MT 700 Issue of a Documentary Credit

Field 42P: Negotiation/Deferred Payment Details

Ozgur Eker (CDCS) MT 700 Issue of a Documentary Credit, Swift Messages , , ,
Field 42P: Deferred Payment Details

What is Field 42P: Negotiation/Deferred Payment Details?

Field 42P: Negotiation/Deferred Payment Details is a field in MT 700 swift message type that is used to specify the payment date or method for its determination in a documentary credit which is available by deferred payment or negotiation only.

This is an optional field.

A credit must state whether it is available by sight payment, deferred payment, acceptance or negotiation.

By nominating a bank to accept a draft or incur a deferred payment undertaking, an issuing bank authorizes that nominated bank to prepay or purchase a draft accepted or a deferred payment undertaking incurred by that nominated bank.

MT 700
Field 42P: Negotiation/Deferred Payment Details:

DEFINITION
This field specifies the payment date or method for its determination in a documentary credit which is available by deferred payment or negotiation only.

CONDITIONAL RULES
Either fields 42C and 42a together, or field 42M alone, or field 42P alone may be present. No other combination of these fields is allowed.

Field 42M: Mixed Payment

Ozgur Eker (CDCS) MT 700 Issue of a Documentary Credit, Swift Messages , , ,
Field 42M: Mixed Payment

What is Field 42M: Mixed Payment?

Field 42M: Mixed Payment specifies the payment dates, amounts and/or method for their determination in a documentary credit which is available by mixed payment.

This is an optional field.

Mixed payment is not covered under the letter of credit rules. But parties can utilize a letter of credit which is available by mixed payments.

There are 3 main scenarios exists in a mixed payment letter of credit:

  • Scenario 1: The beneficiary receive an advance payment before the shipment and remaining amount will be payable against the shipping documents,
  • Scenario 2: Some of the contract amount is payable against the shipping documents and the remaining amount will be paid after the shipment such as installation of the machinery etc.,
  • Scenario 3: Mixed payment consists of both advance payment, payment against the shipping documents and payment after the shipment. (Option 3 is the combination of Option 1 and Option 2)

Mixed Payment Example:

  • 50 percent of the total lc value payable at sight as an advance against presentation of simple invoice.
  • 40 percent of the total lc value payable at sight against presentation of stipulated documents under field 46A.
  • 10 percent lc value payable at sight against presentation of following documents: commercial invoice for 10 percent of lc value completion of installation certificate issued by beneficiary and to be duly counter signed by applicants authorized signatory , whose signature follows by courier.

MT 700
Field 42M: Mixed Payment Details:
USAGE RULES
This field specifies the payment dates, amounts and/or method for their determination in a documentary credit which is available by mixed payment.

CONDITIONAL RULES
Either fields 42C and 42a together, or field 42M alone, or field 42P alone may be present. No other combination of these fields is allowed

Field 42a: Drawee

Ozgur Eker (CDCS) MT 700 Issue of a Documentary Credit, Swift Messages , , ,
Field 42a: Drawee

What is Field 42a: Drawee?

Field 42a: Drawee is a field in MT 700 swift message type that is used to identify the drawee of the drafts to be drawn under the documentary credit.

This is an optional field.

A credit must not be issued available by a draft drawn on the applicant.

A credit may be issued requiring a draft drawn on the applicant as one of the required documents, but must not be issued available by drafts drawn on the applicant.

The draft must be drawn on the party stated in the credit.

The draft must be drawn by the beneficiary.

MT 700
Field 42a: Drawee:
USAGE RULES

The drawee must be a bank. If drafts on the applicant are required, they are to be listed as documents in field 46A.

The Party Identifier must not be present.

CONDITIONAL RULES

When used, fields 42C and 42a must both be present.

Either fields 42C and 42a together, or field 42M alone, or field 42P alone may be present. No other combination of these fields is allowed.

Field 42C: Drafts at

Ozgur Eker (CDCS) MT 700 Issue of a Documentary Credit, Swift Messages , , ,
Field 42C: Drafts at

What is Field 42C: Drafts at?

Field 42C: Drafts at is a field in MT 700 swift message type that is used to to specify the tenor of drafts to be drawn under the documentary credit.

This is an optional field.

This field specifies the tenor of drafts to be drawn under the documentary credit.

If a draft is drawn at a tenor other than sight, or other than a certain period after sight, it must be possible to establish the maturity date from the data in the draft itself.

If the tenor refers to xxx days after the bill of lading date, the on board date is deemed to be the bill of lading date even if the on board date is prior to or later than the date of issuance of the bill of lading.

In all cases the drawee bank must advise the maturity date to the presenter.

The calculation of tenor and maturity dates, as shown above, would also apply to credits designated as being available by deferred payment, i.e., where there is no requirement for a draft to be presented by the beneficiary.

MT 700
Field Field 42C: Drafts at … :
This field specifies the tenor of drafts to be drawn under the documentary credit.

CONDITIONAL RULES

  • C1 When used, fields 42C and 42a must both be present
  • C2 Either fields 42C and 42a together, or field 42M alone, or field 42P alone may be present. No other combination of these fields is allowed.

Field 41a: Available With … By …

Ozgur Eker (CDCS) MT 700 Issue of a Documentary Credit, Swift Messages , , ,
Field 41a: Available With ... By ...

What is Field 41a: Available With … By …?

Field 41a: Available With … By … is a field in MT 700 swift message type that is used to identify the bank with which the credit is available (the place for presentation) and indicates of how the credit is available.

This is a mandatory field, which means that it must be stated in all of the letters of credit issued via MT 700 swift format.

This field identifies the bank with which the credit is available (the place for presentation) and an indication of how the credit is available.

FORMAT

  • Option A : (Identifier Code BIC )

BY ACCEPTANCE
BY DEF PAYMENT
BY MIXED PYMT
BY NEGOTIATION
BY PAYMENT

  • Option D : (Name and Address)

BY ACCEPTANCE
BY DEF PAYMENT
BY MIXED PYMT
BY NEGOTIATION
BY PAYMENT

MT 700
Field 41a: Available With … By … :
USAGE RULES

If the credit is to be freely negotiable by any bank, option D must be used with the phrase Any bank in … (city or country).

If the credit is to be freely negotiable by any bank anywhere in the world, an indication of country is not required.

When Code contains either BY DEF PAYMENT or BY MIXED PYMT, the specific details of the payment terms must be specified in field 42P and 42M respectively.

When Code contains BY PAYMENT, this should be understood to mean payment at sight.

For credits subject to eUCP:

  • If presentation of both electronic records and paper documents is allowed, the place for presentation of the electronic records (ie, the electronic address to which presentation must be made) as well as the place for presentation of the paper documents must be specified in field 47A and not in this field.
  • If presentation of only electronic records is allowed, the place for presentation of the electronic records (ie, the electronic address to which presentation must be made) must be specified in field 47A and not in this field.

Field 39C: Additional Amounts Covered

Ozgur Eker (CDCS) MT 700 Issue of a Documentary Credit, Swift Messages , , ,
Field 39C: Additional Amounts Covered

What is Field 39C: Additional Amounts Covered?

Field 39C: Additional Amounts Covered is a field in MT 700 swift message type that is used to specify any additional amounts covered such as insurance, freight, interest, etc.

This is an optional field. In most cases it is not utilized.

If used Field 39C : Additional Amount Covered, must be added to the amount in Field 32B: Currency Code, Amount to state the maximum amount covered by the letter of credit.

This field can be used to reach a CIF amount from the FOB amount as well as determination of the interest rate of the time draft or usance bill of exchange.

MT 700
Field 39C: Additional Amounts Covered:
This field specifies any additional amounts covered such as insurance, freight, interest, etc.

Field 39B: Maximum Credit Amount

Ozgur Eker (CDCS) MT 700 Issue of a Documentary Credit, Swift Messages , , ,
Field 39B: Maximum Credit Amount

What is Field 39B: Maximum Credit Amount?

Field 39B: Maximum Credit Amount is a field in MT 700 swift message type that is used to further qualifies the documentary credit amount.

This is an optional field.

This field further qualifies the documentary credit amount.

A nominated bank acting on its nomination, a confirming bank, if any, or the issuing bank may accept a commercial invoice issued for an amount in excess of the amount permitted by the credit, and its decision will be binding upon all parties, provided the bank in question has not honoured or negotiated for an amount in excess of that permitted by the credit.

The amount in words must accurately reflect the amount in figures if both are shown, and indicate the currency, as stated in the credit.

The amount must agree with that of the invoice, unless as a result of UCP 600 sub-article 18(b).

MT 700
Field 39B: Maximum Credit Amount:
CODES : The following code must be used. NOT EXCEEDING Qualifies the documentary credit amount.

Note : Either field 39A or 39B, but not both, may be present.

Field 39A: Percentage Credit Amount Tolerance

Ozgur Eker (CDCS) MT 700 Issue of a Documentary Credit, Swift Messages , , ,
Field 39A: Percentage Credit Amount Tolerance

What is Field 39A: Percentage Credit Amount Tolerance?

Field 39A: Percentage Credit Amount Tolerance is a field in MT 700 swift message type that is used to specify the tolerance relative to the documentary credit amount as a percentage plus and/or minus that amount.

This is an optional field.

The words “about” or “approximately” used in connection with the amount of the credit or the quantity or the unit price stated in the credit are to be construed as allowing a tolerance not to exceed 10% more or 10% less than the amount, the quantity or the unit price to which they refer.

A tolerance not to exceed 5% more or 5% less than the quantity of the goods is allowed, provided the credit does not state the quantity in terms of a stipulated number of packing units or individual items and the total amount of the drawings does not exceed the amount of the credit.

Even when partial shipments are not allowed, a tolerance not to exceed 5% less than the amount of the credit is allowed, provided that the quantity of the goods, if stated in the credit, is shipped in full and a unit price, if stated in the credit, is not reduced or that sub-article 30 (b) is not applicable. This tolerance does not apply when the credit stipulates a specific tolerance or uses the expressions referred to in sub-article 30 (a).

MT 700
Field 39A: Percentage Credit Amount Tolerance:
This field specifies the tolerance relative to the documentary credit amount as a percentage plus and/or minus that amount.

FORMAT (Tolerance 1)(Tolerance 2)
Tolerance 1 specifies a positive tolerance, the Tolerance 2 specifies a negative tolerance

Note : Either field 39A or 39B, but not both, may be present.

Field 32B: Currency Code, Amount

Ozgur Eker (CDCS) MT 700 Issue of a Documentary Credit, Swift Messages , , ,
Field 32B: Currency Code, Amount

What is Field 32B: Currency Code, Amount?

Field 32B: Currency Code, Amount is a field in MT 700 swift message that is used to indicate the currency code and amount of the letter of credit.

This is a mandatory field, which means that it must be stated in all of the letters of credit issued via MT 700 swift format.

This field contains the currency code and amount of the documentary credit.

Currency must be a valid ISO 4217 currency code.

The integer part of Amount must contain at least one digit. The decimal comma ‘,’ is mandatory and is included in the maximum length. The number of digits following the comma must not exceed the maximum number allowed for the specified currency.

A commercial invoice must be made out in the same currency as the credit.
The insurance document must indicate the amount of insurance coverage and be in the same currency as the credit.

The words “about” or “approximately” used in connection with the amount of the credit or the quantity or the unit price stated in the credit are to be construed as allowing a tolerance not to exceed 10% more or 10% less than the amount, the quantity or the unit price to which they refer.

MT 700
Field 32B: Currency Code, Amount:
Special information relative to the amount of the credit must be specified in field 39A Percentage Credit Amount Tolerance, field 39B Maximum Credit Amount or field 39C Additional Amounts Covered

Field 59: Beneficiary

Ozgur Eker (CDCS) MT 700 Issue of a Documentary Credit, Swift Messages , , ,
Field 59: Beneficiary

What is Field 59: Beneficiary?

Field 59: Beneficiary is a field in MT 700 swift message type that is used to specify the party in favour of which the documentary credit is being issued.

This is a mandatory field, which means that it must be stated in all of the letters of credit issued via MT 700 swift format.

Beneficiary means the party in whose favour a credit is issued.

Presenter means a beneficiary, bank or other party that makes a presentation.

A beneficiary can in no case avail itself of the contractual relationships existing between banks or between the applicant and the issuing bank.

Except as provided in sub-article 29 (a), a presentation by or on behalf of the beneficiary must be made on or before the expiry date.

MT 700
Field 59: Beneficiary:
This field specifies the party in favour of which the documentary credit is being issued. Beneficiary is the exporter of the underlying contract.