Confirm and Transfer

[MNg1]

When advising bank confirms a L/C, does its confirmation extend to the transferred L/C? Does it extend to the 2nd beneficiary as well? If it is fully transfer, it seems to make sense that the confirmation is automatically extended.
Under partial transfer, certain terms and conditions have been altered. Should we consider that there are two confirmations involved?
Under certain circumstances, some banks may base on their business decision to alter terms and conditions that are not mentioned under Art 48h.
If the confirmation is automatically extended to the transfered L/C, the risk exposure for the transferring bank will be very high.


[edited 4/11/2005 11:13:48 PM]
[edited 4/11/2005 11:14:29 PM]

[larryBacon]

A transferable LC permits transfer, but does not require it. Therefore the advising bank initially takes a decision to confirm the LC to the first beneficiary. A decision to confirm after that is a separate decision, taken under instruction and with agreement of the first benef. As there may be more than one second benef., a separate decision on each may be necessary.
Whether the second benef. receives confirmation depends on the requirements of the second benef, and these requirements may include a second confirming bank.

Laurence

[NigelHolt]

Personally and without any liability or responsibility:

I infer from sub-Art 48h that if a transferable credit is confirmed the transfer must also be confirmed notwithstanding sub-Art 48c.

I cannot see why a bank would have any concerns about this given it does not seem to affect the ‘exposure’ arising from the confirmation in any significant way as the maximum amount of the confirming bank’s liability remains unchanged.

[asamaha]

I think that whenever the confirming bank agrees to effect the transfer, its confirmation will also stand towards the second beneficiary.
Antoine

[RolandLeupi]

Adding the confirmation to a transferable L/C extend same to the transferred L/C. Not automatically to 2nd beneficiaries however. The transferring bank may request 2nd beneficiaries'bank to advise L/C by adding their confirmation or not

[asamaha]

I think the transferring bk must obtain issuing bk's approval before asking for confirmation from the bank where the transfer is rendered available for the 2nd bene.
On the other hand, when the credit is transferred, I see no difference in considering the transfering bank confirmation under the original credit as being also valid vis-a-vis the 2nd bene, as long as it has agreed to effect the transfer within the scope and under the protection of art. 48 of the UCP.
Antoine Samaha