Is it formally correct that a l/c shows a precise place of expiry (in my case USA) and in the apposite field is indicated 'ANY BANK FOR NEGOTIATION'?
Could a bank outside USA negotiate this l/c under beneficiary's request? If a bank outside USA negotiate docs the place of expiry is to consider the country of the negotiating bank?
place of expiry/freely negotiable l/c
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ARoncoroni
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place of expiry/freely negotiable l/c
Without liability/responsibility:
Strictly speaking, I personally believe the credit should be expressed to be available with ‘ANY BANK IN THE USA BY NEGOTIATION’. Nonetheless, given the expiry provisions, I would only be prepared to regard the credit as being available in the USA. This being the case, I would not be prepared to negotiate documents if I were based outside the USA.
Strictly speaking, I personally believe the credit should be expressed to be available with ‘ANY BANK IN THE USA BY NEGOTIATION’. Nonetheless, given the expiry provisions, I would only be prepared to regard the credit as being available in the USA. This being the case, I would not be prepared to negotiate documents if I were based outside the USA.
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DimitriScoufaridis
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place of expiry/freely negotiable l/c
USA is the place where this credit is made available. It has also indicated that it is to be freely negotiable. Putting the two together, it will be considered to be freely negotiable by any bank within USA, i.e. the applicant of the credit has already limited its negotiability to a specific country; therefore, the structure of the L/C is correct. Please see ICC Pub. 416 on Documentary Credits/Standard Documentary Credit Forms/Guidance Notes-Recommendations.
Based on the above, if a bank outside USA negotiates the credit it does not mean that the place of expiry is automatically shifted.
Dimitri
Based on the above, if a bank outside USA negotiates the credit it does not mean that the place of expiry is automatically shifted.
Dimitri
place of expiry/freely negotiable l/c
Dmitri, am I right in understanding from what you are saying that you believe that it would not be possible for a bank outside the USA to claim the status, and thus protection, of a nominated bank (sub-Art 10bi)? Therefore, that ‘negotiation’ -under sub-Art 10bii- outside the USA is not possible? (This is certainly my own view of the likely situation.)
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DimitriScoufaridis
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place of expiry/freely negotiable l/c
Jeremy,
Yes, as stated in sub-Art. 10b(i), in a freely negotiable Credit, any bank is a Nominated Bank. In this L/C any bank in USA only may become a Negotiating Bank.
Dimitri
Yes, as stated in sub-Art. 10b(i), in a freely negotiable Credit, any bank is a Nominated Bank. In this L/C any bank in USA only may become a Negotiating Bank.
Dimitri
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ARoncoroni
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- Joined: Fri Apr 05, 2019 5:15 pm
place of expiry/freely negotiable l/c
Dear Dimitri, so you mean that in that case if issuing bank receives docs in full copliance with credit terms and conditions by a bank (nominated by beneficiary as negotiating bank) outside USA, it (the issuing bank) may refuse to recognize non-USA bank as negotiating bank and decide not to reimburse?
In any case, what's the right technical way to issue a credit which is freely negotiable all around the World? Is it better not to indicate, after the date of expiry, any place of expiry?
Thank you.
In any case, what's the right technical way to issue a credit which is freely negotiable all around the World? Is it better not to indicate, after the date of expiry, any place of expiry?
Thank you.
place of expiry/freely negotiable l/c
I appreciate my name is not Dmitri, but in reply to your questions:
1. Yes, particularly if documents are presented to the issuing bank after expiry.
2. Per sub-Art 42a, no place of expiry should be shown in the credit.
1. Yes, particularly if documents are presented to the issuing bank after expiry.
2. Per sub-Art 42a, no place of expiry should be shown in the credit.
place of expiry/freely negotiable l/c
To make this more than a 3-party conversation...
It is not a discrepancy if the documents are presented by a bank outside the U.S., i.e., who is not a nominated bank. The issuer may not refuse payment based on this reason. As Jeremy points out, however, because the bank is not a nominated bank, the presenting bank runs the risk that the L/C will expire or that the transport document will "go stale," as the L/C does not expire at their counters. Also, not being nominated to negotiate, the presenting bank risks non-payment due to a court injunction.
It is not a discrepancy if the documents are presented by a bank outside the U.S., i.e., who is not a nominated bank. The issuer may not refuse payment based on this reason. As Jeremy points out, however, because the bank is not a nominated bank, the presenting bank runs the risk that the L/C will expire or that the transport document will "go stale," as the L/C does not expire at their counters. Also, not being nominated to negotiate, the presenting bank risks non-payment due to a court injunction.
place of expiry/freely negotiable l/c
Buddy,
I quite agree with you that it is not a ‘discrepancy’ for the documents to be presented by another bank.
The point I was trying to make is that the issuing bank may not have any obligation to the (non-nominated) presenting bank, as opposed to the beneficiary, in respect of a complying presentation. This is because the issuing bank’s (sub-Art9a) undertaking is addressed to the beneficiary, and no one else. Thus -in the absence, for example, of a legally effective assignment of the beneficiary’s rights under the credit or an ability to claim successfully rights of subrogation- the presenting bank is unlikely to have any rights against the issuing bank and, as a consequence, be unable to sue the issuing bank for settlement of a complying presentation.
Jeremy
[edited 2/23/03 9:51:50 AM]
I quite agree with you that it is not a ‘discrepancy’ for the documents to be presented by another bank.
The point I was trying to make is that the issuing bank may not have any obligation to the (non-nominated) presenting bank, as opposed to the beneficiary, in respect of a complying presentation. This is because the issuing bank’s (sub-Art9a) undertaking is addressed to the beneficiary, and no one else. Thus -in the absence, for example, of a legally effective assignment of the beneficiary’s rights under the credit or an ability to claim successfully rights of subrogation- the presenting bank is unlikely to have any rights against the issuing bank and, as a consequence, be unable to sue the issuing bank for settlement of a complying presentation.
Jeremy
[edited 2/23/03 9:51:50 AM]
place of expiry/freely negotiable l/c
A ‘mea culpa’.
A rather lengthy article about negotiation credits I’m currently reading quotes sub-Art 9a(iv). To my embarrassment I realised that the issuing bank’s obligations are not just to the beneficiary (‘drawers’) but also to ‘bona fide holders’ of drafts etc. Therefore, on the face of it, an issuing bank would be obliged to reimburse any party -whether a bank or not and, if a bank, one that was not a nominated bank- that presented complying documents to the issuing bank/nominated bank and which was a ‘bona fide holder’. As a consequence I’m certain my posting above was wrong. A silly mistake and apologies all round.
A rather lengthy article about negotiation credits I’m currently reading quotes sub-Art 9a(iv). To my embarrassment I realised that the issuing bank’s obligations are not just to the beneficiary (‘drawers’) but also to ‘bona fide holders’ of drafts etc. Therefore, on the face of it, an issuing bank would be obliged to reimburse any party -whether a bank or not and, if a bank, one that was not a nominated bank- that presented complying documents to the issuing bank/nominated bank and which was a ‘bona fide holder’. As a consequence I’m certain my posting above was wrong. A silly mistake and apologies all round.