05 Compendium of cases V - LCs Rules & Docs.docx - CASE...

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CASE: SHELLIS Corp. – Shipping Frozen Food Commodities SHELLIS Corp., a Jacksonville, USA importer, signed a contract with a Peruvian Exporter named EXPORTS S.A. who would forward them a lot of Peruvian scallops. Payment was agreed to be done through the issuance of a notified Letter of Credit at sight. EXPORTS S.A. receives the LC from a bank in Miami/USA for the amount of US$ 130,592.00, by order of SHELLIS Corp, with the following specifications: Notified LC payable at sight Documents to be negotiated in Miami (at Issuing Bank counters) Goods: Approx. 40,000 pounds of unshelled scallops, frozen (several calipers) en 5 pounds packs – 10 packs per master box. B/L consigned to the applicant Sale Terms: CFR Halifax, Nova Scotia, Canada Goods subject to Canadian Food inspection Agency (Canada) approval Last date to present documents: 14 days from B/L All expenses are for beneficiary’s account. At negotiation the bank found the following discrepancies: Goods Description in the Invoice differs with LC (unit Price of a size differs from LC, no indication of markings, no indication of packing in 5 pounds’ bags) Invoice doesn’t specify name & address of "packers" Number of boxes in the B/L is not in the corresponding column (it is shown right next to the goods description, LC requires to be shown in the corresponding column) Net weight differs between Origin Certificate and B/L. A Health Certificate has been presented instead of a Sanitary Certificate. The Health Certificate shows shipping date 990307 instead of 990310 and “Paita” is consigned as shipping port instead of “Callao”. Health Certificate does not indicate “ merchandise good for the human consumption”. Although the revising bank remarked the discrepancies and notified the beneficiary, he insisted in forwarding the documents to the Issuing as they were. The beneficiary mentioned to the bank that in the past he had exactly the same situation and the applicant always accepted the discrepancies. As instructed the advising bank forwarded the documents by Courier to the Issuing bank with a report of the discrepancies. Later on, the advising bank requested status of the documents by swift. QUESTIONS You are requested to review the case and make your prediction of the possible consequences. NOTE: IMAGINE THAT THERE WILL BE NO PROBLEM WITH THE CANADIAN FOOD INSPECTION AGENCY TO TAKE THE LOAD IN. _[______________________________________________________________________________________________________ _[______________________________________________________________________________________________________ _[______________________________________________________________________________________________________ _[______________________________________________________________________________________________________ _[______________________________________________________________________________________________________ _[______________________________________________________________________________________________________ _[______________________________________________________________________________________________________ _[______________________________________________________________________________________________________ _[______________________________________________________________________________________________________ _[______________________________________________________________________________________________________ Compendium of Cases V – Page 1 of 12
Case - CHICLAYO In December, 2000 the Peruvian company Chiclayo SAC celebrates an international sale contract with the Argentine exporter CARNE GAUCHA LTD where it is found that the mean of payment to be used would be an irrevocable letter of credit, at sight and confirmed by the Republican Bank of Buenos Aires. The conditions of the Documentary Credit established that the seller had to, between other documents, present an invoice addressed to the buying company, a Bill of Lading clean on board, freight prepaid and consigned to the Peruvian company and the corresponding sanitary certificate and origin certificate. The product to be deliver was 500 kg of first quality Beef.

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