Waiver of discrepancy

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MMV
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Joined: 10/28/2015
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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

pan
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Joined: 09/13/2007
Practice...

 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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