The goods have sailed, the documents have been presented and a message arrives from the bank: the presentation is discrepant. Payment will not be made as things stand. The credit's expiry date has not moved, and the buyer now has a choice it did not have yesterday. What you do in the next few days decides whether this becomes a short delay or a renegotiated price.
Short answer. First read the refusal notice and check that it meets the rules. Then test every stated discrepancy against the credit, the rules and banking practice. Sort the defects into those you can still cure and those you cannot. Then choose, in this order: correct and re-present if time allows; ask the buyer to waive the discrepancies, knowing the bank decides whether to accept a waiver; release the documents on a collection basis; or renegotiate directly with the buyer. Each option costs time, money or leverage.
This article assumes a credit subject to the International Chamber of Commerce's (ICC) Uniform Customs and Practice for Documentary Credits (UCP 600) and begins after a refusal. The checks to make before accepting a credit are covered in reading an LC before you accept it.
Read the refusal notice first
UCP 600 sets out what a refusing bank must do. It must give a single notice to the presenter stating that it refuses to honour or negotiate, each discrepancy on which it relies, and what it is doing with the documents: holding them pending further instructions from the presenter; (for the issuing bank) holding them until it receives a waiver from the applicant and agrees to accept it, or receives further instructions; returning them; or acting on instructions previously received from the presenter. The notice must be given by telecommunication or, if that is not possible, by other expeditious means, no later than the close of the fifth banking day following the day of presentation. A bank that fails to act in accordance with these requirements is precluded from claiming that the documents do not constitute a complying presentation. ICC, UCP 600, article 16
So check, with your bank:
- When was the presentation made, and was the notice given by the close of the fifth banking day following that day?
- Does the notice list every discrepancy? A single notice is required; grounds raised only in a later message deserve challenge.
- What is the bank doing with the documents? "Holding pending your instructions" and "holding until the applicant waives" leave you different choices.
These checks do not decide a dispute. They tell you how strong your position is before you choose a response.
Test every discrepancy
Not every stated discrepancy is a valid one. A complying presentation is one that accords with the credit terms, the applicable UCP 600 provisions and international standard banking practice. ICC, UCP 600, article 2 Data in a document, read in context with the credit, the document itself and international standard banking practice, need not be identical to data in other documents or the credit, but must not conflict with it. ICC, UCP 600, article 14(d) The ICC's practice guidance for examining documents, ISBP 821, gives an example of the line: a misspelling that does not affect meaning is not a discrepancy, while "model 123" shown instead of "model 321" is a conflict of data (paragraph A23). ICC, ISBP 821
For each item in the notice, ask your bank's document checker:
- Which credit term, UCP 600 article or ISBP 821 paragraph does it rest on?
- Does the stated defect actually appear in the document?
- Could the data be read as not conflicting?
Notice also which bank refused. UCP 600 allows a nominated bank acting on its nomination, a confirming bank or the issuing bank to refuse when it determines that a presentation does not comply. ICC, UCP 600, article 16(a) If the refusing bank is a nominated bank that has not confirmed the credit, ask your bank whether the documents can be forwarded to the issuing bank for its own examination; a confirming bank's refusal concerns its own undertaking. Where you believe a discrepancy is wrong, reply in writing, cite the credit term or practice you rely on, and ask for the documents to be re-examined or forwarded. Keep the tone factual: the checker who refused is often the person who must agree.
Refusals are not rare. An ICC Banking Commission technical briefing dated 27 June 2022 stated that the global percentage of documents refused on first presentation under documentary credits is estimated at 65–80%; the briefing does not give a survey, year of data or method. ICC, Technical Advisors Briefing No. 3 Treat it as an ICC-reported estimate that shows how easily presentations fail, not as a measured rate for your bank or trade.
Curable and incurable defects
Sort each valid discrepancy by one question: can a corrected document still be presented before the deadline?
Usually curable, if time remains:
- a missing document, original or copy that exists or can be obtained;
- a typing error that creates a conflict, where the issuer can reissue;
- a correction that was not authenticated by the issuer, where the issuer can authenticate or reissue (the ICC Academy lists unauthenticated corrections among common grounds for refusal); ICC Academy, ISBP insights, April 2026
- a document from the wrong issuer, where the right issuer can still produce it.
Curability depends on the issuer. The seller can reissue its own invoice or packing list quickly. A carrier-issued bill of lading or an authority's certificate may require surrendering originals, new applications and fees.
Incurable by re-presentation:
- late shipment, because the shipment date is a fact the documents record;
- late presentation, beyond the credit's presentation period or, where original transport documents are required, the UCP 600 default of 21 calendar days after the date of shipment;
- an expired credit, since presentation must be made on or before the expiry date. ICC, UCP 600, articles 6(e) and 14(c)
"Incurable" means re-presentation cannot fix it. The buyer may still waive it, or the parties may still agree another route.
The four responses, in order
1. Correct and re-present
If every valid discrepancy is curable and the presentation period and expiry still allow it, obtain corrected documents and re-present. Ask the bank how it will treat the replacement documents and how long it will need to examine them. This keeps the bank's undertaking in play and concedes nothing to the buyer. The US International Trade Administration (ITA) notes that document errors and discrepancies must be amended and resubmitted, and links errors to payment delays and extra fees. ITA, Letter of Credit
2. Ask the applicant for a waiver
When the issuing bank determines that a presentation does not comply, it may in its sole judgement approach the applicant for a waiver; UCP 600 states that this does not extend the bank's examination period. Where the bank has said it will hold the documents until it receives a waiver, the rule refers to a waiver the bank receives and agrees to accept. ICC, UCP 600, article 16(b)–(c) A buyer's willingness to waive is therefore not the same as the bank's obligation to pay.
A waiver request also changes the negotiation. The buyer now knows it can decline, and may use that to ask for a price reduction as the condition of waiving. A discrepancy fee may also be deducted from any payment; the ICC's 2022 briefing refers to banks deducting discrepancy fees where they pay after an acceptable waiver. Check the credit and your bank's tariff for how any fee applies.
3. Release the documents on a collection basis
If the credit cannot be complied with, the seller can instruct the bank to send the documents to the buyer for payment outside the credit's undertaking. In substance, the seller then relies on the buyer's willingness to pay, much as under a documentary collection; the exposure is explained in documentary collection or letter of credit. Keep the documents under bank control until payment, and confirm that the transport document still controls the goods.
4. Renegotiate directly with the buyer
Sometimes the honest answer is a commercial one: a revised price for a late shipment, a partial payment, or a different payment arrangement. Negotiate while the bank still holds the documents, and put any agreement in writing before releasing them.
Asking for a waiver: what to send
A waiver request goes to the buyer, who must then instruct its bank. Make it easy to agree to and hard to misread. A useful message:
Illustrative waiver request. "Our presentation under credit [reference] was refused on [date] for the following discrepancies: [list exactly as in the notice]. The goods shipped on [date] conform to contract [reference]; the discrepancies concern [brief explanation, e.g. a typing error in the packing list]. We ask you to instruct [issuing bank] that you waive these discrepancies and accept the documents. We have [corrected / are correcting] items [x] and will [re-present / provide] them by [date]."
State facts, not arguments, and do not concede price or terms in the same message. If the buyer wants to negotiate, that is a separate conversation, taken while the bank still holds the documents. The wording above is a teaching illustration; your bank may prefer its own format.
Meanwhile, the goods keep moving
A refusal does not stop the vessel. While documents are held, the cargo may reach the destination, and port and container charges can start once free time runs out; see demurrage and detention explained.
Three points protect the seller during the dispute:
- Control: with an order bill of lading held by the banks, the buyer normally cannot take delivery without the documents. With a sea waybill or a straight bill, that may not be true; reading a bill of lading explains the difference.
- Insurance: check whether the cargo insurance still covers the goods while they wait, and in whose interest.
- Evidence: keep the refusal notice, the presentation schedule, courier records and every message with the bank and buyer in one file. If the dispute escalates, the dates will matter.
Timing: what the calendar allows
| Situation on the day you receive the notice | Realistic options |
|---|---|
| Expiry and presentation period still open; all defects curable | 1, then 2 as fallback |
| Some defects curable, one incurable | 2, with corrections made anyway to narrow the waiver |
| Presentation period or expiry passed | 2 (only if the applicant waives and the issuing bank agrees to accept the waiver), 3 or 4 |
| Buyer signals it will not waive | 3 or 4; review goods control and destination charges |
Count banking days and courier days, not calendar days alone. The refusal does not extend the presentation period or the expiry date: your remaining time is whatever the credit still allows, less the time needed to obtain, courier and have corrected documents examined.
Worked example: three grounds, two cures and one challenge
Hypothetical teaching example. A sesame exporter, its buyer and the banks are invented. The credit wording and outcome are illustrative; this is not a Maqboola transaction.
A presentation under a credit for hulled sesame is refused on three grounds. Eight days of the presentation period and eleven days to expiry remain.
| Stated discrepancy | Valid? | Curable in time? | Action |
|---|---|---|---|
| Bill of lading notify party differs from the credit's stated notify party | Yes: the credit specified it | Possibly: the originals must be retrieved from the bank and surrendered to the carrier for reissue | Ask the bank to return the originals and the carrier for its reissue time and charges |
| Packing list carries a handwritten correction without the issuer's authentication | Yes | Yes: the seller issued it | Reissue a clean packing list |
| Weight certificate dated one day after the bill of lading date | Unclear | Not needed if invalid | Ask the bank for the credit term or practice it relies on |
The third item illustrates the testing step. ISBP 821 states that when a credit requires a document such as an inspection certificate, that alone does not require the document to evidence a pre-shipment event, and it need not be dated before shipment (paragraph A12(c)); by contrast, a credit calling for a pre-shipment inspection requires the document to show the event took place on or before shipment (paragraph A12(b)). ICC, ISBP 821 Whether that reasoning covers this weight certificate depends on the credit's wording, for example whether it asks for weighing at loading or a certificate dated on or before shipment. The exporter therefore asks the bank to identify its basis before spending time on a new certificate.
The bank releases the originals to the exporter's courier on day 1 of the eight remaining days, and they reach the carrier on day 2. The carrier reissues within four working days, by day 6, and the corrected set reaches the nominated bank on day 7, one day inside the period (the courier days are assumptions of this example). The exporter re-presents with the corrected bill of lading and packing list, and a written query on the third point. If the carrier had been unable to reissue in time, the exporter would have moved to a waiver request with the other two defects already corrected, narrowing what the buyer is asked to accept.
Preventing the repeat
After a refusal, two checks remove the causes that recur most easily:
- Pre-check drafts against the credit before originals are issued, especially transport documents and third-party certificates, which are slow to correct.
- Work back from the deadline: set an internal presentation date that leaves time for one correction cycle inside the presentation period. Knowing who issues each document, and in what order, helps; see the document set behind one shipment.
ICC guidance points the same way: the ICC Academy stresses reviewing the credit carefully on receipt and preparing documents in line with UCP 600. ICC Academy, ISBP insights, April 2026
Common mistakes
- Accepting every stated discrepancy without asking for its basis.
- Treating the buyer's agreement to waive as a guarantee of payment.
- Releasing documents to the buyer before agreeing terms.
- Losing days on a curable defect while the presentation period runs out.
- Correcting one document and creating a new conflict with another.
Next step
If you are agreeing a contract with Maqboola that will be paid by letter of credit, settle before shipment who will pre-check draft documents and how quickly corrections can be issued, especially for carrier and third-party documents; you can raise this when you request a quote. After a refusal, your bank's document checkers are the right first contact.
General information. This article explains cited ICC rules and common practice for general educational purposes; it is not legal or banking advice. The outcome of a refusal depends on the credit's terms, the banks involved and the applicable law, so confirm your options and deadlines with your bank, and take legal advice if a dispute develops.
