The 23-Day Presentation: Discrepancies, Waiver and the Five-Banking-Day Clock

Work through the presentation item by item, testing each document against the credit terms and the UCP 600 default rules.

1. Late presentation - raise it. Bill of lading dated 28 May; presentation 20 June. That is 23 calendar days. Sub-article 14(c) of UCP 600 requires presentation within 21 calendar days after the date of shipment, and in any event before expiry. The 23rd day is two days outside the window, even though 20 June is still before the 30 June expiry. This is the fatal discrepancy.
2. Insurance dated after shipment - raise it (conditionally). The certificate is dated 3 June, after the 28 May shipment date. UCP 600 sub-article 28(e) permits this only if the document itself shows that cover is effective from a date not later than the date of shipment. If the certificate carries a 'cover effective from 28/05' wording, the discrepancy disappears; if not, it stands. Check the wording before refusing.
3. Transhipment - do not raise it. The credit is silent, and a bill of lading covering the entire carriage from Karachi to Valencia may show transhipment at Colombo (UCP 600 article 20(c)). A silent credit does not prohibit transhipment.
4. Invoice description - arguable, but a corrected invoice is the cheap fix. ISBP requires the invoice description to correspond with the credit, not to be identical to it. An HS code is a customs classification, not a description of the goods, so most examiners would not call it. But because the refusal decision is binary and the cure costs nothing, advise the exporter to reissue the invoice with the HS code stated rather than argue the point at the counter.
5. Insurance percentage and clauses - verify, do not assume. Confirm the insured amount is at least 110% of the CIF value in the credit currency and that the certificate is endorsed/assigned as the credit requires. No data here supports raising it, but the silence in the file is itself a gap.

Deadline: the nominated bank has a maximum of five banking days following the day of presentation to determine compliance (sub-article 14(b)). It must then give a single notice stating each discrepancy and how it is disposing of the documents (sub-article 16(c)). If it simply forwards the documents without such notice, it is precluded from claiming the presentation is non-compliant (sub-article 16(f)) - and a nominated bank that has negotiated on the strength of that silence can put the issuing bank in the same position. Treat the five days as a hard operational deadline, not a target.

A waiver from the applicant is a commercial signal, not a legal discharge.

• Independence of the credit. The issuing bank's undertaking runs to the beneficiary on the terms of the credit. The applicant's private waiver does not amend the credit and does not bind the issuing bank.
• What article 16(b) actually permits. The issuing bank may, in its sole judgement, approach the applicant for a waiver of discrepancies. Critically, that does not extend the five-banking-day period. The clock runs whether or not the applicant replies.
• Two permissible outcomes for the issuing bank.
  • Accept: it may, in its sole judgement, decide to honour despite the discrepancies. It is then bound to honour.
  • Refuse: it must give a single notice stating each discrepancy and its disposal of the documents (sub-article 16(c)).
• The trap. If the issuing bank neither honours nor refuses within its period, article 16(f) precludes it from claiming non-compliance, and it must honour. Silence is a decision to pay - a fact pattern that regularly produces losses for banks that assume the applicant's waiver 'covers' them.
• The exporter's argument is irrelevant. 'The buyer accepted the same documents twice before' has no documentary effect: each presentation is examined on its own terms against the credit. Past practice creates commercial comfort, not a documentary right.
• Nominated bank's position. It is under no obligation to negotiate. If it does so against discrepant documents, it advances with recourse to the exporter unless it has confirmed the credit and the documents comply. In practice, ask for a written amendment or the issuing bank's express agreement to honour, and hold the documents until it arrives.

Sequence the options by cost and by how much control the exporter retains over the goods.

1. Get a compliant re-presentation inside the credit's life. A fresh invoice (and, if needed, an insurer's endorsement confirming cover from 28 May) fixes items 2 and 4; the 21-day late-presentation defect cannot be cured. So the realistic route is an amendment or an express issuing-bank agreement to honour - not a re-presentation.
2. Ask the issuing bank to release documents on 'approval' basis. Under sub-article 16(c)(ii)/(iii) the presenting bank can hold the documents pending the applicant's acceptance or act on prior instructions. This keeps the banking channel alive and is the cheapest way of testing whether the buyer genuinely wants the goods.
3. Move to a collection. Have the documents treated as a documentary collection against payment. You lose the bank undertaking but keep title and a payment trigger. Ask for the collecting bank to be instructed not to release without payment.
4. Hold or return the goods. Check the bill of lading: if it is consigned to order of the issuing bank, the exporter may not control discharge. If it is to order of shipper, the exporter retains control until endorsement - its strongest lever. Returning the cargo usually costs more than the goods are worth on a cotton-bed-linen shipment of this size.
5. Re-sell or discount. Identify an alternative buyer in Spain or elsewhere in the EU; price the concession against demurrage and storage. A 10% discount to the existing buyer is frequently cheaper than 30 days of port costs plus a total loss.
6. Preserve rights. Notify the insurer of the goods' situation; check the sale contract for a retention-of-title and an arbitration/forum clause; keep a written record of the buyer's refusal to establish bad faith if a claim is later pursued.

What not to do: do not instruct anyone to release the documents against a promise of later payment, and do not let the nominated bank send documents 'on approval' without written instructions - that is how banks end up in disputes about who authorised release.