| (1) Definition |
- L/C amendment is referring to change the terms of L/C, the contents of the master L/C while the commercial transaction is in proceeding as per the established L/C to other terms and L/C cancellation is invalidating the already established L/C by withdrawal.
- An exporter upon L/C acceptance, if there is any unclear statement or any non-conforming contents to the contract agreement by examining the details, amendment should be requested. |
|
(2) The said party at the time of amendment and cancellation |
- To change L/C or cancel, the L/C applicant(importer) must receive written agreement by requesting an amendment agreement of a beneficiary through opening bank (If a confirming bank exist, include the confirming bank).
- When an exporter request changes or cancellation of L/C (include the confirming bank) a consent of an opening bank is required but importer's consent is not necessary. |
|
(3) the time for amendment and the number of times allowed for amendment |
- An amendment should be made within L/C validity period. If the valid period has been
elapsed, an amendment to extend the validity period is the first step to take then there is no problem for the effectiveness and there is not limitation for the amendment number of times. |
|
(4) Things to be cautious when amending |
- The other party's acceptance for amendment proposal must be unconditionally and wholly therefore, partial acceptance, partial refusal is not allowed.
(The Sub-Article No. 9-d-iv of UCP)
- If an opening bank notifies period extending approval and propose to lower the unit price as a condition with some time after some time lag: A beneficiary should accept the notification of period extending approval and the later arrived unit price decrease request can be ignored.
- Although a beneficiary request amendment to extend period for Confirmed L/C and an opening bank approved the request, but no written consent from a confirming bank, it could be reason for payment refusal by a confirming bank for L/C terms violation when a beneficiary conducts Nego. |
|
(5) Preparing method for amendment application |
| <1> Things related to the L/C itself |
|
1 L/C number : Indicate the master L/C number
2 name of the beneficiary and address : the beneficiary of the master L/C, number name and address should be indicated correctly and refrain from using initial.
3 Name of applicant and address : the applicant of the master L/C, address, name
4 L/C amount: amount of the mater L/C before amended
5 L/C Expiry Date : Indicate the Expiry Date of the mater L/C. To eliminate misunderstanding, the month should be indicated in words.(Ex-JUNE 4. 1993) |
|
| <2> Things related to amendment |
|
1 Increase of amount : After "Amount increased (or Decreased) by", indicate the actual increased amount and after 'To' indicate L/C amount after the changes of increase.
2 Extending L/C validity period |
|
- Although the shipping period is automatically extended as much as it is extended, when a validity period is extended, the shipping date will not automatically extend. (The Sub-Article No. 43-b of UCP).
- When extending the shipping period : After "The latest shipment date extended until" wording, indicate the final shipping date that has been changed. If "to" "until" wording is indicated in front of the date, it should be interpreted as the date is to be also included.
- When extending the validity period: After 'The expiry date extended until' wording, indicate the changed validity period. |
|
|
| - Transship and installment shipping |
|
- Transhipments are permitted (or allowed), Partial shipments are allowed(or permitted)
- Transhipments are prohibited(or not permitted), Partial shipments are not allowed(or prohibited) |
|
| - Changing the shipping port and the arrival port |
|
- If the country to arrive is changed due to the shipping port and arrival port changes : Documents for such changes should be also changed.
(country of origin certificate, factura consular etc)
- Shipment from K port instead of O port, Shipment to be made from A to B instead of from C to D
- Destination should be A instead of B, Destination changed from A to B" |
|
|
- If amending things that are likely to be disadvantageous for a beneficiary such as name of items, unit price, delivery term, bill maturity date : A beneficiary consent is recommendable.
- If there are changes to amount there could be changes to unit price and quantity in general, therefore, the changed matter should be indicated and standards, specification of items, delivery term or tenor should be changed, added, or deleted after the consent of the said parties.
- Other matters should be indicated in this section.
- "This credit is transferable"
- "Unit price changed from @US$1,100 to @US$1,110"
- "Commodity size now should read 20cm*25cm instead of 8"*10""
- "Please delete the special instruction #2"
- "Please insert the word" in A in to expiry date clause" etc. |
|
(6) Amending transferred L/C |
- If transferring the entire amount, the 2nd beneficiary reserve the amendment approval.
- With installment transferring, the very first beneficiary can exercise the right to
approval of amendment.
- If L/C that was transferred to a grantee has been modified according to UCP 500: it
prescribes to let a grantee to continue existence the changed L/C, and the original condition of the mater L/C to a grantee that rejected to continue existence.
- If requested L/C transferring : A beneficiary should instruction to the 2nd beneficiary
whether the 2nd beneficiary get to notify the amendment in person before a transfer
is established. |
|
Trade Helper 
L/C(Letter of Credit)
{1} Letter of credit
[8] L/C Amendment and Revocation(L/C amendment and cancellation) 
2006 - 2011 tradegoods.com All right reserved