Dear all
A standby L/C for EUR10,000 payable agaisnt presentation of a statement of default is confirmed by the confirming bank. Subsequently, the credit amount is increased by EUR1,000 .
In its acknowledgement of the amendment the confirming bank states
Quote:
Any presentation made to the extent of EUR10,000 will be honour by us and any presentation made beyond the amount of EUR10,000 will be forwarded to the issuing bank for review and payment.
Unquote
Do you agree with this point of view or would you agree that in case of a claim exceeding EUR10,000 the confirming bank would still be liable, albeit to the extent of EUR10,000.
Best Regards
Carmel
Partial confirmation
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CarmelBorg
- Posts: 21
- Joined: Fri Apr 05, 2019 5:13 pm
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HOANGTHIANHTHU_invalid
- Posts: 189
- Joined: Fri Apr 05, 2019 5:15 pm
Partial confirmation
Dear Carmel,
What I understand from sub-article 10 (b) is that when the confirming bank has advised the amendment without its added confirmation, it is deemed to have agreed to the terms and conditions of the amendment except for its refusal to extend its confirmation to the amendment. Therefore, it must honour a complying presentation up to the amount of its confirmation even when the beneficiary makes a presentation for the amount including the amount increased by the amendment.
A confirmed L/C cannot be amended without the agreement of the confirming bank, hence, if the confirming bank does not wish to agree to the amendment, it should not advise the amendment to the beneficiary and advise the issuing bank of the same. If this is the case, it can refuse to honour in case of a claim exceeding the amount of its confirmation.
Best regards,
N.H.Duc
What I understand from sub-article 10 (b) is that when the confirming bank has advised the amendment without its added confirmation, it is deemed to have agreed to the terms and conditions of the amendment except for its refusal to extend its confirmation to the amendment. Therefore, it must honour a complying presentation up to the amount of its confirmation even when the beneficiary makes a presentation for the amount including the amount increased by the amendment.
A confirmed L/C cannot be amended without the agreement of the confirming bank, hence, if the confirming bank does not wish to agree to the amendment, it should not advise the amendment to the beneficiary and advise the issuing bank of the same. If this is the case, it can refuse to honour in case of a claim exceeding the amount of its confirmation.
Best regards,
N.H.Duc