Question

Our company sold a batch of goods by way of letter of credit. Due to problems during the loading, most of the goods were loaded on October 12, and the rest of them could not be shipped until October 16. However, the latest date of shipment stated in the credit was October 15. How could we solve this problem?​

Answer 1

Answer:

The Uniform Customs and Practice for Documentary Credits (UCP) is published by the International Chamber of Commerce and was revised in 1993 and put into use January 1, 1994. The purpose of the UCP is to clarify gray areas that may appear in a letter of credit and to help banks interpret conditions in the letter of credit in a consistent manner.

However, as anyone who has ever worked with a letter of credit knows, there is plenty of disagreement between all parties concerned. Banks, account parties, and beneficiaries can all disagree about what complies and what does not comply when the shipping documents are checked against the terms of the letter of credit.

Sometimes the UCP just doesn’t clarify a situation the way you think it should. After all there is a huge difference between the words “will” and “may.” For instance: “Banks will accept…” versus “Banks may accept….” One is definite and the other appears to be open to interpretation. It’s not surprising confusion results.