I wonder why it would be outside of the UCP. See 12a and15c
Daniel
Nomination and Authorized confirmation
Nomination and Authorized confirmation
Given the sub-Article 12(a) apparently confers upon a non-confirming nominated bank a mandate (authority) to agree expressly (in advance of presentation of documents) to honour (logically as defined in article 2) or negotiate (logically as defined in article 2), I do not either see why such an agreement would be ‘outside the UCP or why the agreement should clearly specify the conditions under which the commitment … will come into effect and the obligation(s) of the bank that is giving the commitment’. As stated, the terms honour and negotiate are defined in UCP600 and if one is simply committing oneself to carry out one or other act, why does one have to say more than ‘We hereby undertake to honour / negotiate documents presented to us that comply the Credit.’?
I say sub-Article 12(a) apparently confers upon a non-confirming nominated bank a mandate to expressly agree to honour or negotiate as otherwise why mention it? It is perfectly obvious that if sub-Article 12(a) did not state ‘except where expressly agreed to’ etc a nominated bank could still do this, i.e. enter into an agreement that overrode the terms of the UCP. Therefore, the only logical reason for mentioning it is to bring such an activity within the ambit of the UCP.
I of course recognise that there are special considerations where, notwithstanding this, the law applicable to the Credit discriminates against a non-confirming nominated banks that enters into a sub-Article 12(a) agreement.
I say sub-Article 12(a) apparently confers upon a non-confirming nominated bank a mandate to expressly agree to honour or negotiate as otherwise why mention it? It is perfectly obvious that if sub-Article 12(a) did not state ‘except where expressly agreed to’ etc a nominated bank could still do this, i.e. enter into an agreement that overrode the terms of the UCP. Therefore, the only logical reason for mentioning it is to bring such an activity within the ambit of the UCP.
I of course recognise that there are special considerations where, notwithstanding this, the law applicable to the Credit discriminates against a non-confirming nominated banks that enters into a sub-Article 12(a) agreement.
Nomination and Authorized confirmation
Jeremy,
Again, English is not my "mother tongue" but maybe the word "agreed" in 12a is misleading. You can put a lot of things in an agreement. Maybe the right wording could have been:"except when the nominated bank accepts to act upon its nomination..."
Daniel
Daniel
Daniel
Again, English is not my "mother tongue" but maybe the word "agreed" in 12a is misleading. You can put a lot of things in an agreement. Maybe the right wording could have been:"except when the nominated bank accepts to act upon its nomination..."
Daniel
Daniel
Daniel
Nomination and Authorized confirmation
And you can cross out 2 "Daniels"
Nomination and Authorized confirmation
Daniel,
As I’ve already indicated, I do not see any point at all in including any ‘wording’, subject to one exception (see the next sentence), as its absence would obviously not affect one iota a non-confirming nominated bank’s ability to give an agreement, in advance of presentation of documents, to honour or negotiate a complying presentation. Therefore, the only logical reason for having any ‘wording’ is to bring the activity within the UCP.
Also, the current wording can only logically relate to a situation that prevails before presentation of documents. In other words, it has absolutely nothing to do with a non-confirming nominated bank’s decision as to whether or not to honour/negotiate a complying presentation at the time of presentation of documents.
Regards, Jeremy
As I’ve already indicated, I do not see any point at all in including any ‘wording’, subject to one exception (see the next sentence), as its absence would obviously not affect one iota a non-confirming nominated bank’s ability to give an agreement, in advance of presentation of documents, to honour or negotiate a complying presentation. Therefore, the only logical reason for having any ‘wording’ is to bring the activity within the UCP.
Also, the current wording can only logically relate to a situation that prevails before presentation of documents. In other words, it has absolutely nothing to do with a non-confirming nominated bank’s decision as to whether or not to honour/negotiate a complying presentation at the time of presentation of documents.
Regards, Jeremy
Nomination and Authorized confirmation
Jeremy,
Actually, the resume of the whole matter is "noir sur blanc" in the Commentary when it is written page 53 that when the nominated bank expressly communicates its agreement to honour or negotiate it indicates that it is willing to act under its nomination.
Meilleures salutations
Daniel
Actually, the resume of the whole matter is "noir sur blanc" in the Commentary when it is written page 53 that when the nominated bank expressly communicates its agreement to honour or negotiate it indicates that it is willing to act under its nomination.
Meilleures salutations
Daniel
Nomination and Authorized confirmation
Its a nice question whether UCP600 Art. 12(a) affirmatively authorizes a nominated negotiating bank to "confirm" by agreeing with the beneficiary in advance of presentation to negotiate complying documents. I wouldn't count on it under an LC that said "without adding your confirmation". It could be that this subarticle is is intended to protect beneficiary reliance on a nominated bank's agreement, whether or not authorized by the issuer.
Whether a nominated bank acts without recourse depends on what the LC and LC rules say and what the law applicable to the draft or demand provides. Recourse under applicable law is likely to be a right of recovery available only to the purchaser of a draft drawn on another. On that basis only banks that negotiate drafts drawn on another have recourse (unless the face of the draft says "without recourse" or the UCP expressly disclaims or overrides recourse rights, as is the case for issuing and confirming banks). So, there is no recourse for what we used to call paying and accepting banks. (Recourse is not the only basis, however, on which a bank may recover from a beneficiary.)
Finally, the extra risks to which I referred previously are not UCP600 risks, but are based on the fact that many courts recognize a fraud exception that is not recognized by UCP and will apply that exception to defeat not only beneficiary rights but also nominated bank rights in some circumstances. Of interest to some courts is whether the nominated bank was obligated to the beneficiary to do what it did and whether it was authorized by the LC to obligate itself.
Regards, Jim Barnes
Whether a nominated bank acts without recourse depends on what the LC and LC rules say and what the law applicable to the draft or demand provides. Recourse under applicable law is likely to be a right of recovery available only to the purchaser of a draft drawn on another. On that basis only banks that negotiate drafts drawn on another have recourse (unless the face of the draft says "without recourse" or the UCP expressly disclaims or overrides recourse rights, as is the case for issuing and confirming banks). So, there is no recourse for what we used to call paying and accepting banks. (Recourse is not the only basis, however, on which a bank may recover from a beneficiary.)
Finally, the extra risks to which I referred previously are not UCP600 risks, but are based on the fact that many courts recognize a fraud exception that is not recognized by UCP and will apply that exception to defeat not only beneficiary rights but also nominated bank rights in some circumstances. Of interest to some courts is whether the nominated bank was obligated to the beneficiary to do what it did and whether it was authorized by the LC to obligate itself.
Regards, Jim Barnes
Nomination and Authorized confirmation
Daniel,
Surely p.53 of the Commentary merely confirms the plain meaning of sub-Article 12(a), i.e. that a non-confirming nominated bank may agree, in advance of presentation of documents, that it will honour / negotiate a complying presentation? (Apologies if I have missed the point you are making.)
Jim,
Good point about ‘without adding your confirmation’.
Regards, Jeremy
[edited 7/28/2008 9:12:03 AM]
Surely p.53 of the Commentary merely confirms the plain meaning of sub-Article 12(a), i.e. that a non-confirming nominated bank may agree, in advance of presentation of documents, that it will honour / negotiate a complying presentation? (Apologies if I have missed the point you are making.)
Jim,
Good point about ‘without adding your confirmation’.
Regards, Jeremy
[edited 7/28/2008 9:12:03 AM]
Nomination and Authorized confirmation
By this new sub-article 12a, the IB is giving a NC NB explicitly the right to enter into an agreement with the beneficiary to honor or negotiate a complying presentation just like when it gives a NB an authorization to add its confirmation if requested by the beneficiary. This agreement is not silent since clearly authorized by the UCP, and imposes an irrevocable and unconditional obligation on the NB.
Regards - Antoine
Regards - Antoine
Nomination and Authorized confirmation
Antoine,
It's not 'new'; sub-Art 10(c) UCP500 says essentially the same thing.
It's not 'new'; sub-Art 10(c) UCP500 says essentially the same thing.