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LC Rejection FAQs Solved: Fix & Avoid Issues (2024 Guide)

If your LC (Letter of Credit) has been rejected or delayed, you're not alone. Every year, thousands of exporters and importers face LC rejection due to avoidable documentation errors, compliance issues, and unclear bank terms. In this comprehensive Q&A guide, we’ve compiled 253 real questions and expert answers covering the most common reasons for LC rejection—and how to fix or prevent them. Whether you're a beginner or a seasoned exporter, this 2024 guide will help you understand LC rejection causes, resolve bank discrepancies, and avoid future mistakes.

Read on to get practical solutions, bank-approved tips, and insider knowledge to keep your trade transactions smooth and secure.

Letter of Credit (LC) Rejection – FAQs

1. What is an LC rejection?

An LC rejection occurs when a bank refuses payment under a Letter of Credit due to document errors or non-compliance with terms. The seller must fix the issues or negotiate with the buyer to receive payment.

2. What happens when an LC is rejected by the bank?

The bank issues a discrepancy notice. The seller must correct the errors or get a waiver from the buyer to receive payment.

3. Can you reverse an LC rejection?

Yes, if errors are fixed before the LC expires or the buyer agrees to waive the discrepancies.

4. Is an LC rejection the same as a discrepancy?

No. A discrepancy is a document error. Rejection occurs when discrepancies are not resolved in time.

5. What are the most common reasons for LC rejection?

Document mismatches (amounts, dates)
Expired LC
Late submission
Errors in shipping documents

6. Do banks reject LCs for minor errors?

Yes. Even small typos, missing stamps, or absent signatures can lead to rejection.

7. Which LC document causes the most rejections?

The Bill of Lading (BL), especially due to errors in consignee or notify party details.

8. How strict are banks with LC rules?

Extremely strict. Banks follow UCP 600 guidelines and reject even minor non-compliance.

9. How can I avoid LC rejection?

Triple-check all documents against LC terms, maintain consistency across paperwork, and submit at least 3 days before LC expiry.

10. What is the #1 tip to prevent LC rejection?

Use a bank-provided checklist to verify all documents before submission (invoice, BL, COO, etc.).

11. How do I check my LC documents for errors?

Compare each document line-by-line against LC terms, focusing on:

Amounts
Dates
Descriptions
Signatures

12. Can software help avoid LC discrepancies?

Yes. Trade finance tools like TradeShift or LC Protector can automatically flag errors.

13. What happens after an LC is rejected?

The bank issues a discrepancy notice. The seller may:

Correct and resubmit documents (if time permits)
Request a buyer’s waiver

14. How long do I have to fix a rejected LC?

Typically 5–7 days, depending on the LC’s remaining validity.

15. Can the buyer override an LC rejection?

Yes, by sending a formal written waiver to the bank accepting the discrepancies.

16. Who pays bank charges for LC rejection?

Usually the seller, unless the buyer agrees to cover them.

17. Can an LC rejection be reversed?

Yes, if the seller fixes all discrepancies or the buyer waives them before the LC expires.

18. What if the LC expires before corrections?

Payment will not be made unless the buyer extends the LC validity period.

19. Can a rejected LC be renegotiated?

Yes, but both the buyer and seller must agree on new terms or documents.

20. Do banks charge for re-submitting LC documents?

Yes. Charges range from $50 to $200 per discrepancy.

21. Who pays the fees for an LC rejection?

Usually the seller pays, unless negotiated otherwise with the buyer.

22. How much are LC rejection fees?

Typically $50–$200 per discrepancy, depending on the bank and country.

23. Can you negotiate LC discrepancy charges?

Rarely. Most banks follow standard rates. However, buyers may cover charges as a gesture of goodwill.

24. Who bears the risk in LC transactions?

Sellers: Document compliance risk
Buyers: Goods quality and shipment risk

25. How strict are banks with LC documents?

Extremely strict. Even a 1-day late submission or a minor typo can result in rejection.

26. Do banks ever overlook small LC errors?

Answer: No. All discrepancies must be formally waived by the buyer. Banks do not overlook any errors, however minor.

27. What's the toughest LC document to get right?

Answer: The Bill of Lading, due to strict rules regarding consignee and notify party details.

28. Why are LCs so rigid?

Answer: To protect banks from fraud and ensure strict compliance with UCP 600 rules.

29. Which LC documents are rejected most often?

Answer: The Bill of Lading, Commercial Invoice, and Certificate of Origin.

30. How do I avoid Bill of Lading mistakes?

Answer: Ensure the consignee and notify party names exactly match the Letter of Credit terms.

31. What's the most common invoice error in LCs?

Answer: Amount or description mismatches (e.g., "100 units" vs. "100 pcs" as per LC terms).

32. Can missing a single document cause LC rejection?

Answer: Yes. If any required document is absent, the bank will reject the presentation.

33. Can a buyer reject an LC after goods are shipped?

Answer: Yes, if the documents don’t comply with LC terms—even if the goods are in transit.

34. What if the buyer won't waive LC discrepancies?

Answer: The seller must correct the errors or negotiate alternative payment arrangements.

35. Can you sue a buyer for rejecting an LC unfairly?

Answer: Only if the buyer acts in bad faith, though this is rare. Courts typically uphold LC autonomy.

36. How to protect against LC rejection after shipment?

Answer: Use pre-submission document checks or trade finance insurance to minimize risks.

37. What's the difference between LC discrepancy and rejection?

Answer:

Discrepancy = A document error.
Rejection = The bank refuses payment because the discrepancy wasn’t corrected or waived.

38. Do all discrepancies lead to rejection?

Answer: Yes, unless they are corrected in time or waived by the buyer.

39. How do banks notify you of LC discrepancies?

Answer: Through a formal SWIFT message or email outlining all detected errors.

40. Can you get paid with minor LC discrepancies?

Answer: Only if the buyer issues a formal waiver accepting those discrepancies.

41. What is UCP 600 in LC transactions?

Answer: The Uniform Customs and Practice for Documentary Credits (UCP 600) are ICC rules that govern Letters of Credit globally.

42. How many days do banks take to check LC documents?

Answer: Typically 3 to 5 working days from the date of document receipt, as per UCP 600 Article 14(b).

43. Can an LC be rejected after payment?

Answer: No. However, if fraud is discovered, the bank may attempt to recall the funds.

44. What is the difference between LC rejection and LC cancellation?

Answer:

Rejection = Due to document issues.
Cancellation = Termination of the LC by mutual consent before it expires.

45. Do all banks follow the same LC rejection rules?

Answer: Yes, most follow UCP 600, but some may add country- or bank-specific requirements.

46. How do I know if my LC has discrepancies before submission?

Answer: Use a discrepancy-check service or request a pre-check from your advising bank.

47. What is an LC discrepancy fee?

Answer: A charge levied by the bank (typically $50–$300) for examining and reporting errors in documents.

48. Can I get LC rejection insurance?

Answer: Yes. Trade credit insurers like Euler Hermes offer insurance to cover document rejection-related losses.

49. Which Incoterms cause most LC rejections?

Answer: FOB and CIF, due to complex shipping documentation requirements.

50. What is a "soft discrepancy" in LC?

Answer: A minor error that banks may overlook if the buyer quickly agrees to accept the discrepancy via a waiver.

51. Can I amend an LC after rejection?

Answer: Yes. The applicant (buyer) must request an amendment, and the beneficiary (seller) must accept it.

52. What’s the role of the confirming bank in LC rejection?

Answer: The confirming bank also checks documents and can reject them if non-compliant, even if the issuing bank accepts them.

53. What is "strict compliance" in LCs?

Answer: It means documents must match LC terms exactly—no tolerance for errors or deviations.

54. Why are commas or spelling differences a reason for LC rejection?

Answer: Under UCP 600, even minor inconsistencies can be considered discrepancies, leading to rejection.

55. How to minimize LC rejection risk before shipment?

Answer: Have the LC terms reviewed by a trade finance expert and clarify all conditions with the buyer upfront.

56. Can I change documents after LC submission?

Answer: No. Once documents are submitted, changes require formal resubmission or a waiver from the buyer.

57. What is the most frequent reason for LC rejection in exports?

Answer: Discrepancies in shipment details (date, quantity, transport mode) and inconsistent invoice data.

58. Can a pre-shipment inspection certificate cause LC rejection?

Answer: Yes, if it's missing, expired, or doesn't meet LC wording exactly.

59. Does "latest shipment date" on LC matter?

Answer: Yes. If the goods are shipped after this date, the LC is automatically invalid.

60. What does “presentation period” mean in an LC?

Answer: It’s the number of days after shipment within which documents must be presented to the bank.

61. Can weekends delay LC processing and cause rejection?

Answer: Yes, especially if documents miss deadlines because of bank holidays or weekends.

62. Can banks reject LC documents for missing a stamp or signature?

Answer: Yes. Required stamps, signatures, or authentications must be present per LC conditions.

63. How to deal with recurring LC rejections?

Answer: Review past rejections with a trade consultant and revise your document preparation process.

64. Can I use digital documents in LC transactions?

Answer: Only if the LC explicitly allows for e-presentations, per eUCP rules.

65. Do LC rejections affect my credit rating?

Answer: Not directly, but frequent rejections can impact your reputation with banks and trade partners.

66. What if the issuing bank is in a sanctioned country?

Answer: Your bank may refuse to process the LC, regardless of compliance, due to international regulations.

67. How do I explain LC rejection to my management or client?

Answer: Provide the official discrepancy notice, explain the issue clearly, and outline corrective steps.

68. What is a clean LC presentation?

Answer: A document set submitted without any discrepancies—fully compliant with LC terms.

69. Can an LC be revalidated after expiry?

Answer: No. Once expired, the LC is void unless reissued or amended by the issuing bank and accepted by the seller.

70. Who pays for LC rejection charges?

Answer: Usually the seller, but this can be negotiated in the LC terms.

71. What happens if documents are lost in courier after LC dispatch?

Answer: The bank may reject the claim if the presentation deadline is missed; always use trackable, fast couriers.

72. Can I submit LC documents through scanning or email?

Answer: Only if the LC explicitly permits e-document submission under eUCP or similar rules.

73. What is "discrepant documents sent on approval basis"?

Answer: This means the bank is forwarding the documents to the buyer for approval, even though they contain discrepancies.

74. How does force majeure affect LC rejection?

Answer: If force majeure delays shipping or documentation, the LC can still be rejected unless amended in advance.

75. Can LCs be rejected due to geopolitical risks?

Answer: Yes. Sanctions, trade embargoes, or political instability can cause banks to block or reject LC-related transactions.

76. What is "reimbursement authorization" in LC transactions?

Answer: It's the instruction from the issuing bank to a reimbursing bank to pay the claiming bank when LC terms are met.

77. Can LC be rejected for minor clerical errors?

Answer: Yes. Even small clerical mistakes (misspelled names, wrong dates) may result in rejection under the “strict compliance” principle.

78. What does "Banking Days" mean in LC terms?

Answer: Days when banks are open for business in the relevant country. It affects document presentation and payment timelines.

79. Can I get paid under an LC with discrepancies?

Answer: Only if the applicant (buyer) accepts the discrepancies and instructs the issuing bank to honor the LC.

80. What is "soft clause LC"?

Answer: An LC with conditions that are difficult or impossible to fulfill, often inserted by the buyer to delay or avoid payment.

81. Who prepares LC-compliant documents – seller or freight forwarder?

Answer: The seller is responsible, but freight forwarders or document specialists often assist in preparing transport-related documents.

82. What does "third-party documents acceptable" mean in LC?

Answer: It allows documents (like invoices, certificates) to be issued by entities other than the beneficiary.

83. Can LC be used for advance payment?

Answer: Yes, if the LC terms specifically allow for advance or partial payments.

84. What is a "transferable LC"?

Answer: An LC that allows the beneficiary to transfer part or all of the credit to another party (e.g., a supplier).

85. Can the issuing bank reject documents after confirming bank’s acceptance?

Answer: If the confirming bank accepted compliant documents, the issuing bank is obligated to honor the payment.

86. What if the LC is silent on certain terms (e.g., Incoterms)?

Answer: UCP 600 rules apply by default, but ambiguity can still lead to document disputes or rejection.

87. How is the LC expiry date different from shipment date?

Answer: Shipment date is the last day goods must leave; expiry date is the last date to present documents for payment.

88. What is "negotiation" in a Letter of Credit?

Answer: It refers to a bank advancing funds to the beneficiary before receiving payment from the issuing bank, based on compliant documents.

89. Can you present documents before shipment under LC?

Answer: No. Shipment must occur first; documents must reflect post-shipment details.

90. What is a “freely negotiable LC”?

Answer: An LC that can be negotiated by any bank—not just a named bank—provided documents comply.

91. Are handwritten documents acceptable under LC?

Answer: Only if the LC permits it; otherwise, typed or printed documents are typically required.

92. Can LC be issued in multiple currencies?

Answer: No. Each LC is issued in a single currency, though parties can agree on a specific currency beforehand.

93. What is the impact of UCP 600 in LC disputes?

Answer: UCP 600 governs most international LCs and serves as the standard rulebook unless the LC states otherwise.

94. What does “stale documents” mean in LC terms?

Answer: Documents presented after the allowable period post-shipment—usually 21 days—are considered stale and can be rejected.

95. Can LC documents be couriered directly to the issuing bank?

Answer: Yes, if allowed in the LC terms. Otherwise, they must go through a nominated or advising bank.

96. Is a packing list mandatory in LC presentation?

Answer: Only if the LC requires it. Otherwise, it's optional.

97. What is a "standby LC"?

Answer: A backup LC used as a guarantee of payment if the applicant fails to perform or pay under the main contract.

98. Can an LC be backdated?

Answer: No. LCs must reflect current or future terms. Backdating can lead to fraud or rejection.

99. Who can cancel an LC?

Answer: For irrevocable LCs (most common), cancellation requires consent from all parties, including the beneficiary.

100. Can you use a previous LC draft as a template for a new transaction?

Answer: Yes, but update all terms and dates. Each LC must reflect the specific terms of the new contract.

101. What is an "advising bank" in an LC transaction?

Answer: The advising bank is the bank that receives the LC from the issuing bank and forwards it to the beneficiary, verifying its authenticity.

102. Can the advising bank amend an LC?

Answer: No. It can only advise amendments received from the issuing bank; it cannot make changes on its own.

103. What does “LC utilization” mean?

Answer: It refers to the process of drawing funds under the LC by presenting compliant documents.

104. Is electronic presentation (eUCP) allowed under LC?

Answer: Yes, if the LC is issued under eUCP rules and all parties agree to accept electronic documents.

105. What happens if the expiry date falls on a bank holiday?

Answer: As per UCP 600, presentation must be made on the next banking day at the place of presentation.

106. What does “presentation” mean in LC?

Answer: It means submitting the required documents to the nominated or issuing bank for payment or acceptance.

107. Can a single LC cover multiple shipments?

Answer: Yes, if the LC allows for partial shipments.

108. What is “trans-shipment” in LC shipping terms?

Answer: It refers to goods being moved from one vessel to another during transit. Allowed only if permitted in the LC.

109. What if the bill of lading date is earlier than LC issuance?

Answer: Generally not acceptable, unless the LC explicitly permits pre-shipment or pre-issuance dates.

110. What is a “non-negotiable copy” of a document?

Answer: A copy that cannot be used to claim goods (e.g., non-negotiable bill of lading). Usually marked as “COPY”.

111. Who pays the bank charges in an LC transaction?

Answer: The LC should specify. By default: issuing bank charges – applicant; advising/negotiating bank charges – beneficiary.

112. What is a “Clean Transport Document”?

Answer: A transport document with no clauses declaring defective condition of goods or packaging.

113. What is “partial drawing” under an LC?

Answer: It refers to drawing part of the LC value. Permitted only if the LC allows partial drawings.

114. Can an LC be extended after expiry?

Answer: No, unless all parties (including the beneficiary) agree to an amendment before expiry.

115. What is the risk of not confirming an LC?

Answer: The beneficiary faces country and bank risk—i.e., if the issuing bank or country defaults, payment may not be received.

116. What is a “default LC” in project finance?

Answer: A standby LC issued as a guarantee in case of non-performance or payment default in infrastructure or large-scale projects.

117. What is a “clean LC”?

Answer: An LC that does not require presentation of transport or commercial documents—only a draft or demand is needed.

118. What is the difference between LC and bank guarantee?

Answer: An LC is a payment mechanism for trade; a bank guarantee is a security instrument activated on default.

119. What is a “shipping guarantee”?

Answer: A guarantee issued by a bank allowing the consignee to take delivery of goods without the original bill of lading.

120. Can the applicant refuse to pay under a confirmed LC?

Answer: No. Once confirmed and compliant documents are presented, payment is guaranteed regardless of applicant’s opinion.

121. What is “overdrawn LC”?

Answer: When a beneficiary presents documents exceeding the LC amount. Banks will usually reject unless an amendment allows it.

122. What is the purpose of a “draft” in LC documents?

Answer: A draft (bill of exchange) is a written demand for payment drawn by the beneficiary on the issuing or confirming bank.

123. Can a transport document be “on board” without the words “on board”?

Answer: No. The phrase "on board" or a similar notation is required to confirm shipment under UCP 600.

124. What is a “revolving LC”?

Answer: An LC that automatically renews after each use, up to a set period or amount—commonly used in long-term supply contracts.

125. What does “documents to be presented within 21 days” mean?

Answer: Under UCP 600, documents must be presented no later than 21 days after the shipment date, unless otherwise stated.

126. What does “days after sight” mean in a draft under LC?

Answer: It means payment is due a specific number of days after the draft is presented and sighted by the drawee.

127. What is the maximum validity period for a Letter of Credit?

Answer: There is no fixed maximum; it depends on contract terms, but generally ranges from 30 to 180 days.

128. What is the function of a "reimbursement bank"?

Answer: It is the bank appointed by the issuing bank to reimburse the nominated bank after honoring a complying presentation.

129. What happens if documents are lost in transit to the issuing bank?

Answer: The beneficiary may face non-payment unless copies are accepted or insurance covers document loss.

130. What is “bank-to-bank reimbursement”?

Answer: A process where the nominated bank claims funds from the reimbursing bank, as per the LC terms.

131. Can freight charges be shown as “Collect” under LC?

Answer: Only if the LC allows it. Otherwise, freight must be shown as “Prepaid”.

132. What is a "commercial invoice" under LC?

Answer: A document from the seller showing details of goods, quantity, price, and total value, required under most LCs.

133. What is the difference between "negotiation" and "honour" in LCs?

Answer: Negotiation means buying a draft/documents by a nominated bank; honour means payment by the issuing or confirming bank.

134. What is the standard banking rule for checking LC documents?

Answer: As per UCP 600, banks have 5 banking days to examine the documents for compliance.

135. What is a “third-party invoice”?

Answer: An invoice issued by someone other than the beneficiary. Acceptable only if the LC permits it.

136. Can an LC be issued in a currency other than USD?

Answer: Yes. LCs can be issued in any freely convertible currency as agreed by the parties.

137. What is a “House B/L” under LC?

Answer: A bill of lading issued by a freight forwarder, not the actual carrier. Acceptable if allowed by the LC.

138. What is the difference between "charter party B/L" and "ocean B/L"?

Answer: Charter party B/L is used for full ship charters; Ocean B/L is standard for containerized goods.

139. What does “clean on board” mean?

Answer: It means the goods were shipped in good condition without any clause about damage on the bill of lading.

140. What is "non-documentary condition" in LC?

Answer: A condition not related to a document. As per UCP 600, it will be disregarded by banks.

141. What is the significance of the LC expiry date?

Answer: It is the last date for document presentation under the LC. No presentation is accepted after this.

142. Can the expiry date and last date of shipment be the same?

Answer: Not advisable. There must be time allowed for document preparation and submission.

143. What is the impact of an expired LC?

Answer: Once expired, the LC is no longer valid, and the issuing bank has no obligation to pay.

144. What is a "standby LC used in lieu of a bank guarantee"?

Answer: A standby LC functions like a guarantee and is used when the beneficiary can demand payment upon non-performance.

145. What is “non-compliance” in LC documents?

Answer: When the presented documents do not match the terms and conditions of the LC.

146. What is “acceptance” in LC terms?

Answer: It is when a draft is drawn at a future date (usance), and the issuing bank accepts to pay on the due date.

147. What is “sight LC”?

Answer: An LC where payment is made immediately upon presentation of compliant documents.

148. What is a "transfer schedule" in LC?

Answer: A document showing how and when portions of the LC amount will be transferred to secondary beneficiaries.

149. What is a "red clause LC"?

Answer: It allows the beneficiary to receive advance payment before shipment, usually for purchasing materials.

150. What is a "green clause LC"?

Answer: Similar to a red clause, but includes storage and warehousing requirements before advance payment.

151. What is the difference between "LC date of issue" and "date of shipment"?

Answer: LC issue date is when the LC is opened; shipment date is when goods are loaded on transport.

152. What is a “packing list” in LC documentation?

Answer: A detailed document showing how goods are packed—used for inspection and customs.

153. Can partial shipments be made under LC?

Answer: Only if the LC explicitly permits partial shipments.

154. What is a “performance LC”?

Answer: A type of standby LC ensuring the seller or contractor fulfills contractual obligations.

155. What is the meaning of “LC available by deferred payment”?

Answer: Payment will be made on a future date (not immediately), as per LC terms.

156. What is “insurance certificate” in LC?

Answer: A document showing that goods are insured during transit. Required when LC demands CIF or CIP.

157. Who is responsible for arranging insurance under FOB terms?

Answer: The buyer/importer is responsible under FOB.

158. Can documents under LC be sent by courier?

Answer: Yes, if the LC permits and the courier receipt is acceptable under LC terms.

159. What is “beneficiary’s certificate”?

Answer: A certificate issued by the beneficiary confirming specific facts or compliance, as required under LC.

160. What is an “inspection certificate”?

Answer: A document confirming goods were inspected and meet required standards. Often issued by a third party.

161. What is a “certificate of origin”?

Answer: It certifies the country where goods were manufactured. Often required by customs or under LC.

162. Can the LC be issued in paper and electronic format simultaneously?

Answer: Only if all parties agree and LC is issued under eUCP.

163. What does "transhipment not allowed" mean in LC?

Answer: Goods must go directly to the destination without changing vessels en route.

164. What is “currency fluctuation risk” in LC transactions?

Answer: The risk that exchange rates change between LC issuance and payment, affecting value.

165. What is a "presentation period"?

Answer: The time allowed to submit documents after shipment—usually 21 days unless otherwise stated.

166. What is the difference between a “confirmed” and “advised” LC?

Answer: A confirmed LC includes a guarantee by a second bank; advised LC only relays the terms.

167. What is “back-to-back LC”?

Answer: When a second LC is opened using the first LC as security—commonly used in trading.

168. What is the meaning of "UPAS LC"?

Answer: Usance Payable At Sight LC – buyer pays later, but seller gets payment at sight (bank finances the delay).

169. Can goods be shipped before the LC issue date?

Answer: No, unless the LC permits shipment prior to issuance. Otherwise, documents will be non-compliant.

170. What happens if a bank finds a discrepancy in documents?

Answer: The bank must notify the presenter within 5 banking days, specifying the discrepancies.

171. Can an LC be canceled unilaterally?

Answer: Not if it is irrevocable—cancellation requires consent from all parties.

172. What is “usance period” under an LC?

Answer: The credit period allowed (e.g., 30, 60, 90 days) before payment is due after acceptance.

173. What is “revolving LC cumulative” vs “non-cumulative”?

Answer: Cumulative allows unused amount to carry forward; non-cumulative does not.

174. What is a "DC number" in LC documents?

Answer: Documentary Credit (DC) number is the unique reference number assigned to each LC by the issuing bank.

175. What is the function of the SWIFT message MT700 in LC?

Answer: MT700 is the standard SWIFT format used for issuing Documentary Credits between banks.

176. What is a “confirmed” vs “unconfirmed” LC?

Answer:

· Unconfirmed LC is guaranteed only by the issuing bank.

· Confirmed LC adds a confirming bank’s guarantee on top of the issuing bank’s, offering extra payment security https://resumegemini.com Wikipedia.

177. What are the main types of LC?

Answer:
Includes irrevocable, revocable, confirmed, unconfirmed, transferable, non-transferable, standby, and documentary LCs, each embedding different payment and security implications https://resumegemini.com Wikipedia.

178. What risks are associated with LCs?

Answer:
Key risks include non‑compliance risk, fraud risk, documentary discrepancies, political/economic risk, and issuing‑bank insolvency risk The Knowledge Academy https://resumegemini.com.

179. Are LCs considered non-fund-based advances?

Answer: Yes. They don’t involve real cash upfront and become a liability only if invoked — making them contingent or non-fund-based advances crowdforgeeks.com.

180. How many amendments can be made to an LC?

Answer: There's no ICC-imposed limit on amendments under UCP 600, but excessive amendments can complicate document checking and incur fees crowdforgeeks.com https://resumegemini.com.

181. What documents are typically required when opening an LC?

Answer: Commonly: commercial invoice, bill of lading or transport doc, insurance certificate, certificate of origin, packing list, inspection certificate, bill of exchange, among others emeriobanque.com crowdforgeeks.com.

182. What does “revolving LC” mean?

Answer: An LC that automatically renews either by amount or over time (cumulative or non-cumulative) for multiple shipments up to a cap Trade Finance Global https://resumegemini.com.

183. Explain cumulative vs non-cumulative revolving LCs.

Answer:

· Cumulative: unused amount carries forward.

· Non‑cumulative: unused portion does not carry over from period to period Trade Finance Global.

184. What is the role of SWIFT messages in LC transactions?

Answer: They are standardized messages (e.g. MT700, MT750, MT799) to exchange details, amendments, notifications, and cancellations between banks securely https://resumegemini.com+1.

185. What is a standby LC (SBLC)?

Answer: A guarantee-like LC where payment is triggered by non-performance or default, not by shipping documents Reddit https://resumegemini.com.

186. What is a “red clause LC”?

Answer: Allows pre-shipment advance payment to the seller before goods are shipped, up to an agreed percentage https://resumegemini.com+1.

187. What is a “green clause LC”?

Answer: Similar to red clause but includes funding for storage or warehousing costs before shipment Wikipedia https://resumegemini.com.

188. What is “avalisation” of a bill of exchange?

Answer: Endorsement of a draft, typically by a bank, guaranteeing payment at maturity — effectively a guarantee on a negotiable instrument crowdforgeeks.com.

189. What does “direct benefit transfer” mean in LC context?

Answer: Occurs when one LC serves as collateral for a new LC (e.g. middleman transfers credit to supplier). It helps facilitate chain trade deals crowdforgeeks.com+1.

190. What is interest rate parity?

Answer: Financial theory stating that differences in interest rates between countries equal the difference between forward and spot exchange rates https://resumegemini.com.

191. What are Incoterms, and how do they relate to LCs?

Answer: ICC-defined shipping terms. LC obligations often require specific documents based on Incoterms—for example, CIF requires an insurance certificate; FOB requires clean B/L https://resumegemini.com+1.

192. Describe assessing buyer creditworthiness in international trade.

Answer: Involves analyzing financial statements, credit reports, trade references, due diligence, and bank references to reduce payment risk https://resumegemini.com.

193. What is ISBP 745?

Answer: International Standard Banking Practice for the Examination of Documents under UCP. It offers uniform rules on document checks and interpretations https://resumegemini.com.

194. What defines “strict compliance” under UCP 600?

Answer: Documents must match LC terms exactly without deviation; even minor differences can result in rejection unless waived Wikipedia https://resumegemini.com.

195. What are formal, commercial, and financial discrepancies in LC documents?

Answer:

· Formal: missing signatures, wrong stamps

· Commercial: goods details mismatch

· Financial: invoice amount misstatements https://resumegemini.com+1.

196. How should one verify authenticity of an LC?

Answer: Check format, SWIFT headers, issuing bank details (address, SWIFT code), security features, and signature coding systems via advising bank https://resumegemini.com Wikipedia.

197. What constitutes a complying presentation?

Answer: A complete and correct set of documents precisely matching the LC terms, examined within UCP 600’s timelines Wikipedia https://resumegemini.com.

198. Does UCP 600 allow “non-documentary conditions”?

Answer: No. UCP 600 disregards non-documentary conditions — only specified documents matter for payment Wikipedia https://resumegemini.com.

199. What is the legal principle behind LC autonomy?

Answer: The bank's obligation is based solely on the documents, not on the underlying sales contract; disputes over goods do not impact payment if docs comply Wikipedia https://resumegemini.com.

200. How do banks handle multiple shipments under an LC?

Answer: Only allowed if the LC permits partial shipping; each presentation must still comply fully with the credit terms https://resumegemini.com Wikipedia.