Presigned docs

[mandyvong]

I would like to hear your comments on the issue of presigned drafts, Documentary Credit Application Forms, etc.

We have certain customers who is the sole authorised signatory in our records. Travelling abroad frequently & reluctant to appoint another person as an authorised signatory, they would presign the said forms, his staff will fill it in when the need arises & submit to us thereafter. We came to know of this practice when certain alterations require his signature & it was then made known to us that he is not around. What are the consequences for the bank when one of the customer's staff fraudulently fills in the presigned DC application form in his absence & the bank having verified his signature proceeds to issue the LC?

Could the customer raise defences against the bank claiming at that precise moment he was abroad as evidence by his passport?

[RahimaRazzak]

This is a similar situation to an "inchoate" instrument i.e an instrument which is signed by the drawer but is left blank/incomplete in respect of other details. the negotiable instrument act, recognises that completion of the blank/incomplete details in such a situation would be similar to as if the drawer had himself filled in the details.the absence from a particular place cannot preclude the trader from denying that he has not signed the document. In such a situation the wise thing for your bank is to ensure that any alterations in the applications & documents are duly authenticated by the authorised signatory himself.

[T.O.Lee]

DC PRO DOES NOT COVER LEGAL ISSUES

This is a legal issue to be governed by the local law. The UCP 500 does not cover legal issues.

It is not appropriate to bring up queries on law issues in the DC PRO which is meant for trade financing under ICC Rules such as the UCP 500, URR 525, URC 522, URDG, Incoterms 2000 and the like.

We are from http://www.tolee.com

[edited 7/22/01 5:44:57 PM]