a 90 days letter of credit was issued by buyer to the seller..the seller produced the documents to the negotiating bank upon delivering the goods..the seller's bank discounted the bill & paid the amount..mean while the the seller's bank could not recover the amount from buyer's bank & letter of credit got expired after 90 days..henceforth the seller's bank without prior permission, deducted the discounted amount from seller's bank account.
kindly let me know, what legal action can seller take against seller's bank & buyer's bank.
02 September 2011
PLZ SEE THE EXAMPLE LC OPEN DATE 01.01.2011 LC DAYS 90 DAYS LC EXPIRE DAYS 31.03.11 MATERIAL PURCHASE 15.01.2011 B.O.E. MADE 22.01.2011 SELLER CAN GET PAYMENT FROM BANK UPTO 31.03.2011 BEFORE EXPIRY OF LC. IF SELLER'S BANK COULD NOT RECOVER THE AMOUNT FROM BUYERS BANK IT IS NOT MISTAKE OF THE SELLER. IT MEANS LC IS FAILED. IT MAY BE POSSIBLE THAT SELLE BANK PRODUCED THE DOCUMENT TO BUYERS BANK AFTER EXPIRY OF LC DATE. PLEASE GIVE THE DETAIL OF THE CASE DATE WISE satbirca2009@gmail.com
02 September 2011
The letter of credit should have an expiration date that gives sufficient time to the seller to get all the tasks specified and the documents required in the LC. If the letter of credit expires, the seller is left with no protection.
Most LC s fail because Sellers/Exporters/Beneficiaries were unable to perform within the specified time frame in the LC.
Three dates are of importance in an LC: a) The date by when shipment should have occurred. The date on the Bill of Lading. b) The date by when documents have to be presented to the Bank c) The expiry date of the LC itself.
in view of above in your case asking bank to issue a letter of indemnity in order to take up the goods without surrender of an original bill of lading.
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