LC Discrepancies: Why They Happen and How to Eliminate Them

When an exporter presents documents under an LC, the nominated bank has 5 banking days to examine documents and determine whether they comply strictly with the LC terms. Any discrepancy — even a single missing letter in a product description — allows the bank to refuse payment and seek the buyer applicant agreement to accept despite discrepancy. This creates delay, negotiation leverage for the buyer, and sometimes loss of payment security.

The five most common discrepancies in India-EU LC trade:

1. Late presentation. UCP 600 Article 14(c) requires documents within 21 calendar days of shipment date and before LC expiry. Fix: calculate maximum presentation date from sailing date and set internal deadlines. For complex document sets requiring agency certificates and inspections, allow sufficient post-sailing preparation time.

2. Bill of Lading not showing notify party exactly as per LC. Fix: provide shipping line or forwarder with exact LC text for notify party field and verify the draft B/L before endorsing.

3. Invoice description does not exactly match LC. UCP 600 Article 18(c): description must correspond with LC description word for word. Fix: copy the LC goods description verbatim into your commercial invoice template.

4. Short shipment without LC amendment. If actual quantity is less than LC amount, this is a discrepancy unless the LC expressly permits partial shipment. Fix: always ship at least the minimum LC quantity; request LC amendment if quantity must change.

5. Incomplete set of Bills of Lading. LC requires full set of 3/3 original B/Ls but forwarder issues only 2/3. Fix: explicitly instruct forwarder and shipping line that LC requires 3 originals and verify draft B/L before finalising.

The systematic solution: Implement a pre-presentation document checklist mapped against each LC specific requirements. Assign a dedicated LC specialist to review every document against the LC field by field before submission. The 2-4 hours investment per LC is far smaller than the cost of a discrepancy.