ICC Digital Library Forum

I have an observation with respect to credits particularly available by negotiation.Banks from different countries require drafts drawn on the nominated bank (confirming) if that bank adds its confirmation to the credit.

Within the framework of the UCP and the nature of the credit, drafts should be drawn on the issuing bank or any other nominated bank not on the bank acting as negotiating bank.And this situation should be applicable to both confirming or non conforming credits.
I'm trying to understand the reason behind this requirement.
What would you "as the confirming bank" do if you received such a credit ?

Regards,
Yahya

[edited 11/12/2007 2:44:15 PM]

Yahya,

A drawee pays the bill of exchange. Therefore only an "entity" which is not drawee negotiates. In my opinion, such a credit is available by acceptance with the confirming bank.
Daniel

Yahya,

Irrespective of whether or not a credit is confirmed, if a credit is available by negotiation drafts should normally be drawn on the issuing bank unless there is a non-confirming nominated bank in addition to a confirming bank (as provided for in sub-Art. 8(i)(e)). I would note the definition of negotiation (Art. 2) is ‘the purchase by the nominated bank of drafts (drawn on a bank OTHER THAN THE NOMINATED BANK’) …’ [my emphasis] and that sub-Art. 8(ii) makes provision for a confirming bank to negotiate. If drafts are drawn on the confirming bank it cannot, by definition, negotiate.

Regards, Jeremy

[edited 11/13/2007 10:44:42 AM]