Difference Between With / Without Recourse Clause In A LC

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suhail
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Difference Between With / Without Recourse Clause In A LC

Postby suhail » Mon Jul 01, 2013 12:22 pm

Hi All,

What is Difference between With / Without recourse clause in a LC.

Thanks in advance,
Suhail

he123
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difference

Postby he123 » Tue Jul 02, 2013 12:06 pm

withrecourse: negotiating/nominating bank shall take back money in case of with recourse.
without recourse: negotiating/nominating/confirming bank will not take back money once paid.

Brgds

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With/Without Recourse

Postby Arun » Tue Jul 02, 2013 1:18 pm

Hi

When a bank has negotiated the documents of the beneficiary and if the beneficiary need funds urgently then the bank will pay upfront to the beneficiary and latter they receive the money from the issuing bank. If the bank has negotiated the documents to the beneficiary in with recourse means if the funds has not been received by the bank from the issuing bank then the bank will recall the money from the beneficiary. On the other hand if the it has negotiated in without recourse then the bank cannot recall the money from the beneficiary.

Note: the Bank means - Neogiating Bank/Confirming Bank/Nominated Bank

The above is my person opinion on with/Without Recourse.

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With / Without recourse clause in a LC

Postby Goody » Fri Jul 05, 2013 10:44 am

In the case of pre-payment of LC whether in discounting or negotiation the banker can add a clause called with recourse or without recourse.
With recourse means if the drawee doesn't pay the banker can recoup the amount paid from the beneficiary. the charges will be less for with recourse payment
where as in the case of without recourse, the banks assume all responsibility and cannot claim the money that is paid to the beneficiary even if the drawee doesn't pay. Hence the charges will be high
As per UCP 600, only a nominated bank can pay with recourse. Both confirming & negotiating banks payment obligations are without recourse.


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