Clause a: Text: “An authenticated teletransmission of a credit or amendment will be deemed to be the operative credit or amendment, and any subsequent mail confirmation shall be disregarded. If a teletransmission states “full details to follow” (or words of similar effect), or states that the mail confirmation is to be the operative credit or amendment, then the teletransmission will not be deemed to be the operative credit or amendment. The issuing bank must then issue the operative credit or amendment without delay in terms not inconsistent with the teletransmission.”
Explanation: When a credit or an amendment is sent via authenticated teletransmission (e.g., SWIFT), it is considered the official and operative document. Any follow-up confirmation sent by mail should be ignored. However, if the teletransmission indicates that “full details to follow” or suggests that the mail confirmation will be the operative document, then the teletransmission is not considered operative. In such cases, the issuing bank must promptly issue the official credit or amendment, ensuring it aligns with the details in the teletransmission.
Example: A bank issues a letter of credit (L/C) via SWIFT message to the beneficiary, stating all the terms and conditions. This SWIFT message is the official L/C. If the message includes “full details to follow,” the SWIFT message is not operative. The bank must then send the official L/C via mail or another method, ensuring it matches the preliminary details in the SWIFT message.
Clause b: Text: “A preliminary advice of the issuance of a credit or amendment (“pre-advice”) shall only be sent if the issuing bank is prepared to issue the operative credit or amendment. An issuing bank that sends a pre-advice is irrevocably committed to issue the operative credit or amendment, without delay, in terms not inconsistent with the pre-advice.”
Explanation: A pre-advice is an advance notice about the issuance of a credit or an amendment. This should only be sent if the issuing bank is ready to issue the actual credit or amendment. Once a pre-advice is sent, the issuing bank is irrevocably bound to issue the operative credit or amendment promptly and in accordance with the terms mentioned in the pre-advice.
Example: A bank sends a pre-advice to a beneficiary stating that a letter of credit will be issued for a certain amount with specific terms. The bank is then obligated to issue the actual L/C promptly, ensuring it matches the terms outlined in the pre-advice. If the pre-advice states a credit amount of $100,000, the final L/C must also be for $100,000 with consistent terms.