. countries, and in the context of the credit, it seems to be immaterial whether E.E.C is followed by the word “countries” or not. (3) No, it shoul

16、d not reject the documents based on the inconsistency between the words “country” and “countries” because Article 3 states that where applicable, words in the singular include the plural and in the plural include the singular. (4) Yes, Bank A could do so. The issuing bank failed to issue the credit

17、requiring the country of origin (e.g. a specific country) in a complete and precise manner, therefore, as the author of such unclear requirement, it must bear the consequences. Its claiming a discrepancy in the case is not justified. Case Number 2 The Case of the Contingent Irrevocability of the Cre

18、dit UCP 600 Article 5 (Banks deal with documents and not with goods, services and performance) and sub-Article 7 (Issuing Bank Undertaking)BackgroundType of Credit: IrrevocableApplication: UCP600 Issuing Bank: Bank IAdvising Bank: Bank AAvailability: At sight with the Issuing Bank.Expiry: At the cou

19、nters of the Issuing BankCircumstancesIssuing Bank: Bank I issued its irrevocable Credit and advised it to the Beneficiary through Bank A.Advising Bank: Bank A advised the Credit to the Beneficiary.Credit: Among the terms and conditions, the Credit asked for:1. Sight draft on the Issuing Bank.2. Bil

20、ls of lading issued to order of Bank I for account of the Applicant.3. Special Conditions:(a) Payment of drafts drawn hereunder will be made only after the realization of the re-export proceeds program.Beneficiary: The Beneficiary shipped the goods and presented the documents required by the Credit

21、to Bank A.Advising Bank: Bank A informed the Beneficiary that in view of the special conditions related to payment and because the Credit expired at the counters of the Issuing Bank, Bank A would only forward the documents to Bank I for their action.Beneficiary: After determining that Bank A had no

22、obligation to negotiate, relying upon the standing of the Issuing Bank as a premier financial institution, and being comfortable that the Credit was subject to UCP 600, the Beneficiary instructed Bank A to forward the documents to Bank I.Issuing Bank: Informed Bank A that while the documents present

23、ed under the Credit were compliant, they were not in a position to honor the drawing, as the necessary funds had not been made available to them from the “re-export proceeds program”. If and when such proceeds were made available, they would pay the drawing under their Credit.Beneficiary: The Benefi

24、ciary never received payment for the goods shipped, even though the documents presented under the Credit compiled fully with the terms and conditions of the Credit. Bank I stated that while their Credit was irrevocable it contained special conditions stating that irrevocability was subject to the re

25、ceipt of the necessary funds from the “re-export proceeds program”. Since such proceeds were not received, Bank I had no obligation to honor the drawing, Bank I suggested that the Beneficiary try to recover directly from the Applicant.Questions for discussion: (1) Would your bank have issued or conf

26、irmed such an irrevocable Credit？(2) If your bank advised such a Credit to the Beneficiary, would it have warned the Beneficiary about its special conditions?(3) Is it correct for Bank I to have issued this Credit subject to UCP 600?Notes: 1. Contingent Irrevocability不可預(yù)知的不可撤銷性，隨情況變化而定的不可撤銷性2. Sight

27、 draft on the Issuing Bank 以開證行為付款人的即期匯票3. Bills of lading issued to order of Bank I for account of the Applicant 提單做成以代表聲請人的開證行為抬頭人4. after the realization of the re-export proceeds program完成再出口貨款計(jì)劃后5. not in a position to honor the drawing不能兌付匯票款項(xiàng)6. subject to the receipt of the necessary funds受制于

28、或受限于收到必要的資金7. recover directly from the Applicant直接向申請人（進(jìn)口方）索還Reference answers to the queries in Case No.2Attention: All the answers which should be arguable are conducted based on the related explanation of the Banking Commission of ICC and the basic articles of UCP600. (1) Our bank would have not

29、 issued or confirmed such an irrevocable Credit which contains contingencies having to be met outside the control before honoring their obligation. This type of credit provides no security to the beneficiary and in fact is not irrevocable on Bank Is part. The irrevocability is subject to the realiza

30、tion of the re-export proceeds program. If no realization, Bank I will not honor the drawing. (2) It is suggested that an advising bank should inform the beneficiary of the special condition and the risks associated with them. (3) It is not legally wrong for Bank I to have issued this Credit subject

31、 to UCP 600 because the special condition of the credit clearly states that payment of drafts drawn hereunder will be made only after the realization of the re-export proceeds program. Unfortunately, the wording of the credit has not been carefully studied and its implications have not been understo

32、od by the beneficiary, so the beneficiary should be fully responsible for the loss of goods and the money. But, such a credit which provides no security to the beneficiary should never be issued by any bank, and advising such a credit is not a service to the banking industry. Case Number 3The Case o

33、f the Standby Credit and the Alleged Fraudulent Statement of Default UCP600 Article 7 (Issuing Bank Undertaking) and Article 18 (Commercial Invoice)BackgroundType of Credit: Irrevocable StandbyApplication: UCP 600Issuing Bank: Bank IAdvising Bank: Bank AAvailability: At sight with the Issuing BankEx

34、piry: At the counters of the Issuing Bank CircumstancesIssuing Bank: Bank I issued its irrevocable Standby Credit in favor of the Beneficiary and advised it through Bank A.Advising Bank: Bank A advised the Credit to the Beneficiary, informing him that the Credit was available with Bank I and that it

35、 expired at the counters of Bank I. Credit: The Credit required, amongst other documents:1. Sight Draft on Bank I2. Copy of the unpaid commercial invoice3. Statement from the Beneficiarys authorized representative certifying that the enclosed invoices were at least 30 days past due and that payment

36、had been demanded from the Applicant.Applicant: Five days before the Standby Credit expired, the Applicant informed Bank I that no outstanding invoices were due to the Beneficiary and therefore Bank I should not pay any drawing made under the Standby Credit.Advising Bank: The day before the Standby

37、Credit expired, Bank A presented via courier, on behalf of the Beneficiary, the following documents:1. Sight draft on Bank I2. Copy of the unpaid commercial invoice, undated and listing delivery date of the goods prier to 15 days of their presentation.3. Statement of default as required by the Stand

38、by Credit.Issuing Bank: After examination of the documents, Bank I paid the drawing under the Credit by crediting the account of Bank A and debiting the account of the Applicant.Applicant: The Applicant objected to the debit of his account even though he had already taken possession of the goods. Th

39、e Applicant stated that:1. Bank I had previously been informed by the Applicant that no outstanding invoices were due to the Beneficiary and that Bank I should not honour any drawing under the Credit.2. Bank I should have realized that, despite the fact that the statement of default as required by t

40、he Credit declared that a default condition by the Applicant existed, it was clear that the delivery dates on the invoices signaled that there was no amount 30 days past due.3. The invoices stated that delivery had been effected only 15 days prior to the presentation of the documents and, therefore,

41、 there was a misrepresentation of fact in which the Beneficiary could not have declared a 30-days past-due period when only 15 days had clasped prior to the presentation.4. The Applicant demanded immediate re-credit to their account.Issuing Bank: Bank I refused to re-credit the Applicants account, s

42、tating that the terms and conditions of the Credit had been fully complied with.Questions for discussion: (1) Would your bank have issued such a Standby Credit? If not, why and what would have changed?(2) Was there any importance in the fact that the invoices were undated?(3) Was Bank I correct in p

43、aying the drawing despite the allegation by the Applicant that there was no default by him (the Applicant)?(4) What course of action should Bank I have considered in view of the Applicants statement made prior to the drawing that there were no invoices past due?Notes: 1. At sight with the Issuing Ba

44、nk開證行即期付款2. At the counters of the Issuing Bank開證行柜臺(tái)到期（單據(jù)須在信用證期限內(nèi)提交到開證行）3. the Credit was available with Bank I該信用證可在開證行議付（該信用證付款行為開證行）4. outstanding invoices未付款的發(fā)票5. undated（發(fā)票）未列明簽發(fā)日期6. crediting the account of Bank A and debiting the account of the Applicant貸記（劃入）通知行賬號并借記（劃出）申請人賬號Reference answer

45、s to the queries in Case No.3Attention: All the answers which should be arguable are conducted based on the related explanation of the Banking Commission of ICC and the basic articles of UCP600. (1) No, our bank would not have issued such a Standby Credit. Because the statement of default is not exp

46、licit in its wording, which may put the issuing bank and the applicant in danger if the beneficiary presents any kind of fraudulent statement of default to them, which may be in compliance with the terms and conditions of the credit so that the issuing bank must take its definite undertaking for pay

47、ment. For example, who knows from when the so-called 30 days past due should be calculated? Starting from the issuing date of the invoice or from the date of shipment or presentation? And in terms of the Statement from the Beneficiarys authorized representative, who determines who is an authorized r

48、epresentative? The working to appear on the statement should be placed in quotes, thus enabling all parties to determine whether there has been in strict compliance with the terms and conditions required for a declaration of default. (2) No, there wasnt. There is no clear requirement in UCP600 Artic

49、le 18 for the dating of the invoice, and the Credit itself did not require the invoice to be dated, and payment under it was conditioned on the presentation of the statement of default certifying that the invoice was 30 days past due. The credit did not specify that the period of time was to begin f

50、rom the billing date, the shipment date or the delivery. (3) Yes, it was correct. Based on UCP Article 7, provided that the stipulated documents are presented to the nominated bank or to the issuing bank and that they constitute a complying presentation, the issuing bank must honor. The banks duty i

51、s to honor its obligation under the Credit only based on the documents presented by the beneficiary, and UCP600 can not be subject to the allegation made by the applicant, which is not a document. (4) Bank I should have counseled or advised the Applicant of the banks duty to honor its obligation und

52、er the Credit if compliant documents were presented. If the Applicant had reason to believe that a misrepresentation or fraudulent act was about to take effect, then it should have taken action under law to obtain the necessary injunction of restraining order preventing Bank I from paying the drawin

53、g that might be made under the credit. Case Number 4 The Case of the Automatic Extension of a Confirmation to a Credit UCP 600 Article 8 (Confirming Bank Undertaking)BackgroundType of Credit: Irrevocable ConfirmedApplication: UCP600Issuing Bank: Bank IAdvising Bank: Bank AConfirming Bank: Bank AAvai

54、lability: At sight with the confirming Bank Expiry: At the counter of the confirming BankCircumstancesIssuing Bank: Bank I issued its irrevocable Documentary Credit in favor of the Beneficiary and advised it through Bank A with a request that Bank A add its confirmation.Confirming Bank: Bank A advis

55、ed the Credit to the Beneficiary adding its confirmation.Beneficiary: The Beneficiary shipped the merchandise and presented the relevant documents with a value of USD110, 000 - two days prior to the expiry date of the Credit. Confirming Bank: Upon receipt of the documents, Bank A examined them and d

56、etermined that they were not in compliance with terms and conditions of the Credit for the following reasons:1. Bills of lading were issued to the order of the shipper and endorsed in blank instead of to the order of the buyer.2. The Credit was overdrawn by USD10, 000.In view of the fax: that the Cr

57、edit was about to expire, Bank A telephoned the Beneficiary advising him of the discrepanciesBeneficiary: Upon receipt of the notice of rejection and prior to the expiry date of the Credit, the Beneficiary requested Bank A to telex the Issuing Bank requesting approval to pay despite the discrepant d

58、ocuments.Confirming Bank: Immediately, upon receipt of such telephonic authorization, Bank A telexed Bank I requesting authority to pay the documents as presented.Issuing Bank: After conferring with the applicant, Bank I authorized Bank A to pay the documents as presented.Confirming Bank: By the time Bank I had telexed authorization for Bank A to pay the discrepant documents, the political and economic conditions in Bank Is country had deteriorated, with a military and political upheaval in the country about