DRAFT ENDORSEMENT BY PARTY NOT MENTIONED IN IT.

[dinesh2476]

Dear experts,

Draft states drawee is xxxxx(ISSUING BANK)

We, applicant apart from the below, usually authorize Issuing bank to debit our account with date in
the column specifically designed in the DAN( documents arrival notice)

However, but as a practice, Issuing bank asking us to fill the below details with signature on the back page of the draft.

''ACCEPTED FOR PAYMENT AT XXXXX ON XXXXX FOR XXXX DATE ''

We understand that issuing bank being drawee is obligated to provide undertaking to the presenting
that on xxxx date they make payment without fail

However,not sure the reason for Issuing bank looking for acceptance in the backside of the draft despite acceptance in the DAN to debit our account on xxxxx date.

By endorsing as said above, is applicant making themselves legally binding to make payment to the issuing bank though his not a party to draft.

Do we have any provision in the negotiable instrument act supporting the above stands or could be local law that protects that Issuing bank.

Thanks & Regards
Dinesh Kumar

[dinesh2476]

Dear Experts

any opinion welcome.

How does confirmation of applicant on draft in endorsement page '' agreed to make payment on xxxxx'' help bank to sue/protect them in case of non payment by applicant on maturity date

Applicant is not a party to the draft. it was drawn on issuing bank(our bank)

Thanks & Regards
Dinesh Kumar

[dinesh2476]

Dear Experts,

I welcome any opinion on this subject.

Drawee is Issuing bank and under this Negotiable instrucment, the obligation is created against issuing bank and by accepting on the back side of the draft. the issuing bank is invoking its obligation under this draft instrument.

The anticipation of the issuing bank in accepting draft by the applicant make a change in the way the issuing bank commited its obligation to confirming bank/nominated bank.

In the event of failure of payment from the applicant on maturity date post payment from issuing bank to confirming/nominated bank, can make the issuing bank sue applicant basis the endorsement done by him though he is not a party involved in the draft neither does it create any obligation under LC or UCP.

Thanks & Regards
Dinesh Kumar

[picant]

Hi Pal,

probably it depends on the local law. IMHO, draft is kept by the issuing bank, and the amount duly debited at sight or maturity.
In case of doccredit available by acceptance, the beneficiary or the presenting bank may require the accepted draft(by the issuing bank) and try to discount it in the Market at a better price. At matirity someone will present the draft to the issuing bank for payment. No experience about it. Ciao