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ACCA Applied Skills · Corporate and Business Law (Global) · Transportation documents and means of payment

Halden Co is beneficiary of an irrevocable credit requiring shipment by 30 June and presentation of documents within 10 days after shipment. Halden ships on 20 June but presents the documents, which are otherwise conforming, on 5 July, which is 15 days after shipment. The buyer, Prisma Ltd, still wants the goods and wishes to be flexible. What is the position of the issuing bank?

The bank may refuse payment. A late presentation is a discrepancy, because the documents must be presented within the period stated in the credit. Timely shipment does not cure it. The bank can pay only if the applicant waives the discrepancy; there is no right to part payment.

  1. AIt is entitled to refuse payment because the presentation was late, unless the applicant waives the discrepancyCorrect
  2. BIt must pay because the shipment itself was on time
  3. CIt must pay because the discrepancy concerns timing only, which is not a document defect
  4. DIt must pay half the amount, as the delay is only five days

Explanation

Compliance covers the time of presentation as well as the content of the documents. Presentation 15 days after shipment breaches the 10-day limit, so the presentation is non-conforming. The bank may refuse, although it can accept if the applicant waives the discrepancy. Part payment has no basis.

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