Letter of Credit Forum

Hello,

article 2 defines negotiation as "purchase .... by advancing" - article 7 (c) and 8 (c) refer to the authorization to offer prepayment or purchase under a documentary credit available either by deferred payment or acceptance.

Thus the reimbursement claim vis-á-vis the issuing bank 7 (c) or confirming bank 8 (c) may either be based on a nominated bank having honoured (including the use of the authorisation given by 12 (b)) or on a nominated bank having negotiated.

Thus the reference to "prepaid or purchased" in 7 and 8 is not linked to documentary credits available by negotiation.

Maybe it helps to separate these issues in accordance with the availability of the documentary credit in question.

As a draft may be asked for in a documentary credit being either available by negotiation or acceptance it seems not to fit in the distinction of Honour or Negotiate. By avoiding the use of "discount" the UCP keep options for nominated banks open as to how purchase or prepayment occurs.

Kind regards

Currer

For the time being, my answer is forty-two!

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Best regards

Frammi