L/C expired on 15th May 2015 but documents have been presented on 17th May, 2015. What precautions will you take before negotiation of the bill ?
All the discrepancies are of such nature that they cannot be easily rectified by the exporter. For the provisions regarding the discrepancies under the UCP, please see the chapter on Letters of Credit. The bank may take precautions as detailed in the preceding question. Since the credit had already expired, the bank probably would like to take the bill under collection.
You have received an export letter of credit favouring your cus-tomer containing the following stipulations:
(i) Shipment on CIF basis
(ii) Goods to be consigned direct to the buyer, and
(iii) Telegraphic advice of date of shipment of goods to the buyer
Advise the precautions to be taken by your customer against the risk of loss of goods in the midstream before the documents reach the opening bank and the buyer failing to take insurance policy.
The exporter should be advised to obtain a contingency insurance cover from GIC or any of its subsidiaries.
Normally, insurance for exports can be taken in India by paying the premium in Indian rupees only if the cost is included in the price of the goods (CIF contract) or it is separately added in the invoice. The idea is that the insurance cost should be borne by the importer ultimately and the net flow of foreign exchange is not less than the actual value of the goods.
The arrangement in the above case is that the buyer himself will take the insurance. To enable him to do so at the earliest a telegraphic intimation of the date of shipment of goods is sent. However, before he could take the insurance policy, the goods may suffer damage/loss and it is in the interest of the exporter to get them insured. The exporter may avail of contingency marine insurance policy from GIC and its subsidiaries in order to protect his interest till the goods are paid for. Claims on such policy will be payable only to the exporter in India and the policy is not assignable to overseas buyer or any other party.