What Happens When a Bank Rejects Letter of Credit Documents?
The steps a bank must follow when it refuses a Letter of Credit presentation, and the options the beneficiary has.
Reviewed by LCCheck team (owner-approved) · 2026-10-12
Short answer
When a bank decides a Letter of Credit presentation does not comply, UCP 600 Article 16 requires it to send a single notice of refusal to the presenter, stating every discrepancy and what it is doing with the documents, no later than the fifth banking day after presentation. The beneficiary can then correct and re-present within the credit's deadlines, or the applicant can be asked to waive the discrepancies.
| Rule | UCP 600 Article 16 |
|---|---|
| Notice deadline | Close of the fifth banking day after presentation |
| Notice content | All discrepancies, in a single notice |
| Late or incomplete notice | Bank may lose the right to claim the documents do not comply (Art. 16(f)) |
What the refusal notice must say
- That the bank is refusing to honour or negotiate.
- Each discrepancy relied on.
- Whether it holds the documents pending instructions, pending a waiver, returns them, or acts on earlier instructions.
Your options as beneficiary
- Correct the documents and re-present before the presentation deadline and expiry.
- Ask the applicant to accept the documents despite the discrepancies.
- Send the documents on collection terms if the deadline has passed.
Is the rejection always justified?
Not always. If the notice is late, incomplete or cites a difference that is not a discrepancy under the credit or standard banking practice, the beneficiary may be able to dispute it. Take specialist advice before doing so.
Sources
- ICC — UCP 600 (Uniform Customs and Practice for Documentary Credits)
- ICC Academy — avoiding Letter of Credit discrepancies
General guidance, not legal advice. Your bank examines documents independently.
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