The countermeasures for documents being rejected

Companies operating import and export trades must have their own experience of being refused payment in the letter of credit business. Some experiences may even be thrilling. Some inexperienced companies often panic when they receive a notice of discrepancies from the issuing bank. In a hurry, accepting customers' requests for price reductions in a hurry, which directly leads to economic losses.

In fact, the fact that the documents under the letter of credit were refused did not mean that the money under the export items had been sentenced to death, and the price cut was not the only solution to the problem. Therefore, we do not need to talk about dissonance, and we must first chaos.

For documents being rejected, we need to clarify a few issues:

1. It is the right of international practice to grant an issuing bank a refusal to pay for documents containing discrepancies. We know that a letter of credit is a conditional payment commitment of the issuing bank. As long as it is consistent with the document, the issuing bank must pay, but once the document has a discrepancy, the issuing bank has the right to dismiss the document by submitting a discrepancy to the party submitting the document. The payment responsibility, which is also a practice for the issuing bank to protect itself. After the refusal of payment, the discrepancy point is indicated to the issuing applicant. If the issuing applicant accepts the discrepancy, the issuing bank will generally pay.

2. After the bill is rejected, the beneficiary has the right to dispose of the bill, which means that the right to the goods has not been lost. The beneficiary can dispose of the goods according to the actual situation. However, there must be a premise that the letter of credit must be A full set of bills of lading, if one-third of the bill of lading has already been sent to the applicant, and the 2/3 bill of lading required by the letter of credit is submitted to the bank, it will inevitably lead to the risk of losing both goods and money.

3. After the bill is rejected, it may bring additional benefits. After the documents were rejected, in theory, even if the applicant accepted the discrepancies, the issuing bank did not have the right to arbitrarily place orders with the applicant. If the market conditions are good, exporters can choose to resell them to third parties at higher prices for greater benefits.

4. At any time, the quality of the goods is the most critical factor in recovering payment. Earning profits is the common desire of buyers and sellers. If the quality of goods is good and the market conditions are good, importers will generally accept discrepancies and make payments.

So, what should we do in the face of foreign disagreements?

1. Carefully review the discrepancies.

We all know that it is indispensable to carefully review the terms of export credits. It is also important that the content of the discrepancies in audits is also important. The reputation of a bank is mixed, and some unscrupulous issuing banks tend to cooperate with the issuing applicants to make unreasonable criticisms of the documents. They refuse to pay or even unreasonably refuse to pay due to innocuous harm. The quality of the banks is uneven and the international The conventional understanding is not the same. Sometimes the proposed discrepancies cannot withstand scrutiny. This gives us an opportunity to refute the discrepancies, leaving a lot of room, and hurrying to deal with the situation without clarifying the discrepancies. For example, if a monk rides a humming horse, although it will not be as thrilling as a half-night deep pool, its blindness can be imagined, and the results of such a downturn can be imagined. Whether the audit discrepancy is established requires the auditor to be familiar with international practices and have extensive international settlement experience and skilled skills. The company can consult the bank.

In general, the audit discrepancies include three parts:

(1) Based on international practice and international standard banking practices, see if the discrepancy raised by the issuing bank is established. The issuance bank is based on the conditions of the documents and the agreement, to decide whether to accept the documents under the letter of credit. If the documents are inconsistent, the documents can be rejected and the documents are in conformity. They must accept the documents and perform the payment obligations under the letter of credit. Banks may not refuse payment for reasons other than documents. As a result, if a document meets the letter of credit on the surface, and there is no inconsistency between the document and the document, it can be determined that the proposed discrepancy is not established and that the obligation of the issuing bank to perform the payment is justified.

(2) See if the preconditions for the discrepancy raised by the issuing bank have been met. According to international practice, the issuance bank’s inconsistent point must: 1 Raise the discrepancies within a reasonable period of time, that is, within seven working days after receipt of the receipt by the issuing bank, submit a discrepancy to the proponent of the bill; 2 If you fail to do so by telecommunications, you must notify the person with the discrepancy by using other shortcuts; 3 The discrepancy must be submitted in a one-time manner. If the discrepancy is not established for the first time, even if there is a substantial discrepancy between the documents, The issuing bank also does not have the right to resubmit; 4 Inconsistent notice, it must be stated that the documents will be handled on behalf of the custody, or those who have made the withdrawal. The above conditions must be satisfied at the same time. If there is a condition that the issuing bank fails to do so, the issuing bank will not have the right to claim that the documents are inconsistent and refuse to pay. For instance, the ICC 535 publication has a case in which the issuing bank refuses to pay Due to the occurrence of an earthquake at the seat of the negotiating bank, the discrepancies could not be notified by telecommunications. The express mail was adopted by the negotiating bank. The issuance bank did not notify the issuing bank within seven working days of the request. The International Chamber of Commerce believed that In that case, the express mail method is the quickest way the issuing bank can adopt, and its refusal behavior is effective. We can imagine that if the issuing bank is not because of the earthquake in the area where the negotiating bank is located, but it is not notified by the means of telecommunications and the express mail is used instead, it is directly notified by express mail, and it is reasonable for the negotiating bank to object to this.

(3) To see if the discrepancies between the proposed points are ambiguous. In some cases, the conditions of the discrepancy raised by the issuing bank have been satisfied, and there are indeed discrepancies in the documents. However, due to limitations in the quality or English level of the issuing bank, the discrepancies proposed by the issuing bank are inconsistent with the actual discrepancies, which is not exactly the same. At this time, in fact, the discrepancy raised by the issuing bank does not exist, and its subsequent interpretation of the discrepancy may be the correct discrepancy, but we can refer to it as the second discrepancy. , is an invalid refusal payment and requires the issuing bank to pay.

2. Research whether it can change orders.

According to international practice, if there is a discrepancy in the document, the issuing bank has already submitted a refusal, as long as the document corrected by the beneficiary is submitted to the designated bank within the validity period and negotiation period specified in the credit, and the newly submitted document has no new If there is any discrepancy, it is deemed that there is no discrepancy in the document and the issuing bank must pay. For this reason, once the issuing bank is notified of the discrepancy, the company's response must be quick to see whether it can and will not be able to change the order. If possible, it is necessary to promptly change the order and deliver the documents to the designated bank in a timely manner. In order to achieve the purpose of reconciliation, we must do several things in advance: 1 When reviewing the letter of credit, we must pay attention to the effective location of the letter of credit must be in the country; 2 delivery as early as possible, do not reach the expiration date Only when it is shipped, in order to ensure that the beneficiary has time to change the order after the issuing bank proposes discrepancies; 3 to ship the goods immediately, and submit the orders immediately, so as to guarantee the refusal of payment, they can re-make orders within the negotiation period; 4 When re-supplying documents, be sure to carefully and ensure that there are no new discrepancies.

3. Pay close attention to whereabouts of the goods.

In the L/C business, the relevant parties deal with the documents, not the goods and/or services related to the goods. The main reason is that the documents involved in the letters of credit are bills of lading, especially as the cargo rights documents. The parties to the letter of credit can control the rights of the goods. The purchase and sale of documents means the purchase and sale of goods. Therefore, UCP500 stipulates that after the bank refuses to pay, it must either hold the order or wait for the document to be returned to the individual. It means that after the issuing bank refuses to pay, it must not issue a document to the issuing applicant without the consent of the beneficiary or the negotiation bank, otherwise it must pay. In addition, concerned about the whereabouts of the goods can also understand whether the issuing applicant has already extracted the goods with the security of the issuing bank's delivery guarantee. Although the guarantee delivery cannot constitute the obligation of the issuing bank to pay after it has refused to pay, it is the beneficiary or the negotiation bank. Ask for a refund, and then ask the shipping company for the goods. If the shipping company is unable to provide the goods, the shipping company will inevitably turn to the issuing bank and ask them to perform the responsibility under the delivery guarantee. If the issuing bank’s reputation loss is not stated, the shipping company may bear more than the purchase price. More economic losses, so in this case, the issuing bank often pays the money once it is known that it knows the fact that the customer picks up the goods with his delivery guarantee.