On the special conditions of a credit it reads that it bans a partial shipment, units for products were by piece and 10% more or less on credit amount and quantity allowed. The amount of credit is US$1,000,000, quantity was 5,000piece but upon inspecting received documents, it was 5,500pcs on the commercial invoice and the packing list, and the amount was US$1,100,000. So the company S rejected the payment but since the credit condition reads 10% More of Less clause, a payment was strongly requested. The company S insisted that even with 10% More or Less clause, amount should not be exceed and the clause is not applicable to the individual items which eventually developed into a dispute.
Case study
1. The meaning of More or Less clause with a credit
According to the Sub-Article 39(b) of U.C.P.,unless there is a clause declaring "the quantity of specified cargo within the credit must not be more or less", 5% more or less is acceptable. But it regulates the issuing amount for the bill of exchange should not exceed more than the credit amount. To apply this provisions, the following conditions are necessary. (1) There should be no clause prohibiting more or less L/C.
(2) The amount should not exceed more than the L/C amount.
(3) No quantity indication allowed as packing units with individual items.
(4) There should be no special clause for More or Less.
This is a special condition in credit applicable to the case that has no More or Less clause, and if there is permission article for 10% more or less, this special condition is to be applied.
2. Special article permitting 10% more or less
If there is a 10% more or less permission article with a credit, this special article is applied before everything, but the Sub-Article 39 (b) of U.P.C. is not applicable.
3. Prohibiting More or less with packing units with individual items
In order for More or Less article to be applied, the quantity indication should not be in packing units or as individual items. (The Sub-Article 39 (b) of U.C.P.)
For these kinds of packing units and individual items, the I.C.C. has following opinion.
Packing units are referring to the packing methods with "cases", "boxes", "drum" and individual items is referring to "piece". The quantities that are not applicable with More or Less article are "case, box, drum and piece" but "kg" or "metric ton" indication is applicable. (I.C.C. pub 459. case No.138).
Caution
More or Less clause is applicable with bulk cargo therefore, applying the standard with piece, case, box and drum items is violation to the credit terms.
|
Trade Helper 
Claim . Unpaid Cases 
39-Allowance in Credit Amount, Quantity and Unit price
2006 - 2011 tradegoods.com All right reserved