Letter of Credit Discrepancy Waiver: Who Gives It and What Follows
How a discrepancy waiver works under a Letter of Credit, who decides, and what it means for the beneficiary's payment.
Reviewed by LCCheck team (owner-approved) · 2026-10-12
Short answer
When documents are discrepant, the issuing bank may ask the applicant whether it will waive the discrepancies (UCP 600 Art. 16(b)). The applicant's waiver does not oblige the bank to pay — the issuing bank still decides — and until the documents are accepted, the beneficiary's payment depends on the applicant rather than on the bank's undertaking.
| Who approaches the applicant | Issuing bank, at its discretion (Art. 16(b)) |
|---|---|
| Does the waiver extend the 5-day period? | No |
| Who finally decides | Issuing bank (and a confirming bank for its own undertaking) |
How the process works
- Bank examines and finds discrepancies.
- Bank may contact the applicant about a waiver.
- If the applicant waives and the bank agrees, the documents are honoured.
- If not, the bank refuses and holds or returns the documents as stated in its notice.
Risks for the beneficiary
A waiver depends on the applicant's goodwill. An applicant may use discrepancies to renegotiate price or delay payment, especially if the market has moved. Discrepancy fees are usually deducted even when a waiver is given.
Avoid needing one
The safest path is a compliant first presentation: check every document against the credit and correct problems before the deadline.
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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