Difference between LC expiry and shipment date expiry

Difference between LC expiry and shipment date expiry copy

 

The information provided here is part of Online export import training guide 


 LC expiry date and Shipment date expiry under Letter of Credit.

 

Some of you in the export import trade may get confused about the date of expiry of Letter of Credit and the date of expiry of shipment under LC  transactions. What is date of expiry of Letter of Credit? What does shipment date under LC mean?  Let us discuss the difference between LC expiry date and shipment expiry date under Letter of Credit transactions.

 

What is Shipment date expiry under Letter of Credit?
 

In a Letter of Credit, there will be a date of shipment of goods and date of expiry of LC. The date of shipment of goods means, the consignment has to be shipped out from seller’s place on or before the last date of shipment of letter of credit. So, the Bill of Lading date should be on or before the date of shipment mentioned on Letter of Credit as 'Shipment Date'. If letter of credit says, ‘ON BOARD’ Bill of lading, the date of ‘on board’ bill of lading should be on or before the date of ‘ON BOARD’ shipment date mentioned in the letter of credit. If letter of credit (LC) just says shipment date, then the BL date can be the date on or before the completion of export customs formalities.

What is expiry date of Letter of Credit?
 

LC expiry date means the last date to submit the exported documents with bank for negotiation of documents. Here, the exporter need to submit all required documents with bank after export as per the guidelines mentioned in the letter of credit. Means, Letter of Credit is void if shipped goods before the date mentioned in LC for shipment, but not submitted documents for negotiation within the validity period of Letter of Credit.

 

Here, we have discussed about the difference between date of expirty of Letter of Credit and date of expiry of shipment date under LC transactions in international business.  Do you wish to add more information about LC expiry and shipment expiry under Letter of Credit?  Share below your experience in handling LC  about shipment date expiry and LC expiry.

Comment below your thoughts about this article - Date of expiry of LC and Date of expiry of shipments under Letter of Credit.

 


The above information is a part of Import Export course online


 

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Comments


Marios Seretis: Dear Sir. I have found very interesting your site. Congratulations. Please I have a question. Is about triangular business, and for LC. Let's say that A reseeves purchase order by B, who is willing to pay by LC. A pass the purchase order to C, supplier of goods. Does A, has also to issue a LC for C? As A will get paid by B's, LC. How A pays the C, supplier? Thank you in advance.

surendran: Hi, Both contracts holds separate entity and can finalize as per mutually agreed terms either under LC,DA,DP or Advance payment.

renny: dear sir I am fully aware of Bill of lading expiry and LC expiry date. shall I ask one doubt ? but in the case of usance LCs , say 90 days or 150 days, what is the LC expiry date in the books of banks ?

prakasan: Irrevoable LC payment terms are as follows. 90% of total order value against the presentation of documents and balance 10% of total order value is payable within 7 days from issuance of acceptance certificate OR 90 days from the date of Transport Documents, whichever occurs first. Therefore, if the machines supplied is successfully commissioned and completion certificate is issued say on 40 days from shipment date, we can draw the balance 10% payment by say 50 days from shipment date. However, for this to happen it is necessary that the LC is valid for submission of completion certificate. In case the LC is not valid till the 90th day , we will have to wait for receipt of balance payment till the end of 90 days from shipment date even if the completion certificate is issued earlier than this date. so the expiry date of LC has got a link to the colletion of balance 10% or since the clause is there , can we get the payment evenbefore the 90th day???

D. N. BOSE: i need your held for following question. IF ANY SHIPMENT MADE AFTER LAST DATE OF SHIPMENT AS PER LC AND DOCUMENTS SUBMITTED AT BANK WITH LC BEFORE EXPIRED DATE THEN CAN WE SAY IT IS EXPIRED LC

Ali: Dear sir, Your website is very useful for beginners, i have a question that if there is sight LC 60 days expiry and there are three 4 shipments to be made each after fifteen days and we ship the the first shipment in time then do we get payment of first shipment? Or the payment will be done after four shipment? Thanks and regards Ali

Surendran Kollerath: Hi Ali, Based on terms and conditions agreed mutually, seller is paid amount of export sales. The terms of payment agreed mutually is reflected on LC.

syed danish abrar: my supplier requested to extend the period of presentation from 15 to 25 days. the same has been done with the change in shipment date i.e. from 15 days to 25 days from expiry of LC now the supplier requested to reverse the shipment date to 15 days from expiry.Will this possible.

Moidu: If I am submitting a l/c documents to the bank, after the latest date of shipment (NOT LC EXPIRY DATE), is it a descrepency ? Please help

Admin: Hi Moidu, Yes, Its an LC descrepency. However, you can get approval from buyer in writing on the subject matter and proceed shipment

Admin: Hi Moidu, Yes, Its an LC descrepency. However, you can get approval from buyer in writing on the subject matter and proceed shipment

BHASKAR REDDY R K: Dear sir, What happens in case of goods has not been reached within the expiry period of LC though the documents received.

Mrs Orungba: Please sir, what is the bill of lading expiry date, and who determine the expiry date is it the bank or the shipping company? Thanks

HIMANSHU MEHTA: Dear Sir, The article written is precise enough to understand the subject. Sir, we have received one usance letter of credit for 150 days from date of Bill of lading. My understanding is such that date of expiry of such LC can be 21 days from last date of shipment. Request to correct, if anywhere required. Regards, Himanshu

Dolly Sheth: Dear Sir, After the LC is issued, shipment can only happen after Last date of shipment on LC application, what to do ?

Faseer: Once LC is issued, shipping possible after the Last Date of Shipment mentioned? What should be done?

waleed: Can the date between latest shipment date and LC expiry date excess more then 21 days ?

Md. Helal: Dear sir, please advise if applicant are agree to expiry date excess more than 21 days?

shyama: Can you please tell maximum date of submission of documents for LC ? how many days we can receive from customer

Lim: Dear Sir/Madam, Latest shipment date on 30/01/2016 Expiry date for LC on 21/02/2016 OBL shipped on board date is 17/02/2016. Documents submit to bank for negotiation is on 21/02/2016. Is it LC still valid or void?

dolphy: Is there a any maximum or minimum period between latest shipment date and LC expiry date. If so, what is the period.

LC Master: Dolphy, if the Letter of Credit requires presentation period of 21 days, and latest shipment date is April 1, 2016, then LC Expiry date is April 22, 2016.

Ahmad: Why sellers required Lc at sight always

Vimal Jain: Dear Sir , I shall appreciate receiving your views & advise on the below questions :--- 1. Assuming I submit all my export shipment original docs on the last day of expiry of the L/c and later bank finds some discrepancy . Can I correct the discrepancy and can my bank treat the docs submitted within the validity of L/c or after submission of corrected documents , it will be treated as documents submitted after L/c expiry ? what would be the case if I Re-submit corrected documents before expiry of the L/c ? In both cases , can the docs as presented will be treated as clean negotiation ? 2. Under a C&F Contract , I make shipment meeting all the contractual terms and obtain Original Bills of Ladings and present to the BYR under L/c or DP terms . Due to unforeseen circumstances , the cargo is not shipped to the destination from trans-shipment port by shipping line to the destination for a long time and arrival of cargo gets delayed beyond a reasonable time . Can the Buyer refuses to make payment of the shipment on this ground that cargo not arrived destination in a reasonable time or shipping line divert the cargo to another destination due to non-availability of service to final destination from trans-shipment port ? From load port the shipping line issues thru' bills of ladings . What are the option available to sellers & Buyers in those situation ? Your valuable views & advise please . Thanks & Regards Vimal Jain DUBAI - UAE

deepak Patil: Dear Sir, pls say exact perid of date of shipment & date of Expaire. Regards, Deepak

Preggie Pillay: Dear Sir With regards to deferred L/C, 60 days after BOL date: must the expiry date of the L/C be within the payment due date. for example expiry date of L/C is 15.12.2016, BOL date is 30.11.2016, payment due 29.01.2017. can the expiry date of the L/C be 31.12.2016? Thank you Preggie

Md Shah Alam: How importer calculate expiry date and shipment expiry date from PI? thank you so much.

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