Dear Freinds,
please help to answer the following questions:
1. Could Beneficiary present documents to the bank other than stated in field 41A if concrete bank stated there.
Could issuing bank refuse to honour/negotiate documents if docs presented directly to the issuing bank omitting advising bank? omitting nominating bank ?
2. Could Beneficiary present documents directly to the issuing bank omitting confirming bank (LC is already confirmed). Could issuing bank refuse to honour/negotiate documents in this case ?
Thank you in advance for your precious assistance!
Presentation /Negotiation
1. a) No. But can present direct to the issuing bank
b) No
2. a) Yes
b) No.
Willing to expand if required.
thank you very much for your
thank you very much for your reply.
Yes, please, could you expand your answers.
We've also faced the situation when Issuing bank refused to take the documents presented directly and not through the advising bank. What rules, regulation or other documents we can refer to in this kind of situation?
Obligation to use the services of a nominated bank ?
the inserton of a named bank in field 41 would mean that the LC is restricted to such bank for presentation (and excepting the issuing bank) with no other bank. Sub-article 6 (d) (iii) of UCP600 states : " The place of the bank with which the credit is available is the place for presentation. The place for presentation under a credit available with any bank is that of any bank. A place for presentation other than that of the issuing bank is in addition to the place of the issuing bank". Sub-article 6 (a) of UCP600 states : " A credit must state the bank with which it is available or whether it is available with any bank. A credit available with a nominated bank is also available with the issuing bank".
So, you can see from the above articles, both reinforce the principle that a beneficiary always has the right to present the documents direct to the issuing bank.
The issuing bank is engaged with the beneficiary as from the time that it issues the LC. The fact that the LC is advised via an advising bank and may be designated as being available with a nominated bank is more to do with custom and convenience rather than a mandatory requirement. The LC contract is between the beneficiary and the issuing bank, and if an intermediary is involved, such intermediary (whether confirming or non-confirming) simply acts as an advising/paying agent for the issuing bank. There is no compulsion on the part of the beneficiary to use such agents, even if such agent has confirmed the LC. The confirmation undertaking is a separate contract between the beneficiary and the confirming bank, and it is up to the beneficiary whether he chooses to avail himself of the benefits of such confirmation, even if he has paid the confirmation fees.
The only reservation that an issuing may have if it receives a direct presentation is the issue of whether the advising bank charges (if such are on beneficiary's acccount) have been settled, and they may well make enquiries of the advising bank in this case. If it has not been paid, it will simply deduct the charges from the proceeds paid to the beneficiary and settle with the advising bank.
The issuing bank should also be reminded of its distinct obligations as under Art. 7 (a): "Provided that the stipulated documents are presented to the nominated bank or to the issuing bank and that they constitute a complying presentation, the issuing bank must honour if the credit is available by: (v) negotiation with a nominated bank and that nominated bank does not negotiate..." and also Art. 7 (b): An issuing bank is irrevocably bound to honour as of the time it issues the credit"
Hope this helps
services of a nominated bank
Dear Abrar, thank you very much for such a comprehensive explanation.
services of nominated bank
excellent explanation Abrar..