When opening a letter of credit by telex, you should also pay attention to the following three possible problems.
(1) The validity of the telex document and the necessity of mailing the confirmation letter. In the past, when letters of credit were mostly opened by telex, in order to prevent the loss or error of the telex, the issuing bank generally mailed the confirmation letter and took the confirmation letter as the final result. However, in the current situation where telex or SWIFT system is widely used to open letters of credit, there is no obvious need to mail the confirmation letter. Therefore, “UCP600” clearly stipulates that as long as the telex document does not mention “full details to follow” or similar words, and does not state that the mailed confirmation letter is an operative credit instrument, the telex document itself is an effective letter of credit, and the issuing bank does not need to mail the confirmation letter. Even if the confirmation letter is mailed, other banks and beneficiaries may ignore it. However, if the telex document clearly stipulates “full details to follow” or that the mailed confirmation letter is the final result, the telex document cannot be used as an effective credit instrument, and the issuing bank must issue an effective credit instrument or mail the confirmation letter without delay. This provision also applies to L/C amendment notices issued by telex.
(2) Regarding the issue of advance notice. Sometimes, in order to meet the deadline for opening a letter of credit stipulated in the contract or to let the beneficiary know the opening of the letter of credit as soon as possible, the applicant requires the bank to send a preliminary notice of the brief content of the letter of credit agreed to be opened by telecommunication. Such preliminary notice generally only lists a few main items such as the name of the beneficiary, letter of credit number, contract number, amount, commodity name, etc., so it is also called brief cable advice. Unless otherwise agreed, the issuing bank must bear the responsibility of issuing a complete letter of credit that is not inconsistent with the preliminary notice in a timely manner.
(3) Regarding the issue of duplicate letters of credit. When some applicants for opening letters of credit repeatedly order goods, in order to save the cost of opening letters of credit, they require the issuing bank to apply or cite the terms of similar letters of credit that have been opened before, that is, when opening a new letter of credit, only the number, amount, quantity of goods, shipment period, validity period and other terms that are different from the previous letter of credit are listed, and the remaining terms refer to the previous letter of credit (other terms similar to L/C No. × ×××). This constitutes a duplicate letter of credit. The practice of duplicating letters of credit can easily lead to omissions and misunderstandings, especially when the previous letter of credit used has been modified and the beneficiary accepts or rejects the modification. Therefore, UCP600 clearly stipulates that banks should discourage applicants from duplicating letters of credit.