Can a discounting bank pay to beneficiary before the draft has been accepting by accepting bank ?
Any ICC opinion in this regards ?
Shahed
Toronto
Discounting of export bill under usance L/C
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ThuHoangAnh_
- Posts: 58
- Joined: Fri Apr 05, 2019 5:28 pm
Discounting of export bill under usance L/C
Hi,
If such a discount is made before the draft is accepted, the discounting bank may incur the risk of being unable to take legal action IN ITS OWN NAME OR ON ITS BEHALF against the nominated bank/issuing bank in case the nominated bank/issuing bank, for some reason, fails to accept the draft.
A discount with recourse is recommended in this case.
Best regards,
N.H. Duc
If such a discount is made before the draft is accepted, the discounting bank may incur the risk of being unable to take legal action IN ITS OWN NAME OR ON ITS BEHALF against the nominated bank/issuing bank in case the nominated bank/issuing bank, for some reason, fails to accept the draft.
A discount with recourse is recommended in this case.
Best regards,
N.H. Duc
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YAATULOLAIA
- Posts: 5
- Joined: Fri Apr 05, 2019 5:30 pm
Discounting of export bill under usance L/C
In accodance with ucp600, you can discount as a nominated bank. Agree to advance or Purchase is allowable however it is your business decision whether you want to take the risk or not.
Discounting of export bill under usance L/C
UCP600 only admits to the ‘purchase’ of a draft:
1. prior to its acceptance, where it is drawn on a bank other than the nominated bank where the credit is available by negotiation (see Article 2) and the purchasing bank is a / the nominated bank.
2. (or its ‘pre-payment’) on / after acceptance, where such draft has been accepted by the nominated bank (see sub-Article 12(a)).
A bank can, of course, purchase from the beneficiary outside the terms of UCP600 any draft drawn under a credit prior to acceptance but in the event of the draft not being honoured the purchasing bank is dependent (for any recourse) on the terms of its agreement, if any, with the beneficiary as supplemented by the relevant negotiable instrument law.
[edited 5/7/2009 8:48:42 AM]
1. prior to its acceptance, where it is drawn on a bank other than the nominated bank where the credit is available by negotiation (see Article 2) and the purchasing bank is a / the nominated bank.
2. (or its ‘pre-payment’) on / after acceptance, where such draft has been accepted by the nominated bank (see sub-Article 12(a)).
A bank can, of course, purchase from the beneficiary outside the terms of UCP600 any draft drawn under a credit prior to acceptance but in the event of the draft not being honoured the purchasing bank is dependent (for any recourse) on the terms of its agreement, if any, with the beneficiary as supplemented by the relevant negotiable instrument law.
[edited 5/7/2009 8:48:42 AM]