A Türkiye-based manufacturer was selling building materials to a buyer in Tunisia. Payment was to be made under an irrevocable (40A IRREVOCABLE) letter of credit opened by a Tunisian issuing bank and advised through a Turkish bank. The text looked standard at first glance — but read line by line before acceptance, three points carried risk against the exporter.
- 01
Confirmation requested, arrived unconfirmed
The text requested confirmation, but the transaction was advised unconfirmed. If the issuing bank fails to pay, the risk sits entirely with the exporter.
- 02
Origin contradiction
A contradictory origin statement and a mandatory EUR.MED certificate in the same text — a near-certain discrepancy at presentation.
- 03
Terms stacked against the exporter
A fee deducted for every discrepancy, “payment under reserve prohibited”, and clauses making acceptance subject to the buyer’s approval.
Risk 01
Confirmation was requested, but the transaction was advised unconfirmed
The credit text carried a confirmation instruction (49 CONFIRM) and named the confirming bank (58A). Yet the transaction was advised unconfirmed. So a deal that looked “confirmed” on paper was, in practice, unconfirmed.
The difference is critical: under an unconfirmed credit, payment depends solely on the issuing bank’s undertaking. If that bank does not or cannot pay — a real possibility in a dollar-constrained, higher-risk market — the risk stays entirely with the exporter. Under a confirmed credit, a second bank adds an independent payment undertaking; the risk moves to that bank.
Risk 02
Origin contradiction: EUR.MED required while the text states Korean origin
The text carried a contradictory origin statement: on one hand Turkish-origin goods, on the other, additional conditions (47A) referring to “Türkiye – South Korea” origin. The same text also required a EUR.MED movement certificate as a mandatory document.
Here’s the problem: EUR.MED is valid only among specific preferential-origin countries (Türkiye/EU and countries in the Pan-Euro-Mediterranean system). A South Korean-origin good does not fall under EUR.MED. So the document contradicted the origin wording within the text itself — making a bank discrepancy at presentation almost certain.
Risk 03
Terms stacked against the exporter
The additional conditions (47A) and instructions in the text set the balance entirely in favour of the buyer and issuing bank whenever a discrepancy arose. Innocent-looking individually, together these clauses reduced the exporter’s negotiating power to zero.
- A fee deducted from the transaction value for every discrepancyEven a small error takes money straight out of the proceeds
- “Payment under reserve prohibited”If a discrepancy arises, the conditional-payment route is closed; the process halts entirely
- Acceptance of discrepant documents subject to the buyer’s approvalThe buyer can use the discrepancy as leverage to push the price down
- Presentation period and all charges on the exporterTime pressure + cost, on the exporter from the start
Most of these clauses can’t be changed one by one through negotiation; but all of them together, combined with the first two risks (unconfirmed + origin contradiction), make the picture clear: if this text is accepted, even the smallest document error costs the exporter dearly. So the risk was taken to negotiation as a whole, not clause by clause.
Method
The one thing that made the difference: timing
None of these risks are exotic. What made the difference is when they were seen. Reviewed before the text was accepted, all three turned into amendment requests and were resolved. Had the same text been accepted and reached the document-presentation stage, the same risks would have become irreversible discrepancies.
Outcome
- All three risks were turned into amendment requests at the draft stage, before the text was accepted.
- Payment risk was made transferable to a strong bank through a confirmation structure.
- The origin–EUR.MED contradiction was resolved before the documents reached the bank; no discrepancy arose from that item at presentation.
- Presentation passed with zero discrepancies; collection completed without delay, discount pressure or lost leverage.