A credit was received via DHL (domestic LC) available with a nominated bank by negotiation, payable at 180 days from the date of shipment.
One of the documents required under the credit was “Draft drawn on the applicant and pre-accepted by them.”
The beneficiary drew a draft and had it accepted by the applicant.
Credit compliant documents were also submitted to the issuing bank.
The following message was received from the issuing bank: “Documents have been accepted and payment will be made as per your instructions on 23-Sep-2009.”
1. Does this message constitute a deferred payment undertaking? (Is there a possibility that the issuing bank can deny payment if the applicant has insufficient funds?)
2. As per article 6, a draft should not be drawn on the applicant. What are the implications including this requirement in this credit?
Appreciate your comments.