Hi Jeremy,
I'm sure that the reference to bona fide holder must relate to the bank which has negotiated and is holding the draft/documents. Such bank must be the bank nominated to negotiate in the credit i.e. any bank if 'freely negotiable' or the specifically named bank.
If an l/c is truly 'freely negotiable' a place for presentation need not be stated. The problem is that SWIFT field 31d is mandatory and most banks will automatically insert the name of the beneficiary's country. It must be rare, however, for a beneficiary to require negotiation at a bank in a different country
Phil
place of expiry/freely negotiable l/c
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PGauntlett
- Posts: 153
- Joined: Fri Apr 05, 2019 5:25 pm
place of expiry/freely negotiable l/c
Phil,
I’m certainly not going to say you’re wrong, and I can well understand your taking this view. Nonetheless, as the sub-Article does not refer to the ‘Nominated Bank’ (unlike the opening part of sub-Article 9a, for example) I would not be surprised -& would even expect- a court to interpret sub-Article 9(a)(iv) as it is literally written.
Jeremy
I’m certainly not going to say you’re wrong, and I can well understand your taking this view. Nonetheless, as the sub-Article does not refer to the ‘Nominated Bank’ (unlike the opening part of sub-Article 9a, for example) I would not be surprised -& would even expect- a court to interpret sub-Article 9(a)(iv) as it is literally written.
Jeremy
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larryBacon
- Posts: 689
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place of expiry/freely negotiable l/c
Jeremy,
I agree with Phil's view on this. The crux of the matter is the definition of a "bona fide holder". The DC determines that this is limited to the bene and nominated bank. A presenting bank which is not nominated may act as agent to the bene & if established that they are acting in this capacity, can justify being a "bona fide holder" etc.
Laurence
I agree with Phil's view on this. The crux of the matter is the definition of a "bona fide holder". The DC determines that this is limited to the bene and nominated bank. A presenting bank which is not nominated may act as agent to the bene & if established that they are acting in this capacity, can justify being a "bona fide holder" etc.
Laurence
place of expiry/freely negotiable l/c
Laurence
You may be right, and –with my risk management hat on- I would pleased if you were. Nonetheless, I find it curious that if this is the intention the sub-Art does not make this clear, by referring expressly to the ‘beneficiary’ and ‘nominated bank’.
I have to say I am unconvinced about the agency argument. Looking to our own Bills of Exchange Act 1882, being a ‘holder’ has nothing to do with agency. Also, I find it odd that a presenting bank would seek to establish ‘holder’ status, unless it had given value and thus was acting as principal and not agent.
Jeremy
You may be right, and –with my risk management hat on- I would pleased if you were. Nonetheless, I find it curious that if this is the intention the sub-Art does not make this clear, by referring expressly to the ‘beneficiary’ and ‘nominated bank’.
I have to say I am unconvinced about the agency argument. Looking to our own Bills of Exchange Act 1882, being a ‘holder’ has nothing to do with agency. Also, I find it odd that a presenting bank would seek to establish ‘holder’ status, unless it had given value and thus was acting as principal and not agent.
Jeremy
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larryBacon
- Posts: 689
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place of expiry/freely negotiable l/c
Jeremy,
if a bene sent these docs incl. B/E by courier directly to the issuing bank, would the courier be a "bona fide holder" of the draft ? My contention is that they would only be so by acting as agent for the bene, but the limit of this agency's powers lies in the mere presentation. A bank which is not nominated acting in a similar way to the courier is also limited in its powers, as it has no powers conferred on it by the DC.
Laurence
if a bene sent these docs incl. B/E by courier directly to the issuing bank, would the courier be a "bona fide holder" of the draft ? My contention is that they would only be so by acting as agent for the bene, but the limit of this agency's powers lies in the mere presentation. A bank which is not nominated acting in a similar way to the courier is also limited in its powers, as it has no powers conferred on it by the DC.
Laurence
place of expiry/freely negotiable l/c
Laurence,
I agree that the courier company would not be a holder. But, based on the provisions of our own BEA 1882, I do not believe that a presenting bank acting as the beneficiary’s agent, i.e. a presenting bank that had not given ‘value’, would be a holder either in English law.
As Prof Roy Goode says in ‘Commercial Law’ (2nd edition, Penguin):
'Though a holder is prima facie deemed to be a holder in due course, yet if it is established that he is not a holder for value, his claim cannot succeed, for in the absence of consideration the 'contract' generated by the bill is nudum pactum.'
The more I read our BEA 1882 the more likely I think it is that the English courts would regard a ‘bona fide holder’ as any ‘holder in due course’ if not any ‘holder for value’ (whether it is a bank or not).
Jeremy
I agree that the courier company would not be a holder. But, based on the provisions of our own BEA 1882, I do not believe that a presenting bank acting as the beneficiary’s agent, i.e. a presenting bank that had not given ‘value’, would be a holder either in English law.
As Prof Roy Goode says in ‘Commercial Law’ (2nd edition, Penguin):
'Though a holder is prima facie deemed to be a holder in due course, yet if it is established that he is not a holder for value, his claim cannot succeed, for in the absence of consideration the 'contract' generated by the bill is nudum pactum.'
The more I read our BEA 1882 the more likely I think it is that the English courts would regard a ‘bona fide holder’ as any ‘holder in due course’ if not any ‘holder for value’ (whether it is a bank or not).
Jeremy
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larryBacon
- Posts: 689
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place of expiry/freely negotiable l/c
Jeremy,
I suggest that a "bona fide holder" in the context of UCP is not comparable to general usage as envisaged under the UK Bills of Exchange Act. Under the UCP, I suggest that the DC determines those who may be "bona fide holders" in an international context and is more specific than the UK general case, which I think does not make any distinction between a "holder" and a "bona fide holder".
Laurence
I suggest that a "bona fide holder" in the context of UCP is not comparable to general usage as envisaged under the UK Bills of Exchange Act. Under the UCP, I suggest that the DC determines those who may be "bona fide holders" in an international context and is more specific than the UK general case, which I think does not make any distinction between a "holder" and a "bona fide holder".
Laurence
place of expiry/freely negotiable l/c
Laurence,
I am not in a position to say you’re wrong in your overall view. Also, you are certainly right to say the BEA 1882 does not use the term ‘bona fide holder’. The Act uses ‘holder’, ‘holder for value’ & ‘holder in due course’. However, the Act does refer to ‘good faith’: under S29(1) ‘good faith’ is necessary to be a ‘holder in due course’ (S90 ‘A thing is deemed to be done in good faith, within the meaning of this Act, where it is in fact done honestly, whether it is done negligently or not’). It is this that leads me to the view that an English court would at least regard a ‘holder in due course’ as being a ‘bona fide holder’ for the purpose of sub-Art 9a(iv). Nonetheless, I do not rule out the possibility of it following your line of reasoning.
Jeremy
[edited 4/8/03 9:25:29 AM]
I am not in a position to say you’re wrong in your overall view. Also, you are certainly right to say the BEA 1882 does not use the term ‘bona fide holder’. The Act uses ‘holder’, ‘holder for value’ & ‘holder in due course’. However, the Act does refer to ‘good faith’: under S29(1) ‘good faith’ is necessary to be a ‘holder in due course’ (S90 ‘A thing is deemed to be done in good faith, within the meaning of this Act, where it is in fact done honestly, whether it is done negligently or not’). It is this that leads me to the view that an English court would at least regard a ‘holder in due course’ as being a ‘bona fide holder’ for the purpose of sub-Art 9a(iv). Nonetheless, I do not rule out the possibility of it following your line of reasoning.
Jeremy
[edited 4/8/03 9:25:29 AM]