Addendum to how a letter of credit works – L/C Extension

Addendum to how a Letter of Credit works

Hi all, this is an addendum to my previous article on how an LC works.. If there is a requirement for an LC to be extended, for whatever reason, the seller has to contact the buyer who opened the LC and they will have to inturn contact the issuing bank with valid reasons for the extension.. Based on this reason the LC may or may not be extended..

Usual reasons for LC extension requests could be :

  • delay in the export material being ready
  • delay in the carrying vessel – due to weather or issues from the shipping line’s side
  • if there is any unprecedented customs stop on the export cargo
  • non-availability of suitable container
  • cargo inspection certificates not ready
  • non-availability of a vessel during the time frame required

What has been your experience or issues with the extension of LC..??

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5 comments on “Addendum to how a letter of credit works – L/C Extension”

  1. By Shahid Khan Jadoon Reply

    wheater we have to send L/C extension request to issuing bank before L/C expiry date (how many days?) or we have to send the L/C extension request to issuing bank before latest date of shipment????
    e.g Latest date of shipment is 5 april and L/C expiry date is 26 april (21 days after latest shipment date)

    as written in L/C opening form.

    • By Manaadiar

      Hi Shahid, that would depend at what stage the shipment is.. If you know for a fact that the shipment is going to be delayed and there is no way you will be able to ship it before the latest date of shipment specified on the L/C, then it is better to seek the extension before that date.. Similarly if you are certain that you will not be able to submit all docs to the bank (after shipment is effected) then you would need to advise the bank about the extenuating circumstances and ask them for an extension..