Beneficiary

[BAKHTEYERH]

Dear,

Does the definition of Beneficary in article 2 of UCP 600 include second beneficiary?
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Bakhteyer
[edited 8/13/2010 1:57:09 PM]

[GlennRansier_]

UCP Article 38 d. introduces the concept of a second beneficiary. Since the second beneficiary is a "beneficiary", they have the same rights and obligations. The second beneficiary is the "beneficiary" of the transferred LC.

[KimChristensen]

See also the article in the latest DCI (vol 16/No 3) by Nesarul Hoque: "Are there ambiguities in defining "Beneficiary" in UCP 600?" ... as well the comment by Donald Smith: "I see no ambiguity".

Best regards
Kim

[BAKHTEYERH]

Dear,
Thanks for reference. Interesting topic indeed.
Nesarul wants to describe: there is an ambiguity between definition of the beneficiary and the same in other places and testify all relevant article related with it very meticulously.
Whereas Don wants to describe what the beneficiary should mean.
What is your opinion sir.
Regards
Bakhteyer

[KimChristensen]

Dear Bakhteyer,

What is my opinion

Well hmm … my opinion is that it depends on how you look at it. Roughly speaking Don (and Glenn above) represents the view of the LC practitioner; i.e. what is intended in the UCP 600 – and how this is generally understood by the LC practitioner. Nesarul – I guess you could say represent the legal view; i.e. he makes (as far as I can see) a perfect analysis of how this is in fact worded in the UCP 600.

So I guess the good question is: in the worst case scenario when this is tested in court, what will a judge focus on? On (1) what is said to be practice or (2) what is actually written in the rules …

I would hope for (1) but I am inclined to think that it will be (2) …

Best regards
Kim

[GlennRansier_]

Well from the US legal side (I am not a lawyer), US law provides this simple definition (From NY UCC 5): (3) "Beneficiary" means a person who under the terms of a letter of credit is entitled to have its complying presentation honored. The term includes a person to whom drawing rights have been transferred under a transferable letter of credit.

[BAKHTEYERH]

Dear,
Beneficiary define under this Law from Drawing perspective i.e. who is entitled to have its complying presentation honored. [which is also the conclusion of Nesarul's article]
.
From my point of view drawing is the distinctive feature of the Beneficiary which make its aparts from other.
.
Moreover we can not bind the beneficiary until presentation of document.
.
Hence, defining beneficiary from issuance perspective creates some ambiguity.
Am I wrong sir.
Regards
Bakhteyer

[GlennRansier_]

Apologies but not completely sure of the question. The UCP definition is a little confusing since it defines the beneficiary as: "the party in whose favor a credit is issued". I had mentioned that a second beneficiary is the "beneficiay" of the "transfer" versus the "issued" LC. However, each article must be read in conjunction with each other. Article 7c forced a different approach with respect to only a "beneficiary" being the party due funds. However 12 a. does provide that a nominated or confirming bank is obligated to the "beneficiary". Article 38 b. acknowledges that there may be more than one "beneficiary".

[BAKHTEYERH]

Dear Kim,
Practitioner assume that :
1. DPU Bank discount the bill under UCP 500[despite absence of explicit reference] and results Banco Santander Case followed by remarkable change took place in sub article 7(c),8(c) and 12 (b).
2. The same assumption was also result "Original Document controversy" during UCP 500 followed by a decision paper on original document and then revised article 17.
Regards
Bakhteyer