Clause 1:
Clause: A bank assumes no liability or responsibility for the consequences arising out of delay, loss in transit, mutilation or other errors arising in the transmission of any messages or delivery of letters or documents, when such messages, letters or documents are transmitted or sent according to the requirements stated in the credit, or when the bank may have taken the initiative in the choice of the delivery service in the absence of such instructions in the credit.
Explanation: This clause states that a bank is not responsible for any issues such as delay, loss, mutilation, or errors that occur during the transmission or delivery of messages, letters, or documents. This applies if the bank follows the delivery instructions specified in the credit or selects a delivery service on its own when no instructions are provided.
Example: Suppose an issuing bank sends the documents via courier service as specified in the credit terms. If the documents are delayed, lost, or damaged during transit, the bank is not liable for these issues as it followed the given instructions.
Clause 2:
Clause: If a nominated bank determines that a presentation is complying and forwards the documents to the issuing bank or confirming bank, whether or not the nominated bank has honoured or negotiated, an issuing bank or confirming bank must honour or negotiate, or reimburse that nominated bank, even when the documents have been lost in transit between the nominated bank and the issuing bank or confirming bank, or between the confirming bank and the issuing bank.
Explanation: This clause ensures that if a nominated bank finds that the presented documents comply with the credit terms and forwards them to the issuing or confirming bank, the issuing or confirming bank must honor or negotiate the credit. This obligation remains even if the documents are lost in transit between these banks.
Example: A nominated bank in Japan finds the documents presented under a letter of credit to be compliant and sends them to the issuing bank in the USA. Even if the documents are lost during transit, the issuing bank must still honor the credit and make the payment or reimburse the nominated bank.
Clause 3:
Clause: A bank assumes no liability or responsibility for errors in translation or interpretation of technical terms and may transmit credit terms without translating them.
Explanation: This clause states that banks are not liable for any errors in translating or interpreting technical terms. Banks may transmit credit terms as they are, without translating them into another language.
Example: An LC is issued in English with specific technical terms. The bank in a non-English speaking country transmits the terms as received without translating them into the local language. If there are misunderstandings due to the lack of translation, the bank is not responsible for any resulting issues.