Help the ICC Australia Banking Committee’s policy work

Following its meeting on 17 May, the ICC Australia Banking Committee is reaching out to ICC Australia members for commercial insights in relation to their trade experience.

The ICC Australia Banking Committee contributes to the work of the ICC Global Banking Commission in respect of voting upon and providing comments relating to various ICC ‘opinions’ which deal with practices within the banking sector and typically around the acceptability of trade documents presented under documentary letters of credit, a commonly used method for the settling of trade transactions.

An issue currently before the ICC Banking Commission relates to the treatment of commercial invoices which indicate therein; “spare parts” provided “free of charge” – please refer to the below example:

Goods description – “KITCHEN EQUIPMENT AND SPARE PARTS PER PURCHASE ORDER NO. XXX DATED 18 MAY 2023”

The Commercial Invoice indicated as follows:

It is currently being considered by ICC Banking Committees globally, whether inclusion in the invoice of “spare parts” as being “free of charge” provides for a breach of the terms of the letter of credit and international standard banking practice.

Notwithstanding the above example relates to a letter of credit transaction, the ICC Australia Banking Committee is seeking feedback from the broader ICC Australia membership to understand whether the provision of spare parts free of charge is a common commercial practice amongst buyers and sellers.

To this extent, we members to consider the following questions based on their own contractual arrangements and experience with counterparties, irrespective as to whether a letter of credit is involved and welcome any views that members may have:

1. Is it common practice for your sales/purchase agreements/invoices to include provision of goods and additionally “spare parts free of charge”?
2. If you receive an invoice from your supplier/forward an invoice to your buyer and it additionally includes “spare parts free of charge”, which was expected, does this create any issue for your business?
3. If you receive an invoice from your supplier/forward an invoice to your buyer and it additionally includes “spare parts free of charge”, which was not expected, does this create any issue for your business?

If you wish to submit responses/comments, please contact the ACCI Team by 1 June 2023.