How to resolve letter of credit discrepancies
Get the issuing bank's written discrepancy notice and compare each objection with the operative credit and presented documents. Ask whether correction, amendment or a specific waiver is workable before authorising payment. Investigate suspected goods defects separately. Supplier-side evidence can be coordinated by Cambridge China Bridge.
Start with the issuing bank's notice
A letter of credit provides for payment against documents that comply strictly with its terms. Start with the operative credit, accepted amendments, the presented document set and the issuing bank's written notice. For the earlier decision about using this payment method, see letters of credit for China orders.
Ask the bank to identify each discrepancy, the relevant credit wording, when it received the presentation and when it sent its notice. Request confirmation of whether it is refusing payment, where the documents are held and what happens next. Ask for the applicable response and presentation deadlines in writing. If you dispute the notice or its timing, request a review by the bank's trade finance team.
Choose correction or a credit amendment
For an inaccurate document, ask its issuer whether a truthful correction and fresh presentation are possible within the applicable deadlines. Give the supplier a discrepancy list showing the document, disputed wording, supporting evidence and responsible person. Do not backdate documents or ask a carrier to certify a shipment event that did not happen.
If the document accurately records what happened but differs from the credit, discuss an amendment with the bank. Specify the proposed wording and ask whose agreement is needed, whether acceptance has been recorded and whether it addresses the current presentation. Do not treat an amendment request as an effective amendment, or assume it repairs an expired deadline. Request the bank's written confirmation before relying on it.
Make any waiver specific
Consider a waiver only after understanding the commercial effect of each discrepancy. A spelling issue calls for different checks from a changed destination, missing inspection evidence or late shipment. Review the underlying evidence using checks before paying the supplier balance. Ask about discrepancy charges, payment timing and any debit authorisation before responding.
If you choose to accept discrepancies, identify the credit, presentation and exact items in your instruction. Ask whether the issuing bank will accept your waiver and what its acceptance means for payment and document release. Request written confirmation of the outcome. Avoid broad wording such as accepting all discrepancies, and do not assume your instruction changes the credit for future presentations.
Investigate defective goods separately
Treat document approval and goods quality as separate checks. Do not use a bank's document decision as proof that the batch meets your specification. Compare inspection results, batch references and photographs with the agreed sample and specification. If defects are suspected, isolate affected stock, preserve packaging and samples, and ask for an independent inspection where useful.
Notify your contractual seller in writing, describing the defect and proposed remedy, such as repair, replacement or an agreed credit. Ask the bank separately what payment obligations remain and obtain legal advice before attempting to stop payment or signing a settlement. Keep any goods settlement distinct from the discrepancy instruction, and have its wording checked for unintended acceptance of goods or release of claims.
Close payment and cargo release separately
Keep the bank's decision, payment status and cargo-release confirmation together, but verify each with the responsible party. Follow bills of lading and cargo release for original-document and destination release arrangements. Use the customs document checklist for the wider clearance file.
Assign an owner to each unresolved action: corrected documents, amendment acceptance, bank confirmation, cargo release and the goods complaint. Record who agreed to bear charges and what evidence closes each task. Cambridge China Bridge's staff in China can coordinate supplier-side corrections and gather batch evidence; obtain payment decisions directly from the bank.
Frequently asked questions
Should I accept a letter of credit discrepancy?
Assess the actual discrepancy and its commercial effect first. Check shipment and inspection evidence, then ask the bank what accepting it means for payment, charges and document release.
Can I amend the credit after documents are presented?
Ask the issuing bank whether an amendment is workable for that presentation, whose agreement is needed and whether deadlines remain open. Obtain confirmation of effectiveness before relying on it.
Does my waiver guarantee the bank will pay?
Ask the issuing bank to confirm whether it accepts your specific waiver and what happens next. Keep its written decision; do not rely on your instruction alone as payment confirmation.
Can I stop payment if the goods are defective?
Do not assume a quality complaint stops payment. Tell the bank promptly, preserve defect evidence and seek legal advice on the payment position and your separate claim against the seller.