Difference Between With / Without Recourse Clause In A LC

User avatar

Difference Between With / Without Recourse Clause In A LC

Postby suhail - INDIA on Mon Jul 01, 2013 12:22 pm

Hi All,

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

Thanks in advance,
Suhail

User avatar
suhail
 
Posts: 1
Joined: Mon Jul 01, 2013 12:16 pm
Location: INDIA

User avatar

difference

Postby he123 - Delhi on 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

User avatar
he123
 
Posts: 86
Joined: Fri Aug 05, 2011 9:46 pm
Location: Delhi

User avatar

With/Without Recourse

Postby Arun - India on 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.

User avatar
Arun
 
Posts: 15
Joined: Mon Jul 01, 2013 9:02 pm
Location: India

User avatar

With / Without recourse clause in a LC

Postby Goody - Bahrain on 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.

User avatar
Goody
 
Posts: 80
Joined: Sat Dec 01, 2012 11:56 pm
Location: Bahrain


Return to Letter of Credit Forum



Buy Premium Points



Buy Points And Get Instant Access!!

Support us on Facebook


Your support is important to us

Similar Topics

Honor Was Made With Recourse

Is Red Clause LC A Mixed Payment LC?

Charge Realization Clause Against Discrepency Of Document

Bill Of Lading Showing Clause Intended Vessel

Institute Frozen Food Clause And All Risk Insurance

Recent Reviews
Books & Training Review - ICC Guide to the Uniform Rules for Bank Payment Obligations

Books & Training Review - ISBP Online

Books & Training Review - UCP 600 Transport Documents

Latest in Trade Library
Issuing Bank Had to Pay Despite Discrepancies

UCP 600 Exclusions in Perspective

Use of Transport Document in International Trade

Your Right to Vote
Do you like our new mobile website for forum?
Yes
No
Havent Tried

Poll initiated by admin
BTS Crossword

Crossword Puzzle: CITF - 1.1
Crossword Puzzle: URR725 - 1.1
Crossword Puzzle: URDG758 - 1.1
Crossword Puzzle: URC522 - 1.1
Crossword Puzzle: UCP600 - 1.1