ICC Digital Library Forum

Dear Jeremy,

I do not claim to have the answer to this, but I can’t help asking if you are not making it more complicated than it actually is

First of all, is this in fact not the same principle as is reflected in the UCP 500 today? UCP 500 article 13(b) also talks about “take up” or “refuse”.

The point I was making, was that there may be other ways to define “take up”. It seems to me, that the way this expression is being used in the ucp is to cover every scenario possible where a bank (issuing, confirming, nominated) examines the documents and finds them I compliance with LC terms, regardless if this “take up” is followed by a payment, acceptance etc.

The obligation to pay, accept etc. following that “take up” of the documents is determined elsewhere in the rules!

Best regards
Kim

Dear Kim,

I am quite prepared to accept that I might be making it more complicated than it actually is and would be more than happy if this were so (and I could be convinced of it). I would also stress that I am not trying to suggest 10c does not mean what it apparently says; I am merely trying to see if there is any agreement that 13 & 14 fail to take account of 10c.

I quite understand the point you are making. My point, in reply, is that I simply cannot accept your view, namely that ‘take up’ means anything other than to pay at sight, accept a draft, incur a deferred payment obligation or negotiate. Of course, were you able to produce any evidence to support your view I’d very much welcome it.

Best regards, Jeremy

Dear Jeremy,

I will try to produce some evidence.

Meanwhile I think it is fair to conclude, that if the result is that the “taken up” only relates to the document examination (by issuing, confirming, nominated banks), then “case closed”. If however “take up” obligates the bank to pay, accept etc. then your point is correct, and we will all line up behind you in misery
(Gosh I hope that I am right)

Best regards
Kim

Let's assume that a Nominated Bank who remained silent examines the documents, find discrepancies and communicated them to the Beneficiary as required in article 14 but then let’s presume that the Beneficiary was able to collect the documents, cure the discrepancies and re-present them for payment within the time allowed in the LC, are we intending to say that because of its action of examination of the documents, communicating the discrepancies to the Beneficiary etc., the Nominated Bank has by default or implicitly communicated it's agreement to Beneficiary to honour documents if they are in order and therefore is obligated to pay, accept etc.??

In what circumstances is a Nominated Bank obligated to act on behalf of the Issuing / Confirming Bank and to what extent?

On the other side, if "take up" doesn't mean pay, accept etc., then what sense would it give to the Beneficiary?? Assurance / assistance?? Then the question that will come up is what type of assurance?? with retreat, without retreat?? What type of assistance? with responsibity or without? Does "take up" change its meaning when the party examining the documents is the Issuing Bank / Confirming Bank?

For me if a beneficiary wants a Nominated Bank of an unconfirmed LC to pay, accept etc., then it has to get that agreement ahead of time, before performing under the LC, otherwise no assurance whatsoever and Nominating Bank may not commit itself in any situation or at any stage. That is why I said earlier, the Beneficiary should know which hat the Nominated Bank is wearing and how long is it going to stay with it.


regards

[edited 12/8/2005 6:34:24 AM]

Hi there,

I have been awake all night thinking about UCP article this and that – take up take that and what have we. Should I say “thank you” …or ??

As expected it proved impossible to find a firm definition of the concept “take up”. I have spoken to a number of people, who all have the same “interpretation” as reflected in Jeremy’s postings under this topic. None however was able to produce any evidence. So one conclusion arising from this would be, that a definition could prove helpful.

However: accepting Jeremy’s interpretation of “take up” as a premises, there are still a number of issues. I think that Abdulkader has some very valid points. One is that one thing is to be “nominated” – another thing is whether or not you choose to act in accordance with the nomination. It goes without saying, that if this is not the case then article 13(b) & 14(d) of the ucp 500 is not applicable for that bank. If however the bank chooses to act in accordance with its nomination then they do apply.

Then of course the 1.000.000 $ question is what it takes for the bank to accept its nomination. As has been stated under this topic it must be “expressly agreed to by the nominated bank and so communicated to the beneficiary”. I do not think that it is fair to say, that the examination of the documents is to “expressly agree to e.g. negotiate” (which by the way is in line with ucp 500 article 10(b)(ii))

So I can not interpret it otherwise, than in the “STANDARD” scenario where the dialogue specific to the documents presented, between beneficiary and advising/nominated bank is done AFTER the examination of the documents, then the “express agreement” transforming the advising bank to a nominated bank takes place at THAT point in time, i.e. after examination of documents!

This would of course depend on the wording of the advising letter; i.e. whether or not the bank has “expressly agreed” to e.g. negotiate after presentation of credit compliant documents. In that case – or any other case where the “express agreement” is given PRIOR to the examination of documents, I can not conclude any other way than that bank is bound by that!

So – timing is of essence here! WHEN is the message to the beneficiary turning the advising bank into a nominated bank given?

My guess is, that the reason that this has not (as far as I know) been a problem, is that it is very seldom that documents under an unconfirmed credit are examined by a bank that has put on the “nominated bank hat” (Thanks Abdulkader
Unless of course the L/C is “silent confirmed” or similar – in which case it is a totally different story!

And yes – I know – I accept – now it was me that managed to make everything more complicated than it should be …

I think that is all for now. Have a nice day.

Best regards
Kim

Abdulkader,

I confirm I am not intending to say what you seem to me to be suggesting in your first para. I agree with the views you express in the rest of your posting if I have understood them correctly.

Kim,

Again I would stress all I am trying to do is establish if there is agreement that 13 & 14 do not take account of 10c. I would simply observe that nothing said so far suggests -at least to me- that 13 & 14 do take account of 10c.

As to defining ‘take up’ in ‘UCP600’, I can now see that there should be no need as it does not currently use this expression.

Hope you both have a good weekend.

Regards, Jeremy