Jeremy,
So, it is still wise to assume that you take a risk on the beneficiary when discounting, prepaying.
Jeremy, thank you
Daniel
Discount of DPU and Recourse
Discount of DPU and Recourse
Daniel,
Don't forget negotiating too.
Regards, Jeremy
Don't forget negotiating too.
Regards, Jeremy
Discount of DPU and Recourse
Daniel,
An after thought.
Even if a nominated bank (NB) does not pre-pay / purchase a draft it has accepted or DPU it has incurred it can still find itself in a position where the IB is ordered -by a court that has jurisdiction over the IB- not to reimburse but the NB is legally obliged -by its own law- to settle the draft / DPU on its due date. Therefore, not pre-paying / purchasing does not necessarily spare the NB the risk of paying and not being reimbursed by reason of court action.
Regards, Jeremy
[edited 10/19/2007 1:50:07 PM]
An after thought.
Even if a nominated bank (NB) does not pre-pay / purchase a draft it has accepted or DPU it has incurred it can still find itself in a position where the IB is ordered -by a court that has jurisdiction over the IB- not to reimburse but the NB is legally obliged -by its own law- to settle the draft / DPU on its due date. Therefore, not pre-paying / purchasing does not necessarily spare the NB the risk of paying and not being reimbursed by reason of court action.
Regards, Jeremy
[edited 10/19/2007 1:50:07 PM]
Discount of DPU and Recourse
Jeremy,
Coming down to that, it reminds me of something a famous person in DCs (M. Bontoux, France) said: confirmed or not a DC MUST be paid par the NB. This had caused a lot of discussion at that time. Thank you again for your views. That proves again that nothing is clean-cut in this world and that it may be dangerous to assume it is Daniel
Coming down to that, it reminds me of something a famous person in DCs (M. Bontoux, France) said: confirmed or not a DC MUST be paid par the NB. This had caused a lot of discussion at that time. Thank you again for your views. That proves again that nothing is clean-cut in this world and that it may be dangerous to assume it is Daniel
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AsifMahmoodButt
- Posts: 89
- Joined: Fri Apr 05, 2019 5:21 pm
Discount of DPU and Recourse
Jeremy
When you say the NB is legally oblidged - by its own law - to settle.... are you saying the courts in the NBs country will ignore the reasons the IB is ordered by another court not to reimburse.
After all an LC is an Undertaking given by the IB to the Beneficiary and as you said earlier whether one is a CB or NCB it makes no difference if a court prohibits an IB to pay. Why then would courts not spare the NB/CB from their obligation, since it is related to they being obliged by the IB,when they are aware that they will not be reimbursed?
Why should these Banks be penalised?
Regards
Jason
When you say the NB is legally oblidged - by its own law - to settle.... are you saying the courts in the NBs country will ignore the reasons the IB is ordered by another court not to reimburse.
After all an LC is an Undertaking given by the IB to the Beneficiary and as you said earlier whether one is a CB or NCB it makes no difference if a court prohibits an IB to pay. Why then would courts not spare the NB/CB from their obligation, since it is related to they being obliged by the IB,when they are aware that they will not be reimbursed?
Why should these Banks be penalised?
Regards
Jason
Discount of DPU and Recourse
Jason,
I am saying the NB may be -rather than definitely will be- legally obliged. (However, in the UK I would anticipate they would be unless the NB itself could show the beneficiary had acted fraudulently.) The reason being the NB itself has entered into a legally binding agreement with the beneficiary.
The court that grants the injunction will not normally have any jurisdiction over the NB so is not in a position to grant an order affecting it. Furthermore, it is the applicant that applies for the order -and normally determines its terms- and the applicant’s sole concern normally is to stop the IB reimbursing. Lastly, as I have already said, judges' understanding of credits is frequently non-existent and, as a result they do not know of such a thing as a NB, let alone that the NB may have given an undertaking to effect settlement.
Regards, Jeremy
[edited 10/23/2007 9:15:04 AM]
I am saying the NB may be -rather than definitely will be- legally obliged. (However, in the UK I would anticipate they would be unless the NB itself could show the beneficiary had acted fraudulently.) The reason being the NB itself has entered into a legally binding agreement with the beneficiary.
The court that grants the injunction will not normally have any jurisdiction over the NB so is not in a position to grant an order affecting it. Furthermore, it is the applicant that applies for the order -and normally determines its terms- and the applicant’s sole concern normally is to stop the IB reimbursing. Lastly, as I have already said, judges' understanding of credits is frequently non-existent and, as a result they do not know of such a thing as a NB, let alone that the NB may have given an undertaking to effect settlement.
Regards, Jeremy
[edited 10/23/2007 9:15:04 AM]
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AsifMahmoodButt
- Posts: 89
- Joined: Fri Apr 05, 2019 5:21 pm
Discount of DPU and Recourse
Jeremy,
If the IB had given its acceptance to the NB and the NB in turn had given its own acceptance to the beneficiary and then the applicant applies for the injunction, would it be any different?
Regards
Jason
If the IB had given its acceptance to the NB and the NB in turn had given its own acceptance to the beneficiary and then the applicant applies for the injunction, would it be any different?
Regards
Jason
Discount of DPU and Recourse
Jason,
I assume you are referring to a situation where a NB sends documents on an ‘approval basis’ (‘in trust’) to an IB and requests authority to honour (by way of accepting a draft / incurring a DPU) which the IB in due course gives.
No, there is not any logical reason that I can see for it to be any different.
Regards, Jeremy
I assume you are referring to a situation where a NB sends documents on an ‘approval basis’ (‘in trust’) to an IB and requests authority to honour (by way of accepting a draft / incurring a DPU) which the IB in due course gives.
No, there is not any logical reason that I can see for it to be any different.
Regards, Jeremy
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AsifMahmoodButt
- Posts: 89
- Joined: Fri Apr 05, 2019 5:21 pm
Discount of DPU and Recourse
Jeremy,
You are right, I was referring to the same thing and if it is not going to be any different then NBs will need to find a way out of such a situation. Suggestions would be required to word our acceptances to beneficiaries for such cases.
Regards
Jason
You are right, I was referring to the same thing and if it is not going to be any different then NBs will need to find a way out of such a situation. Suggestions would be required to word our acceptances to beneficiaries for such cases.
Regards
Jason