28 December 2021
I Had sent one export docs under letter of credit and i sent my export docs as per lc , after reach of docs my buyer (consignee ) suggested to change terms of payment . For change in payment my buyer issue MT 799 .so my question is raise that , is it fine if applicant bank issue issue MT799 in place of MT707
07 July 2024
### Difference Between MT799 and MT707:
1. **MT799:** - **Purpose:** It is a free-format message used for various purposes, including communication and information exchange between banks. It is not specific to documentary credits (letters of credit) and does not carry specific standardized fields for amendments. - **Usage:** Often used for pre-advice, inquiries, and other informal communication between banks. It is not used to formally amend the terms and conditions of a letter of credit.
2. **MT707:** - **Purpose:** It is specifically designed for amendments to documentary credits (letters of credit). It contains structured fields to detail the changes in terms, conditions, and other relevant information related to the LC. - **Usage:** It should be used when formally amending the terms of an LC to ensure all parties (issuing bank, advising bank, beneficiary) have a clear and structured understanding of the changes.
### Recommendation for Changing Terms of Payment:
If you are looking to amend the terms of payment under a letter of credit, the proper and formal way is to use an **MT707 message**. Here’s why:
1. **Structured Format:** MT707 has a structured format that clearly details the amendments to the letter of credit, ensuring there is no ambiguity. 2. **Official Amendment:** MT707 is recognized by all parties involved in the letter of credit process (issuing bank, advising bank, beneficiary) as the official means of amending the LC. 3. **Compliance:** Using MT707 ensures compliance with international banking standards and practices, reducing the risk of disputes or misunderstandings.
### Steps to Amend the LC Terms:
1. **Request Amendment:** The applicant (buyer) should formally request their bank to issue an MT707 to amend the LC terms. 2. **Issuing Bank Sends MT707:** The issuing bank sends the MT707 message to the advising bank, detailing the changes. 3. **Advising Bank Notifies Beneficiary:** The advising bank then informs you (the beneficiary) of the amendments. 4. **Acceptance of Amendments:** You need to review and accept the amendments to ensure the terms are agreeable and there are no discrepancies.
### Communication to Your Buyer and Their Bank:
You can inform your buyer and their bank about the necessity of using MT707 for amending the terms of the letter of credit. Here is a suggested format for communication:
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**Subject: Request for Amendment to Letter of Credit via MT707**
I hope this message finds you well. Regarding the recent request to change the terms of payment under our letter of credit, I would like to ensure that all amendments are processed correctly and in compliance with international banking standards.
To formally amend the terms of the letter of credit, we kindly request that the applicant bank issues an MT707 message. MT707 is specifically designed for amendments to documentary credits and will ensure that all changes are clearly communicated and recognized by all parties involved.
Using MT707 will help avoid any potential misunderstandings or disputes and ensure that the amendments are processed smoothly and efficiently.
Thank you for your cooperation. Please let us know if there are any further requirements or if you need additional information from our end.
Best regards,
[Your Name] [Your Position] [Your Company Name] [Contact Information]
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By following this approach, you can ensure that the amendments to the letter of credit are handled correctly, maintaining clarity and compliance with international trade practices.
CAclubindia
