Negotiation

[Shahed]

As per Article 2 of the UCP600, Negotiation means the purchase by the nominated bank of drafts (drawn on a bank other than the nominated bank)

However, in practice when issuing bank requests the advising bank, which is also a nominated bank, to confirm a L/C, the drafts are normally drawn on the nominated confirming bank.

Is there any issue if the nominated confirming bank negotiate the documents where the drafts is drawn on them (not on a bank other than the nominated bank).

By doing so is there any contradiction with Article 2 of the UCP600?

Regards,

Shahed
Toronto

[asamaha]

Drafts under LCs are to be drawn on the bank authorized to pay i.e. :
- Nominated bk for LCs available by payment and acceptance, knowing that Nominated bank could also be the issuing bank
- Issuing bank for LCs available by negotiation with another bank designated for giving or agreeing to give an advance ; the role of the issuing bank (drawee) is to pay/reimburse the negotiating bank on due date
Regards
Antoine