The term Negotiation
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- Posts: 3
- Joined: Fri Apr 05, 2019 5:27 pm
The term Negotiation
In case we send one document drawn under LC to the applicant's bank without purchasing it. THe schedule used was of Negotiation stating terms as UCP 500. The confusion is that will this be treated as NEGOTIATION as we are not "giving value to the documents." It appears to be a collection transaction !
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- Posts: 256
- Joined: Fri Apr 05, 2019 5:15 pm
The term Negotiation
It is neither negotiation nor collection subject to URC 522. The documents are presented under the protection of UCP 500 and therefore not a collection; at the same time, since no value has been given by the beneficiary's bank to the documents presented to its counters,it does not fall under the definition of negotiation
The term Negotiation
Since the presentation is against UCP 500, it is an LC presentation, but there is no negotiation, payment or acceptance done by the presenting bank. This is a presentation for payment under UCP 500. It is of course not a collection under URC 522 for obvious reasons.
Confusions introduced by using a wrong form or by putting inappropriate wordings in the covering letter/form may work against the interest of the presenting bank. However, to avoid the serious sanction otherwise imposed by UCP 500 sub Article 14 (e), the issuing bank should examine the documents and give notice of refusal according to Article 13 & 14 in order to play safe.
We are from www.tolee.com
[edited 3/7/02 10:40:27 PM]
Confusions introduced by using a wrong form or by putting inappropriate wordings in the covering letter/form may work against the interest of the presenting bank. However, to avoid the serious sanction otherwise imposed by UCP 500 sub Article 14 (e), the issuing bank should examine the documents and give notice of refusal according to Article 13 & 14 in order to play safe.
We are from www.tolee.com
[edited 3/7/02 10:40:27 PM]