If the expiry date of a letter of credit or the last day for presentation falls on a day when the bank to
which presentation is to be made is closed for reasons other than force majeure, the expiry date or the last day for presentation will be extended to teh following banking day. This is the rule of Article 29 Uniform Customs and Practices, ICC publication No. 600. "Closed for reasons other than force majeure" does not mean that construction, company meetings, fieldtrips or similar circumstances limited to individual banks extend the expiry date. Equally, local holidays, in the spirit of a carnival, should not lead to an extension either.
The hitherto used "business-day" has been replaced by "banking day". Regarding this new term, the decision of the ICC Banking Commission should still apply: "The banking day is a day on which the issuing or nominated bank is regularly open to conduct letter of credit business; this would include a full of half day. Conclusion: If an issuing or nominated bank is open on Saturday to conduct, amongst others, letter of credit transactions, then that half day will be classified as one of the 'seven banking days following the day of receipt of the documents', ar act as th actual date of receipt for the determination of this period'. The problem with this decision is that it takes into consideration the opening hours of individual banks, which might vary widely from banks within the same locality and thus make a clean determination as to the expiry date rather difficult.
The beneficiary also has to take into consideration that different countries have different opening hours.
Example: XYZ bank in Hamburg opens a letter of credit to the benefit of a Chinese exporter. The lc is being confirmed by Bank of China. If the LC expires on a Saturday, and the LC is payable at the confirming bank,
a typcal ocurrence, then no extension will be granted, since banks in China generally are open on Saturdays.
Is the LC payable in Hamburg, then the following Monday is the last day for presentation, since banks are generally closed on Saturday.
To avoid arguments regarding a timly presentation, opening bank, confirming or nominated bank should consider to detail their opening hours. However, in practice these consideration are of little relevance.
If the beneficiary presents the documents based on an extended expiry date, a nominated bank myust provide the issuing bank or confirming bank, with a statement on its covering schedule that the presentation was timely made under Article 29 (a) UCP 600.
Even though the beneficiary might be allowed to present the shipping documents later, this does not affect the prescribed shipping dates. Article 14 c UCP 600 stipulates in this regard:"A presentation including one or more original transport documents ... must be made by or on behalf of the beneficiary not later than 21 calendar days after the date of shipment."
Article 44 b UCP 500 had stated that transport documents, evidencing a shipping date past the date of expiry are not acceptable. Even though an equivalent provision has not been incorporated into the UCP 600, the ICC Drafting Group considered this case to be addressed by Article 6 UCP d i. 600 which reads:
"A credit must state an expiry date for presentation. An expiry date stated for honour or negotiation will be
deemed to be an expiry date for presentation."
As always, addressing issues before entering into a letter of credit transaction, is better than being surprised mid-way.
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