What is the discrepancy of the words ‘drawn under’ in relation to an LC?

Where all documents are to be marked drawn under LC number 123 dated 01.01.2015 and the documents presented mentions ‘LC number 123 dated 01.01.2015.’ How is clause 47A applied? This is where there is a discrepancy that the words “drawn under” are not mentioned in the documents and so they are rejected.

On this basis:

  • Is it a valid discrepancy ?
  • Is pointing it out in the letter of the UCP and not the spirit?
  • Do such minor discrepancies harm Letters of Credit (LCs)?
  • It is widely viewed that this is not a valid discrepancy. It could be seen that there is another motive in the rejection, such as the applicant being in financial difficulties or the desire for a discrepancy fee to be charged. It is possible to respond to a rejection with the ICC’s comment contained in various official opinions over the years, most recently TA.774 quoting R578 before it:

    “It should be pointed out that the request for insertion of L/C numbers is usually at the instigation of the issuing bank to facilitate the collation of documents when one or more go astray. The ICC has commented in the past that a refusal based on the absence of a L/C number on a document, where requested in the L/C, is not grounds for refusal.”

    Rejection on this basis is very negative for the reputation of LCs.