ICC Digital Library Forum

Is LC confirmation a primary or a secondary obligation? I always thought primary.
In discussion with a major international bank in NY, I was told otherwise. The details are way too much to go into. My basic questions are ; is confirmation a primary obligation of the confirming bank; is it on par with the issuing banks obligation or is it something else?

Appreciate your input.

Thanks

If an undertaking is a letter of credit (or confirmation) within the scope of UCC Article 5, then it is independent. See UCC section 5-107, particularly official comment 1. Independence is the key concept and word, because primary and secondary are essentially guarantee/suretyship law terms that introduce confusion when applied to LCs. See ISP98 Rule 1.10(a)(iii).

A confirmer's obligation may be triggered by the issuer's dishonor of a presentation to the issuer, and not just by receipt of a presentation to the confirmer. See ISP98 Rule 2.01(d)(ii) and UCP600 Art. 8(a)(i)(b)-(e). The confirmer's obligation is nonetheless independent, but there may be practical problems where the confirmer never itself handled the documents. (Similar practical problems arise for an issuer that permits presentation to a confirmer and also under UCP600 Art 35 on documents lost in transit.)

Regards, Jim Barnes