Jim,
Am I right in assuming your last sentence contains a 'typographical error'?
Regards, Jeremy
Sub-Art. 16 (c) (iii) (b)-Discrepant Documents, Waiver and N
-
JudithAutié
- Posts: 195
- Joined: Fri Apr 05, 2019 5:20 pm
Sub-Art. 16 (c) (iii) (b)-Discrepant Documents, Waiver and N
When a bank received irregular documents it has an obligation under the UCP to make a formal refusal within a limited time span.
It is often quite difficult to get a waiver from the applicant within the time alloted, which is one of the reasons that a bank will send a formal refusal.
In the majority of cases, the bank will be quite happy to receive the waiver and pay the documents, close the file and move on to others. One of the improvements in UCP600 is that it no longer has to wait for the beneficiary's further agreement to receive payment and release the documents (provided of course that the presenting bank hasn't stipulated otherwise).
However, there are cases when the issuing bank will not agree to waive the discrepancies : for example to name only two that jump to mind immediately :
- the applicant is no longer capable of reimbursing the issuing bank
- in a triangular operation, the discrepancies will cause a problem when applied against the master credit
In either of the above cases, I can't see an issuing bank asking for a waiver. It will inform the applicant that there are discrepancies and that they refuse to pay/honor the documents under the credit, but it won't ask for a waiver.
This is not to say that the applicant is released from his contractual obligations towards the beneficiary.
I learned a long time ago, "don't ask for what you don't want".
best regards
Judith
It is often quite difficult to get a waiver from the applicant within the time alloted, which is one of the reasons that a bank will send a formal refusal.
In the majority of cases, the bank will be quite happy to receive the waiver and pay the documents, close the file and move on to others. One of the improvements in UCP600 is that it no longer has to wait for the beneficiary's further agreement to receive payment and release the documents (provided of course that the presenting bank hasn't stipulated otherwise).
However, there are cases when the issuing bank will not agree to waive the discrepancies : for example to name only two that jump to mind immediately :
- the applicant is no longer capable of reimbursing the issuing bank
- in a triangular operation, the discrepancies will cause a problem when applied against the master credit
In either of the above cases, I can't see an issuing bank asking for a waiver. It will inform the applicant that there are discrepancies and that they refuse to pay/honor the documents under the credit, but it won't ask for a waiver.
This is not to say that the applicant is released from his contractual obligations towards the beneficiary.
I learned a long time ago, "don't ask for what you don't want".
best regards
Judith
Sub-Art. 16 (c) (iii) (b)-Discrepant Documents, Waiver and N
Judith,
I cannot see anything I obviously disagree with in what you say. I would merely emphasise that you describe as a ‘formal refusal’ is not automatically intended to be a bank’s final position (whether confirming, non-confirming nominated or issuing bank) and in the vast majority of cases in practice is not.
Also, I would find it odd that an issuing bank would seek a waiver before refusing documents. To me it is far less risky -given the time constraints you refer to- to refuse first and then seek a waiver as well as being in the presenter’s interest as they have the maximum time to cure discrepancies (where this is possible).
Fortunately in the case of 16(c)(ii)(b) ‘we’ have very much got what ‘we’ asked for.
Regards, Jeremy
I cannot see anything I obviously disagree with in what you say. I would merely emphasise that you describe as a ‘formal refusal’ is not automatically intended to be a bank’s final position (whether confirming, non-confirming nominated or issuing bank) and in the vast majority of cases in practice is not.
Also, I would find it odd that an issuing bank would seek a waiver before refusing documents. To me it is far less risky -given the time constraints you refer to- to refuse first and then seek a waiver as well as being in the presenter’s interest as they have the maximum time to cure discrepancies (where this is possible).
Fortunately in the case of 16(c)(ii)(b) ‘we’ have very much got what ‘we’ asked for.
Regards, Jeremy
Sub-Art. 16 (c) (iii) (b)-Discrepant Documents, Waiver and N
Sorry, Jeremy, My visits to this site are irregular. What I said ("That's why the point is made in this sub article that the bank must accept after the applicant decides to waive.") was not a typo, but it was ambiguous. The term "bank must accept" describes not what the bank is either assumed or compelled by UCP600 to do, but what must happen for the presenter to get the benefit of waiver under the LC. I had hoped that the word "after" would convey that thought. The sub-article itself is reasonably clear that acceptance by the bank is an act separate from waiver by the applicant. Regards, Jim Barnes