Transferable documents on Approval

MichaelFlanagan · Post by **MichaelFlanagan** » Mon Dec 16, 2002 12:00 am

We are acting as an Advising/Transferring Bank.

Discrepant documents have been presented by the Second Beneficiary’s Bankers. Our customer (First Beneficiary) wishes to substitute documents and forward to the Issuing Bank on an Approval basis.

Discrepancy notice has been sent to the Second Beneficiary’s Bank requesting them to authorise us to forward their documents on approval to the Issuing Bank for payment. This process is causing grief for our customers, as the whole transaction has been put on hold pending a reply from the Second Beneficiary’s Bank.

Questions;

Firstly, do we need authorisation from the Second Beneficiary’s Bank to forward their documents on approval (assuming that the documents remain at our counters at their disposal) and if so, is there any time limit for a response.

Secondly, are we within our rights, to notify the Second Beneficiary’s Bank, that if a response is not received within 2 business days, we will forward the docs on an approval basis.

Your opinions appreciated

larryBacon · Post by **larryBacon** » Tue Dec 17, 2002 12:00 am

Article 13 d ii states that in the event of refusal of documents, you must hold the documents at the disposal of the presenter or return them to him. Having sought a waiver, there are no other options.

If you forward the documents to any other party, you have failed to comply with this article and under Article 13 e, you have, by default, accepted the documents as being in order.

Laurence
[edited 12/17/02 9:14:53 AM]

NigelHolt · Post by **NigelHolt** » Tue Dec 17, 2002 12:00 am

No, no & no (without liability/responsibility).
[edited 12/17/02 9:17:41 AM]

lroland · Post by **lroland** » Tue Dec 17, 2002 12:00 am

My answer providing your notice of discrepancies indicated that documents are held at remitting bank disposal.
The second beneficiary's bank authorization is necessary. There is not time limit for a response but it's in their interest and even more for those of their customer to answer soon.
As far as the 2 business days are concerned regarding a response to be received I would say that this practice is not correct and furthermore has legally absolutely no impact. Should you act as described because having not received any answer would make you being responsible for any damages, costs, a.s.o., a.s.o. arising out from having taken this option without having in hand any authorisation from the remitting bank.

Roland

NigelHolt · Post by **NigelHolt** » Wed Jan 08, 2003 12:00 am

I've just noticed that Opinion R484 seems to cover this.