Apologies for needing further clarification on this but if anyone could definitively fill in the blanks here iw ould be very grateful.
1. Usance Confirmed l/c available with confirming bank by negotiation. Drafts should be drawn on.......?
2. Usance Confirmed l/c available with confirming bank by acceptance. Drafts should be drawn on.......?
This posting is just written to uplift an interesting theme above the fraudulent entries.
Many thanks fr your understanding
one hill at a time, please
I am supporting Mr. Peter.
In both cases they should be drawn on the confirming bank because they are confirming.
Dear Peter M,
1) Under an LC available by negotiation with the confirming bank, the draft should be drawn on the issuing bank or another bank other than the confirming bank. This requirement is complying with the definition of negotiation in UCP 600 Article 2, which says " Negotiation means the purchase by the nominated bank of drafts (DRAWN ON A BANK OTHER THAN THE NOMINATED BANK) ... ".
However, in practice the fact that the draft is requested to be drawn on the confirming bank under LC available by negotiation is quite common.
If the draft is on the confirming bank, the confirming bank must PAY (not negotiate) though the L/C is available by negotiation.
2) It is agreed that the draft should be drawn on the confirming bank under the L/C available by acceptance.
Nguyen Huu Duc
Nguyen Huu Duc comments are correct. Old habits never change and training is sparce. When drafts are drawn on you, the obligation is that the drawn on party must "pay" them, you cannot "buy" an obligation you already have.
But under export L/Cs also look at the relevant fiields of the credit. It will stipulate on whom the drafts are to be drawn.
-Each long journey starts with a small step-