Discrepancies in the documents


In the event of discrepancies of any kind in the documents, the payment obligation on the part of the issuing bank - and, in the case of confirmed credits, also that of the confirming bank - ceases to apply. As such, the exporter loses any security offered by the documentary credit.

Common discrepancies:

  • Failure to meet the dispatch deadline.
  • Presentation of incomplete documents.
  • Incorrect description of the goods on the invoice.
  • Conflicting statements in the documents.

If such discrepancies are noticed in the documents, UBS will help the exporter find a solution that will reinstate the security of the documentary credit.


The potential implications of discrepancies

  • Payment may be delayed, resulting in lost interest.
  • Costly inconvenience to your business
  • Payment may be withheld. Discrepancies will be exploited in an attempt to avoid payment altogether or obtain a discount, for instance in the event of
    • falling prices on the world market
    • currency fluctuations.

You should therefore first endeavour to get erroneous documents corrected or replaced.

Possible courses of action in the event of discrepancies

Payment under reserve
If erroneous documents cannot be corrected or replaced, a reserve may be put into effect where necessary.

As such, the bank reserves the right to take recourse against (seek redress from) the beneficiary if the issuing bank refuses to accept the documents and provide cover due to discrepancies.

In the case of acceptance credits, the documents cannot be honoured under reserve. In other words, the documents must be correct if the drawee bank is to effect acceptance.

Payment authorization
The nominated bank obtains written payment authorization from the issuing bank. The documents remain at the nominated bank until acceptance.

Approval basis
The nominated bank sends the documents to the issuing bank for approval. The issuing bank will not effect payment until it has received the documents and they have been accepted by the principal (buyer) despite the discrepancies.