The Discrepancy Issue in Letter of Credit and Its Handling Methods
Category: LC Fundamentals
Date: The concept of discrepancy refers to documents that do not meet the requirements of the letter of credit (L/C). This can be caused by minor errors, such as typos, or major errors, such as delayed delivery or incomplete documents. After a discrepancy occurs, the bank may consult the buyers opinion. If the buyer does not mind, the L/C will continue to be executed, but a penalty may be imposed. If the buyer does not accept it, the bank may refuse payment and return the documents to the seller. If the buyer accepts but requests a deduction, the buyer and seller must negotiate. When handling L/Cs, one must be extremely careful and thoroughly check all documents to ensure they meet the L/C requirements.
Source: Shanghai Zhongshen International Trade Co., Ltd.