The Discrepancy Letter of Credit is essential in international trade finance when documents presented under a Letter of Credit contain discrepancies that could otherwise result in payment rejection. Operating within Malaysia's robust financial services framework, this document is typically used when minor documentary inconsistencies are discovered during the bank's document examination process. It provides a formal mechanism for the beneficiary to acknowledge these discrepancies while requesting the bank to proceed with payment processing. The document must comply with both Malaysian banking regulations and international banking practices (UCP 600), making it particularly important in Malaysia's trade-focused economy where Letters of Credit are commonly used in cross-border transactions. It includes specific indemnification clauses protecting the banks involved and must be properly authorized by the beneficiary's representatives.
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1. Letter Header: Company letterhead, date, reference numbers, and addressee details
2. LC Reference: Clear identification of the Letter of Credit number, date, and issuing bank
3. Transaction Details: Details of the underlying transaction including amount, shipment details, and document presentation date
4. Discrepancy List: Detailed enumeration of all discrepancies found in the documents
5. Acknowledgment: Formal acknowledgment of the discrepancies listed
6. Payment Request: Formal request for the bank to process the payment despite the discrepancies
7. Indemnification: Statement indemnifying the bank against any claims arising from paying against discrepant documents
8. Signature Block: Authorized signature, name, title, and company stamp
1. Waiver of Protest: Additional waiver of right to protest if payment is refused - used when dealing with particularly significant discrepancies
2. Amendment Request: Request for LC amendment if applicable - used when discrepancies could be resolved through an amendment
3. Previous Communication Reference: Reference to any prior communications regarding the discrepancies - used when there have been previous discussions
4. Time Extension Request: Request for extension of time for document presentation - used when documents are being presented near expiry date
1. Copy of Letter of Credit: Complete copy of the original LC and any amendments
2. List of Presented Documents: Detailed list of all documents presented under the LC
3. Bank's Discrepancy Notice: Copy of the bank's formal notice listing the discrepancies found
4. Supporting Correspondence: Copies of any relevant prior correspondence regarding the discrepancies
5. Authorization Evidence: Evidence of signatory's authority to sign the discrepancy letter on behalf of the beneficiary
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
International Trade
Manufacturing
Agriculture and Food
Oil and Gas
Electronics and Semiconductors
Textile and Apparel
Commodities Trading
Logistics and Shipping
Import/Export
Wholesale Distribution
Relevant Teams
Trade Finance
International Banking
Documentary Credits
Export Operations
Import Operations
Treasury
Compliance
Legal
Finance
International Operations
Risk Management
Documentary Collections
Relevant Roles
Trade Finance Manager
Export Manager
Import Manager
Documentary Credit Specialist
International Trade Specialist
Banking Operations Manager
Letter of Credit Officer
Compliance Officer
Trade Documentation Officer
Finance Director
Treasury Manager
Banking Relationship Manager
Trade Finance Analyst
Chief Financial Officer
International Business Development Manager
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