# Letter of credit discrepancies that stop payment, and which ones a buyer can waive

> Under a letter of credit the bank pays against documents, not against the shipment. A discrepancy gives the buyer a legitimate reason to refuse. Which ones can still be fixed, which need the buyer to agree, and how to read a credit before you accept it.

- Source: https://www.lexiplatform.com/articles/documents/letter-of-credit-discrepancies-that-stop-payment
- Published: 2026-07-27  ·  Last updated: 2026-07-27
- Next scheduled review: 2026-09-15
- Reviewed by: Dipender Bhamrah
- Publisher: LEXI Platform Pvt. Ltd.

## What is a discrepancy in a letter of credit and does it stop payment?

A discrepancy is any way your documents fail to match the credit's terms. It suspends the bank's obligation to pay. Document errors can often be corrected and re-presented if time remains. Timing and shipment failures cannot be corrected, and payment then depends on the buyer agreeing to waive the discrepancy.

A letter of credit is often described as a guarantee of payment.
What it guarantees is that a bank will pay **against documents that comply with
the credit**. The goods are not the subject of the promise. If the documents
comply, the bank pays even if the buyer has changed their mind. If they do not,
the bank's obligation falls away even if the goods arrived perfectly.

A discrepancy is any way in which your documents fail to comply. It
is the single mechanism by which a credit stops being a guarantee.

## The rules the bank is applying

Most credits are issued subject to UCP 600, the International Chamber of
Commerce's rules for documentary credits, published in 2007 and used worldwide.
Four of its provisions decide most outcomes.

**How closely wording must match.** The description of the goods on your
commercial invoice has to correspond with the description in the credit. That one
document is held to the credit's own words. In every other document the goods may
be described in general terms, provided nothing there conflicts with the credit.
Data across the set need not be identical, but it must not conflict.

**How long you have to present.** Where a credit calls for an original transport
document and says nothing about a presentation period, you have 21 calendar days
after the shipment date, and never later than the credit's expiry date. Exporters
lose credits to this rule without reading it, because the credit does not mention
it.

**What a refusal has to look like.** A refusing bank must send a single notice, no
later than the close of the fifth banking day following the day of presentation,
stating that it is refusing, listing every discrepancy it relies on, and saying
what it is doing with the documents. A bank that misses the deadline, or drips
discrepancies out over several messages, is precluded from claiming your documents
do not comply. Note the date on any refusal you receive.

**What the bank does not do.** It does not investigate. It reads what you sent
against what the credit asked for, and it has never seen your goods.

## The discrepancies that come up

Most refusals fall into six groups: presentation or shipment after a date the
credit set; an invoice description that departs from the credit's wording;
documents that contradict each other on quantity, weight, marks, ports or value;
transport document problems such as a missing on-board notation or the wrong
consignee; amounts or currency outside what the credit allows; and missing
documents, originals or signatures.
[The shorthand a bank writes on the note](https://www.lexiplatform.com/articles/documents/bank-returned-export-documents-discrepancy) maps each group to the phrase you will see.

## Which ones you can still fix

**Correctable, being a document problem with time remaining.** Wording,
arithmetic, a missing signature, a missing copy, an inconsistency between two
documents. You correct the document and present again. A corrected presentation is
a fresh one, and if the presentation period and the credit validity hold, the bank
examines it as normal.

**Not correctable, being a timing or shipment problem.** Late shipment, expired
credit, presentation period exhausted. No document fixes a date that has passed.

## What a waiver really is

For the second group the only route to payment is a waiver. The issuing bank asks
your buyer whether they will accept the documents despite the discrepancy, which
transfers the decision from the bank to the buyer.

That is fine when the buyer wants the goods. They waive it, sometimes without much
thought, and you are paid a few days late. It is not fine when circumstances have
changed. If the market price has fallen, or the buyer's own customer has
cancelled, or the relationship has cooled, the discrepancy is a lawful reason to
refuse or to reopen the price. If they refuse, the bank holds the documents at your
disposal and you have a container at a foreign port with no payment obligation
behind it.

The commercial risk in a letter of credit is not that the bank refuses. It is that
a small paperwork error hands your buyer an option they did not pay for.

## Waiver is not the only route

Where a waiver stalls or the buyer is lukewarm, three other routes exist, and a
good bank will walk you through them rather than leaving you with a single yes or
no.

**Amend the credit itself**, if there is still time. If the true problem is that
the credit's terms no longer match the shipment, your buyer can instruct their
bank to issue a formal amendment, bringing the credit to what actually happened
rather than asking them to overlook the gap. Every party to the credit has to
agree, which is why this only works with days to spare, not hours.

**Negotiate on a collection basis.** Where the buyer will not waive but still
wants the goods, the issuing bank can forward your discrepant documents for
handling as a documentary collection instead of under the credit, releasing them
against payment or acceptance the way a DP or DA transaction would. You lose the
bank's payment undertaking, but you keep a route to payment that does not depend
on a formal waiver being signed.

**Ask for a telex release or a trust arrangement** where the buyer needs the
goods urgently and is willing to commit before the paperwork is settled — an
issuing bank can release the shipping documents against the buyer's undertaking
to pay once the discrepancy is resolved, though this shifts trust back onto the
buyer and is a bank-by-bank practice rather than a right under the credit.

None of these three is available if the buyer has genuinely decided not to pay.
They exist for the far more common case where the buyer wants the deal but the
waiver process is slow, and going straight to your buyer with the concrete
alternative usually moves faster than waiting on the banks to propose one.

## Reading the credit before you accept it

The cheapest place to deal with all of this is when the credit arrives, before you
start production. Read it as a list of things you will have to prove, and test
each one against your own operation.

Confirm you can ship by the latest shipment date and present within the window
that follows it. Confirm the named body will issue the certificate the credit
calls for, and that you can obtain the number of originals it stipulates. Put the
credit's goods description next to the invoice you intend to raise and check it
word for word. Confirm the delivery term and the value are the ones you quoted,
because
[the whole set has to agree](https://www.lexiplatform.com/articles/documents/fields-that-must-match-across-export-documents).

Have anything you cannot meet amended then, by asking the buyer to instruct their
bank. An amendment before shipment is an administrative request. The same issue
after shipment is a favour you are asking from someone who no longer needs to
grant it.

## Sources

- [International Chamber of Commerce — Uniform Customs and Practice for Documentary Credits (UCP 600)](https://iccwbo.org/news-publications/news/iccs-new-rules-on-documentary-credits-now-available/) — checked 2026-07-27
- [ICC Academy — Uniform Rules for Documentary Credits (UCP 600)](https://academy.iccwbo.org/trade-finance/e-books/ucp-600/) — checked 2026-07-27
- [Reserve Bank of India — Master Direction on Export of Goods and Services](https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=10395) — checked 2026-07-27
- [Trade Finance Global — handling discrepant documents under a documentary credit](https://www.tradefinanceglobal.com/letters-of-credit/handling-document-discrepancies/) — checked 2026-07-27