Notice of refusal
Notice of refusal
We have been presented some docs under a deferred credit which we have been acting as confirming bank.
We checked and found the docs compliant with the terms and conditions of the l/c and sent them to the issuing bank (IB).
Although IB has sent us a swft msg advising the maturity date for the drawing (without any further qualification) , in the same day they have sent another swft msg which is a notice of rejection. This is in line with Arts 13,14 of UCP.
The explanation of IB for the case is “First msg was sent in error”
My question,despite having provided a notification of the due date ,whether the IB could send a notice of refusal ?
Regards,
Yahya
We checked and found the docs compliant with the terms and conditions of the l/c and sent them to the issuing bank (IB).
Although IB has sent us a swft msg advising the maturity date for the drawing (without any further qualification) , in the same day they have sent another swft msg which is a notice of rejection. This is in line with Arts 13,14 of UCP.
The explanation of IB for the case is “First msg was sent in error”
My question,despite having provided a notification of the due date ,whether the IB could send a notice of refusal ?
Regards,
Yahya
Notice of refusal
if the IB's 1st mssg confirm the maturity dates without any other information,i think such mssg represents acceptance of docs and IB's undertaking to pay at maturity dates.a second mssg rejecting the docs is unacceptable
however simple rejection of docs is not enough.IB should have also stated that hold docs at your disposal waiting for further instructions (subart.14d(ii).if did not act so,you're entitled to claim payment under good value.
still i keep in mind my 1st opinion that once maturity dates confirmed,IB cannot send another mssg rejecting docs and claiming that the 1st mssg was sent by mistake.
however simple rejection of docs is not enough.IB should have also stated that hold docs at your disposal waiting for further instructions (subart.14d(ii).if did not act so,you're entitled to claim payment under good value.
still i keep in mind my 1st opinion that once maturity dates confirmed,IB cannot send another mssg rejecting docs and claiming that the 1st mssg was sent by mistake.
Notice of refusal
Just to make it clear ,the notice of refusal sent by the IB is ok.under the UCP arts 13,14 and it has been sent within the expiry of the credit.
Notice of refusal
Yahya,
I do not pretend I know the answer for certain and would not be surpised if there are no authorities on the question.
I imagine my approach would be to assert that the first message constituted the issuing bank informing the party from which it received the documents that it had taken them up per article 13b and therefore it could not be withdrawn. However, assuming I considered the discrepancies raised invalid, I expect I would also contest them but state that this was without prejudice to my opening position.
Jeremy
I do not pretend I know the answer for certain and would not be surpised if there are no authorities on the question.
I imagine my approach would be to assert that the first message constituted the issuing bank informing the party from which it received the documents that it had taken them up per article 13b and therefore it could not be withdrawn. However, assuming I considered the discrepancies raised invalid, I expect I would also contest them but state that this was without prejudice to my opening position.
Jeremy
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Notice of refusal
Dear Yahya,
A bit tricky.
I think that it would be fair to say, that the issuing bank could in fact have made a mistake; that the first message was sent erroneously – ups .. !
I would therefore assume that it would depend on whether or not the issuing bank can withdraw that message according to current swift rules. I have not had the time to check. Perhaps some swift expert could offer a view here?
Best regards
Kim
A bit tricky.
I think that it would be fair to say, that the issuing bank could in fact have made a mistake; that the first message was sent erroneously – ups .. !
I would therefore assume that it would depend on whether or not the issuing bank can withdraw that message according to current swift rules. I have not had the time to check. Perhaps some swift expert could offer a view here?
Best regards
Kim
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Notice of refusal
Sure is a tricky one. I would be interested to have the exact wording of the first message -- did it just say that maturity date was such and such, since maturity seems to be fixed starting from receipt of documents by IB ? I wonder how binding that would be in a court case.
Secondly, are the discrepancies valid -- what is the real reason for rejection (there usually are only two real reasons-- no money or the buyer doesn't want the goods for some reason be that because goods are substandard or wants to negotiate a new price).
Lastly, you can only stop a swift if it has not been delivered to the receiver. Otherwise too late.
Regards
Judith
Secondly, are the discrepancies valid -- what is the real reason for rejection (there usually are only two real reasons-- no money or the buyer doesn't want the goods for some reason be that because goods are substandard or wants to negotiate a new price).
Lastly, you can only stop a swift if it has not been delivered to the receiver. Otherwise too late.
Regards
Judith
Notice of refusal
The first msg sent by the IB was a standard mt732-advice of discharge just stating the due date and the exact amount after deducting their charges.
Your second assumption in respect of the real reason for rejection is right because the applicant has demanded a deduction for the value of the goods as a condition for the acceptance of the docs. (This info received from the benef)
The time period between two messages is about 5 hours,so that It doesn't seem to be "a mistake".
The point that made me confused in this case is there is no rule in the UCP requires the IB to send an advice regarding the maturity date except such cases as the presentation of non-conforming docs or where a credit states the due date would be established from the date of the presentation of the docs at the counter of the IB.
Regards,
Yahya
[edited 11/30/2005 10:53:16 AM]
Your second assumption in respect of the real reason for rejection is right because the applicant has demanded a deduction for the value of the goods as a condition for the acceptance of the docs. (This info received from the benef)
The time period between two messages is about 5 hours,so that It doesn't seem to be "a mistake".
The point that made me confused in this case is there is no rule in the UCP requires the IB to send an advice regarding the maturity date except such cases as the presentation of non-conforming docs or where a credit states the due date would be established from the date of the presentation of the docs at the counter of the IB.
Regards,
Yahya
[edited 11/30/2005 10:53:16 AM]
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Notice of refusal
Dear Judith,
Seems that you are right. A message received can not be stopped. Only exception (as far as I understand) is a payment message – where it depends on whether or not it has been acted upon.
Best regards
Kim
Seems that you are right. A message received can not be stopped. Only exception (as far as I understand) is a payment message – where it depends on whether or not it has been acted upon.
Best regards
Kim
Notice of refusal
if IB sent you an MT732 is all clear because SWIFT user handbook for categories 2,4 and 7 clearly states regarding MT732:"it is used to advise the receiver that the documents received with discrepancies have been taken up."
so,no matter after how many hours you received the second mssg,once they SENT the first one,they are precluded from claiming that the documents aren't in compliance with the terms and conditions of the credit.an issuing bank is irrevocable bound from the moment it issued the l/c or an amendment thereto (meaning the transmission of the mssg/letter).i think same judgement may be used in your case.issuing bank is irrevocable bound from the moment they sent (and you received) the MT732.you may drawn issuing bank's attn that they became irrevocable bound since the moment they sent their MT732 and you expect to urgently receive the funds.
so,no matter after how many hours you received the second mssg,once they SENT the first one,they are precluded from claiming that the documents aren't in compliance with the terms and conditions of the credit.an issuing bank is irrevocable bound from the moment it issued the l/c or an amendment thereto (meaning the transmission of the mssg/letter).i think same judgement may be used in your case.issuing bank is irrevocable bound from the moment they sent (and you received) the MT732.you may drawn issuing bank's attn that they became irrevocable bound since the moment they sent their MT732 and you expect to urgently receive the funds.