A documentary letter of credit (LC) pays out only when the documents presented to the bank match the LC's terms exactly — a discrepancy, even a minor one like a date formatted differently than specified or a weight figure that does not tie out between the invoice and the bill of lading, gives the bank grounds to refuse payment or seek the buyer's waiver before releasing funds.
The documents most frequently at fault are the bill of lading (wrong shipped-on-board date, missing notify party details, or a description of goods that does not match the LC's wording precisely), the commercial invoice (value or Incoterm mismatch against the LC), and the insurance certificate where required (coverage percentage below what the LC specifies).
Because these documents are produced by different parties — the carrier issues the bill of lading, the shipper prepares the invoice, often an insurer issues the certificate — a discrepancy frequently originates from one party's documentation that nobody cross-checked against the LC's exact wording before presentation to the bank.
The practical fix is checking every presentation document against the LC's literal text before submission, not after a discrepancy notice arrives — once the bank flags a discrepancy, resolving it typically means obtaining the buyer's written waiver, which introduces delay and, in a strained commercial relationship, is not guaranteed.