Shipment in Three Equal Lots

LC VIEWS - Single Window Q&A No. 38 - Feb 21, 2008

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Question:
LC:
Available with Bank "X” by negotiation at Sight
Draft: Draft drawn on issuing Bank
Partial Shipment: Allowed
Other Conditions
1. Shipments to be effected in three equal lots during January and February 2008
Presentations:

Nominated bank ( Bank X ) negotiated first set of complying presentation in January evidencing shipment on 05/01/2008 and got reimbursed by issuing bank upon receipts of shipping documents by them.
Nominated bank ( Bank X ) negotiated 2nd set of complying presentation in January evidencing shipment on 15/01/2008 and got reimbursed by issuing bank upon receipts of shipping documents by them.
Nominated bank ( Bank X ) negotiated 3rd set of presentation in January evidencing shipment on 30/01/2008, however got a rejection by issuing bank under their refusal notice stating following discrepancy
"SHIPMENT SCHEDULE NOT FOLLOWED"
According to Bank " X " the shipment period is open from 1st January 2008 to 28th February 2008, hence the 3rd shipment is also fall within given shipment schedule, where as issuing bank argue that at least one shipment must got effected in February 2008 instead of effecting all three shipments in January 2008.
Please advice with your expert views.
Regards
A.B.

Response from T.O. Lee:
From the limited information provided, it appears that the beneficiary has met the terms and conditions of the credit as far as shipments are concerned.
If the intent of the applicant is to have a least one shipment in February, the credit must specify this clearly.
The above comments are solely from LC point of view. As a consultant, we have to add that the beneficiary should have discussed with the applicant if he intends to ship all the goods in January. Otherwise the beneficiary may win the battles (UCP 600) and lose the war (continuous business). For long term relationship, the beneficiary should think in the cap the applicant. That is the Chinese way of doing business, caring more for long term business relationship than to reap the harvest too soon.
T. O.

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