浙江财经国际结算双语案例分析

Case Number 1 The Case of the Contingent Irrevocability of the Credit

UCP500 Article 4 and sub-article 8(a)

Background

Type of Credit: Irrevocable

Application:UCP500

Issuing Bank: Bank I

Advising Bank: Bank A

Availability: At sight with the Issuing Bank

Expiry: At the counters of the Issuing Bank

Circumstances

Issuing 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. Bills 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 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 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 UCP500, the Beneficiary

instructed Bank A to forward the documents to Bank I.

Issuing Bank: Informed Bank A that while the documents presented 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 Beneficiary never received payment for the goods shipped, even though the documents presented under the Credit complied 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

receipt 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.

Queries:Please review, analyze the queries, give your opinion and be prepared to answer each query