I feel confused now about 12b.
I wonder if it is necessary. According to 7c, 8c the undertaking to reimburse the NB is independent from the undertaking to the beneficiary. So, whether the NB is authorized or not to prepay, advance, etc..., actually whatever the NB does, it will have to be reimbursed by IB, CB even if beneficiary did something badly wrong.
???
Daniel
7c, 8c and 12b
7c, 8c and 12b
Daniel,
I cannot see that the last sentence of 7c / 8c has any relevance to ‘discounting’ a draft / DPU, as it concerns itself solely with the independence of the issuing / confirming bank’s ‘undertaking to reimburse a nominated bank’ from the issuing / confirming bank’s obligation to the BENEFICIARY to honour a complying presentation.
Whether or not the second sentence of 7c / 8c renders 12b unnecessary is something I leave others to discuss; to me 12b is very welcome clarification / confirmation that puts the position beyond doubt.
Regards, Jeremy
I cannot see that the last sentence of 7c / 8c has any relevance to ‘discounting’ a draft / DPU, as it concerns itself solely with the independence of the issuing / confirming bank’s ‘undertaking to reimburse a nominated bank’ from the issuing / confirming bank’s obligation to the BENEFICIARY to honour a complying presentation.
Whether or not the second sentence of 7c / 8c renders 12b unnecessary is something I leave others to discuss; to me 12b is very welcome clarification / confirmation that puts the position beyond doubt.
Regards, Jeremy
7c, 8c and 12b
Jeremy,
It is why I am confused because I am not sure I interpret correctly 7c, 8c. I understand in the following way: if a beneficiary has no right to get paid (because of a fraud), the undertaking of the IB, CB to him does not exist (anymore) but nevertheless the undertaking to the NB (being independent) still exists. So for me, whatever the NB did (authorized or not) does not affect its right to be reimbursed.
Daniel
It is why I am confused because I am not sure I interpret correctly 7c, 8c. I understand in the following way: if a beneficiary has no right to get paid (because of a fraud), the undertaking of the IB, CB to him does not exist (anymore) but nevertheless the undertaking to the NB (being independent) still exists. So for me, whatever the NB did (authorized or not) does not affect its right to be reimbursed.
Daniel
7c, 8c and 12b
Daniel,
you understand right.
see santander case.
if NB prepaid before a fraud being discovered and before NB having knowledge of such think,IB/CB must reimburse NB at maturity.
regards,
bogdan
you understand right.
see santander case.
if NB prepaid before a fraud being discovered and before NB having knowledge of such think,IB/CB must reimburse NB at maturity.
regards,
bogdan
7c, 8c and 12b
Bogdan,
What I try to say is that NB must be reimbursed by IB, CB not thanks to 12b (I agree with Jeremy that it is a welcome clarification) but to 7c, 8c "in fine".
In my opinion if an IB, CB wants (for some reasons) to exclude 12b they should also specified that their undertaking to the NB is not independent of their undertaking to the beneficiary. But again I am not sure and I would like to know.
Daniel
What I try to say is that NB must be reimbursed by IB, CB not thanks to 12b (I agree with Jeremy that it is a welcome clarification) but to 7c, 8c "in fine".
In my opinion if an IB, CB wants (for some reasons) to exclude 12b they should also specified that their undertaking to the NB is not independent of their undertaking to the beneficiary. But again I am not sure and I would like to know.
Daniel
7c, 8c and 12b
UCP has long said that nominated banks are entitled to reimbursement if they honor or negotiate a facially complying presentation. They should be reimbursed notwithstanding beneficiary fraud, and the courts should not interfere unless there is a question as to whether the nominated bank actually negotiated or honored.
7c and 8c provide a conceptual basis for nominated bank reimbursement rights. Otherwise, nominated banks might be considered to have acquired their rights by purchase or assignment from the beneficiary. The notion that nominated banks acquire their rights from beneficiaries, plus the notion that fraud unravels all, has led to considerable confusion among lawyers and in the courts over the scope of the "fraud/abuse" exception.
12b is intended to negative the argument in Santander that a nominated bank that discounts its own obligation (DPU ar acceptance) has exceeded its authority from the issuer and is therefore not entitled to reimbursement, at least not if discounting adversely affects an otherwise timely established fraud/abuse defense.
Regards, Jim Barnes
7c and 8c provide a conceptual basis for nominated bank reimbursement rights. Otherwise, nominated banks might be considered to have acquired their rights by purchase or assignment from the beneficiary. The notion that nominated banks acquire their rights from beneficiaries, plus the notion that fraud unravels all, has led to considerable confusion among lawyers and in the courts over the scope of the "fraud/abuse" exception.
12b is intended to negative the argument in Santander that a nominated bank that discounts its own obligation (DPU ar acceptance) has exceeded its authority from the issuer and is therefore not entitled to reimbursement, at least not if discounting adversely affects an otherwise timely established fraud/abuse defense.
Regards, Jim Barnes