A nominated bank, even if it is not requested to add its confirmation, must honour or negotiate, when it agrees to act on its nomination and so informs the benef.
What is the difference between a nominated bank that adds its confirmation at issuer's request and a nominated bank not authorized to add its confirmation that agrees to act on its nomination at beneficiary's request?
thanks for comments
regards
Antoine Samaha
Nomination and Authorized confirmation
Nomination and Authorized confirmation
Hi Antoine,
In my opinion the main difference concerns the settlement to beneficiaries, in case of confirmation the paiement is done on due date (whether sight or term) but in case of unconfirmed it can await to receive funds from issuing bank. Otherwise the engament is the same.
Any other views ?
Kind regards to all
Monique
In my opinion the main difference concerns the settlement to beneficiaries, in case of confirmation the paiement is done on due date (whether sight or term) but in case of unconfirmed it can await to receive funds from issuing bank. Otherwise the engament is the same.
Any other views ?
Kind regards to all
Monique
Nomination and Authorized confirmation
Consider prior discussions on silent confirmation and, in particular, the situation in which the issuer sends a message before presentation to the nominated bank saying that any presentation will be fraudulent and should be rejected. Regards, Jim Barnes
Nomination and Authorized confirmation
Would the situation be different for a confirming bank which receives such a message from the issuing bank before any presentation is made to it?
Regards
Antoine
Regards
Antoine
Nomination and Authorized confirmation
Monique,
If a bank agrees to act on its nomination, it will honour or negotiate without waiting the funds from the issuing bank.
If a bank agrees to confirm a DC, it must acts on its nomination i.e. it must honour or negotiate. If a bank does not confirm it will agree or not to act on its nomination but if the bank agrees to act on its nomination, the bank will have to honour or negotiate. And in my opinion, it is the difference between a credit confirmed or not. if confirmed there is an obligation to honour/negotiate. If not confirmed, there is a choice that is an uncertainty for the beneficiary.
Regards
Daniel
If a bank agrees to act on its nomination, it will honour or negotiate without waiting the funds from the issuing bank.
If a bank agrees to confirm a DC, it must acts on its nomination i.e. it must honour or negotiate. If a bank does not confirm it will agree or not to act on its nomination but if the bank agrees to act on its nomination, the bank will have to honour or negotiate. And in my opinion, it is the difference between a credit confirmed or not. if confirmed there is an obligation to honour/negotiate. If not confirmed, there is a choice that is an uncertainty for the beneficiary.
Regards
Daniel
Nomination and Authorized confirmation
Daniel,
You got a point concerning payment !
Do you mean that even though the nominated bank accepted to act on it's nomination, as pointed out by Antoine, there will be still an uncertainty for the beneficiaries ?
Kind regards
Monique
You got a point concerning payment !
Do you mean that even though the nominated bank accepted to act on it's nomination, as pointed out by Antoine, there will be still an uncertainty for the beneficiaries ?
Kind regards
Monique
Nomination and Authorized confirmation
Article 12a states : '..., an authorization to honor or negotiate DOES NOT IMPOSE ANY OBLIGATION on that nominated ..., EXCEPT when expressly agreed to ....'
This will lead us to say that such authorization given by the issuer DOES IMPOSE an obligation on the Nominated Bank to honour/negotiate IF IT AGREES TO ACT on its nomination.
Where is the difference, then, between this commitment of the NB and the confirmation given following the IB authorization?
By informing both the beneficiary and the issuing bank of its agreement to act on its nomination, would the nominated bank be in a better position as does an authorized confirming bank?
Regards
Antoine Samaha
This will lead us to say that such authorization given by the issuer DOES IMPOSE an obligation on the Nominated Bank to honour/negotiate IF IT AGREES TO ACT on its nomination.
Where is the difference, then, between this commitment of the NB and the confirmation given following the IB authorization?
By informing both the beneficiary and the issuing bank of its agreement to act on its nomination, would the nominated bank be in a better position as does an authorized confirming bank?
Regards
Antoine Samaha
Nomination and Authorized confirmation
Monique,
The beneficiary's "uncertainty" will become a "certainty" at the time the nominated bank will tell her/him that it will act on its nomination. For the beneficiary, somehow, the credit will be "confirmed".
Now, I would like to know how many banks tell the beneficiary tha they will act on their nomination at the time they advise the credit.
Antoine,
I wonder why the NB would tell the IB that it will act on its nomination
Regards
Daniel
The beneficiary's "uncertainty" will become a "certainty" at the time the nominated bank will tell her/him that it will act on its nomination. For the beneficiary, somehow, the credit will be "confirmed".
Now, I would like to know how many banks tell the beneficiary tha they will act on their nomination at the time they advise the credit.
Antoine,
I wonder why the NB would tell the IB that it will act on its nomination
Regards
Daniel
Nomination and Authorized confirmation
The answer to the original question put is that one NB acts with the issuing bank's express authority and the other NB does not.
Nomination and Authorized confirmation
Responding to Antoine's further question, the reimbursement rights of an authorized confirming bank are stronger than the reimbursement rights of a bank that is authorized to negotiate but not confirm.
UCP600 addressed the status of nominated banks that discount without express authority. UCP600 did not address the status of nominated banks that confirm without authority. This leaves a silent confirmer at some risk during the period between agreeing to negotiate and negotiating.
The extent of the risk will depend on what law applies to the nominated bank's rights of reimbursement. In the typical commercial LC there will be no choice of law anywhere. So, the decision about what law applies will be made by whatever court hears whatever dispute arises.
Regards, Jim Barnes
UCP600 addressed the status of nominated banks that discount without express authority. UCP600 did not address the status of nominated banks that confirm without authority. This leaves a silent confirmer at some risk during the period between agreeing to negotiate and negotiating.
The extent of the risk will depend on what law applies to the nominated bank's rights of reimbursement. In the typical commercial LC there will be no choice of law anywhere. So, the decision about what law applies will be made by whatever court hears whatever dispute arises.
Regards, Jim Barnes