Dear Mr. O’Brien
In your response you state “the Confirming/Nominated Bank under UCP 600 must Negotiate by purchasing the DRAFTS/DOCUMENT”
Does this make the accusation that it was something different under UCP 500?
Svetlana
Confirming Bank Undertaking - art. 8-a, ii
Confirming Bank Undertaking - art. 8-a, ii
Dear Svetlana
I don’t think my comments were meant to be an ‘accusation’ but let me try to add further clarity and some background.
I made reference to UCP 600 in that paragraph as I had just copied and pasted definitions from UCP 600 in preceding paragraphs
But as you ask a direct question you deserve a direct answer.
Yes, there was a difference in UCP 500, subtle but important.
Under UCP 500 when a Bank added it confirmation to a credit available by negotiation then under UCP 500 sub-article 9 (b) that confirmation constituted a definite undertaking of the Confirming Bank, in addition to that of the Issuing Bank for the Confirming Bank to negotiate without recourse.
UCP 500 sub-article 10 (b) stated the negotiation is ‘the giving of value for drafts and or documents by the bank authorized to negotiate”
So, once the credit available by negotiation was confirmed the beneficiary under UCP 500 then the beneficiary had to hand a credit including the additional definite UNDERTAKING of the confirming bank to negotiate.
So, in simple terms, and reflecting typical trade operations then under UCP 500 if the beneficiary needed cash flow he could take option or enforce undertaking of confirming bank, in most instance by getting advance of funds or if not required he could just sit tight and enforce confirmation should reimbursement not be effected by the issuing bank on day reimbursement was due from issuing bank.
While Confirmation under UCP 600 and UCP 500 are the in essence the same nowhere in UCP 500 did it say …MUST..as it does in UCP 600.
a. Provided that the stipulated documents are presented to the confirming bank or to any other nominated bank and that they constitute a complying presentation, the confirming bank MUST: ………………negotiate, without recourse, if the credit is available by negotiation with the confirming bank
I hope this adds further clarity.
Vin
[edited 9/18/2007 2:22:13 PM]
I don’t think my comments were meant to be an ‘accusation’ but let me try to add further clarity and some background.
I made reference to UCP 600 in that paragraph as I had just copied and pasted definitions from UCP 600 in preceding paragraphs
But as you ask a direct question you deserve a direct answer.
Yes, there was a difference in UCP 500, subtle but important.
Under UCP 500 when a Bank added it confirmation to a credit available by negotiation then under UCP 500 sub-article 9 (b) that confirmation constituted a definite undertaking of the Confirming Bank, in addition to that of the Issuing Bank for the Confirming Bank to negotiate without recourse.
UCP 500 sub-article 10 (b) stated the negotiation is ‘the giving of value for drafts and or documents by the bank authorized to negotiate”
So, once the credit available by negotiation was confirmed the beneficiary under UCP 500 then the beneficiary had to hand a credit including the additional definite UNDERTAKING of the confirming bank to negotiate.
So, in simple terms, and reflecting typical trade operations then under UCP 500 if the beneficiary needed cash flow he could take option or enforce undertaking of confirming bank, in most instance by getting advance of funds or if not required he could just sit tight and enforce confirmation should reimbursement not be effected by the issuing bank on day reimbursement was due from issuing bank.
While Confirmation under UCP 600 and UCP 500 are the in essence the same nowhere in UCP 500 did it say …MUST..as it does in UCP 600.
a. Provided that the stipulated documents are presented to the confirming bank or to any other nominated bank and that they constitute a complying presentation, the confirming bank MUST: ………………negotiate, without recourse, if the credit is available by negotiation with the confirming bank
I hope this adds further clarity.
Vin
[edited 9/18/2007 2:22:13 PM]
Confirming Bank Undertaking - art. 8-a, ii
Dear Mr.O’Brien
Yes, it is now clear but quite well hidden in UCP 600.
I am not sure if my expression ‘accusation’ in my question reflects the strength of my English vocabulary or if it was a ‘Freudian Slip’
Thank you for clarification but from what I have learned from this discussion would it not have been simpler to evolve the language of UCP 500 to
“Negotiation means the giving of value for drafts and or documents by advancing funds to the beneficiary on or before the banking day on which reimbursement is due to the nominated bank”
Is there really a need for LC’s available by ‘Negotiation’ if UCP now has a stated rule that the issuing bank must reimburse a nominated bank whether or not the nominated bank financed the customer?
What difference if any is there for an issuing bank in its obligation to a nominated bank under time LC if LC available with Nominated by either Negotiation – Acceptance or Deferred Payment?
Svetlana
Yes, it is now clear but quite well hidden in UCP 600.
I am not sure if my expression ‘accusation’ in my question reflects the strength of my English vocabulary or if it was a ‘Freudian Slip’
Thank you for clarification but from what I have learned from this discussion would it not have been simpler to evolve the language of UCP 500 to
“Negotiation means the giving of value for drafts and or documents by advancing funds to the beneficiary on or before the banking day on which reimbursement is due to the nominated bank”
Is there really a need for LC’s available by ‘Negotiation’ if UCP now has a stated rule that the issuing bank must reimburse a nominated bank whether or not the nominated bank financed the customer?
What difference if any is there for an issuing bank in its obligation to a nominated bank under time LC if LC available with Nominated by either Negotiation – Acceptance or Deferred Payment?
Svetlana