Depending upon which international trade magazine or article you may read, the worldwide rejection rate for documents (on first presentation) is in the region of 65-80%. In documentary credit operations, the advising of discrepancies in documents is probably the most contentious issue that a bank will face with its clients or another bank. It is therefore imperative that the respective discrepancies are of such detail that the presenter is in no doubt as to the reason(s) for the refusal.
Each bank has a duty to educate its clients. Where a client has been faced with discrepancies, a better presentation should occur next time if it is explained where the beneficiary went wrong. However, most banks merely advise discrepancies as if they were a fact of life. By the manner in which a bank expresses a discrepancy it can demonstrate a quality approach which can set them apart from its peers.
Whether or not a bank refuses documents is based upon the content of the documents themselves, and their conformity to the documentary credit and UCP. At the end of the day, the decision to accept or reject is often down to an individual document examiner in assessing compliance or otherwise, based on his or her individual knowledge, experience and judgement. However, any discrepancy should stand one particular test - "would you feel comfortable in justifying that discrepancy before a judge in a court of law"? Remember, at the end of the day it would be a court that would be asked to make judgement if a dispute were not amicably resolved.
Clarity is the key. To provide a refusal notice that says "Invoice not as per L/C" tells the beneficiary or the applicant nothing. Is it the goods description that is wrong, absence of a required certification, or what specifically?
A refusal notice should be of sufficient detail and clarity for it to be understood by the presenter without the necessity of it having a copy of the documentary credit in front of it.
This subject is covered in far greater detail within our training module ‘documentary credits in practice' which can be purchased at https://www.tradefinance.training/shop/