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The role of the Confirming Bank under the UCP 600

Mon, 01/05/2009 - 19:27 — admin

Joint and Several Liability
The confirmation of a letter of credit creates a "definite undertaking of the confirming bank in addition to that of the issuing bank" (see Article 2 definition of "Confirmation"). The definition creates the illusion that the obligations of issuing and confirming bank  are identical. The obligations of issuing and confirming bank differ however since these obligations are based on different legal systems, since each bank is subject to the law of its place of business. 

 

This follows from international private law which is the national body of law that determines which law the courts will apply when different legal systems are touched by a transaction. International private law is national law and each government is free to come up with its own rules. However, most countries agree that the obligation of a domestic bank are to be judged according to local law.   

The obligation of the issuing bank as provided for in Article 8 a UCP 600 is identical with Article 9 b (i) - (iv) UCP 500. Article 8 a (similar to the definition of the obligations of the issuing bank under the UCP 600) takes in to consideration the new nomenclature according to which the obligation to satisfy a letter of credit consists of its "honour". 

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Wed, 01/07/2009 - 14:11 — Peter M

Issuing and Confirming bank obligations

Under UCP600, the obligations of these two entities also differs as follows:

1. The issuing bank undertakes to honour a complying presentation

2. A confirming bank undertakes to honour a complying presentation and provide settlement in the event that the issuing bank does not.

By the way Admin - I have a word document that is used as a teaching guide for trade finance at this bank that I wrote a couple of years ago that I would be happy to let you have to review and make available to members of this site if you feel it adds value.  Just let me know how to get this to you.

regards

Peter M

Fri, 05/28/2010 - 20:00 — rnbose

Issuing and confirming banks' obligations

Dear Peter,

You wrote:

2. A confirming bank undertakes to honour a complying presentation and provide settlement in the event that the issuing bank does not.

There is one more difference with the issuing bank. It is regarding availability. A credit is always available with the issuing bank. However, for a credit to be available with the confirming bank, it would have to be a nominated bank.

Have a great day!

Thu, 05/13/2010 - 06:34 — administrator

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Thu, 03/04/2010 - 21:47 — mic60

Teaching Docs

Hi Peter,

Please send me the docs at mic60@rediffmail.com .

Many Thanks in advance

Mic

Wed, 03/03/2010 - 03:45 — gdshan

Teaching Doc

Hi Peter

 

I would be grateful to you if you can mail me the doc to my mail id: shankargd@gmail.com

 

Regards

 

Shankar

Tue, 05/05/2009 - 13:45 — surge1977

Copy of teaching document

Hi Peter,

I know you wrote the related post a few months ago but i am new to trade finance and working in a bank where the training has not been great. I would be ver grateful to recieve a copy of this training document if at all possible. My email address is chrissurgett@hotmail.co.uk.

Very best regards

Wed, 05/06/2009 - 05:39 — Peter M

Teaching guise

Hello Surge - you can access the teaching guide through the "articles" tab at the top of this page and print direct from the site.

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Tue, 04/14/2009 - 01:05 — ameetsimha

UCP 600 article 8

Hi Peter,

I have an issue with LC negotiation.

 Bank A in Jordan had issued an LC to Bank B in UAE to be negotiated at Bank B only.

We (Bank C) got the LC assigned by Bank B and discounted the bills under the LC. However the confirmation from Bank B read as - "we will honour the bills subject to reciept of payment from Bank A"

Are we safe in this transaction. Is the confirmation irrevocable?

 

Also do you have a simplified/explained  version of UCP 600.

Tue, 04/14/2009 - 05:58 — Peter M

L/C negotiation vs Confirmation

Hello Ameeta - you have not mentioned that bank B in the UAE have actually confirmed the L/C, only that it is restricted to them for negotiation.  If they are saying that they will pay only after receipt of funds from the issuing bank, then it sounds very much as if they have NOT confirmed the L/C, nor are they prepared to take up the negotiation and pay prior to reimbursement.

As far as your risk is concerned, you are taking the risk of the issuing bank in Jordan not the bank in the UAE.  I am assuming that by "assignment" you are referring to an assignment of proceeds from the beneficiary with instructions to Bank B that funds are to be remitted to yourselves (bank C).

Regarding UCP600, the international team that put these rules together try very hard to make them as simple as possible - I don't know if there is an authoratative "simpler" version that can be relied upon.  The ICC have published a number of explanatory books on this subject.

Thu, 02/05/2009 - 03:59 — olusanya

Dear Peter,

i will appreciate if u can send me a copy of this document at olusanyaoni@yahoo.com.

Thanks a lot. 

Olusanya Oni

Lagos, Nigeria.

Thu, 01/29/2009 - 07:49 — buran

issuing and confirming bank obligations

Kindly give me a copy at my e-mail address in sumarun@gmail.com. I would be very grateful.

regards

buran

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Sun, 01/11/2009 - 06:00 — Ahmedmasry

Dear Peter, I woud

Dear Peter,

I woud appreciate if you can send me copy to my e-mail address (ahmedmasry@gmail.com)

Thanks so much in advance,

Ahmed

Fri, 01/09/2009 - 03:56 — kamranameer

Peter's Guide

I will be extremely thankful if u plz email a copy of ur guide at kamran.ameer@askaribank.com.pk 

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Mob: +923008668984

Fri, 01/09/2009 - 03:05 — LC Specialist

PETER M TEACHING GUIDE COMING SOON

Peter, is it possible for you to send it to me as well ....

Email : lcspecialist@yahoo.com

Looking ahead to hear from you ... and waiting for your teaching guide ....

Thanks!!!!!

Thu, 01/08/2009 - 11:57 — admin

PETER M TEACHING GUIDE COMING SOON

Peter,  I am very excited about your offer and will announce it on the front page.  Admin

Fri, 01/09/2009 - 03:02 — smmujeeb

PETER M TEACHING GUIDE COMING SOON

Peter. I would appreciate you if you could send it to me on mujeeb.mohammedshaik@gmail.com

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Wed, 02/17/2010 - 04:50 — questin

copy

pls send me a copy to johnsanthakumar@gmail.com

Mon, 03/29/2010 - 13:34 — KIAS

copy

Please any one can send me a copy to maghrebtrade@yahoo.fr