Dear Experts,
I would be grateful if you could share your opinion on the following question:
Article 16 c(iii) b says: - When a nominated bank acting on its nomination, a confirming bank, if any, or the issuing bank decides to refuse to honour or negotiate, it must give a single notice to that effect to the presenter . . The notice must state:
iii) . . . b) that the issuing bank is holding the documents until it receives a waiver from the applicant and agrees to accept it, or receives further instructions from the presenter prior to agreeing to accept a waiver;
and article 16(e) says
A nominated bank acting on its nomination, a confirming bank, if any, or the issuing bank may, after providing notice required by sub-article 16 (c) (iii) (a) or (b), return the documents to the presenter at any time.
The question is as follows: If its notice of refusal issuing bank states the following wording "We are holding the docs until we receive a waiver from the applicant and agree to accept it" does it mean that after receiving of waiver the issuing bank cannot return the documents as per article 16e? Don these 2 articles contradict each other?
Alternatively can the bank state only "We are holding the docs until we receive a waiver from the applicant" without stipulating "agree to accept it", and in this case is the bank acting in accordance with UCP 600?
Many thanks in advance
Hi Friend,
UCP are worded considering the best practices in the world of banks. A bank receiving discrepant documents is obliged to refuse them, but in this way 99% of l/c would remain unpaid. Banks have no idea if a discrepancy is important or not, so it is practice to inform the applicant for a waiver, but the final decision is by the bank. An example that may occur, issuing bank receives documents amounting more than the l/c value, applicant is ready to take up the overdrawn set of documents, but the issuing bank needs more guarantee or funds!.......
Other comments appreciated
Ciao
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