Action Of Reimbursing Bank On Honor Of Claim

[FaisalFahim]

Dear Experts,

Kindly help me to find the correct answer..

A reimbursing bank has received a valid claim under its reimbursement undertaking andis instructed by the issuing bank NOT to honour the claim. In accordance with the URR725, the reimbursing bank should:

A request the claiming bank to cancel the claim.
B instruct the claiming bank to contact the beneficiary.
C honour the claim and debit the issuing bank's account.
D dishonour the claim as per the issuing bank's instruction.

While from my opinion D would be the right answer

[picant]

Hi Pal,

claiming bank has not received any message from the reimbursing bank, so D is ok.
Ciao

[saikumar1208]

Option c is right. Reimbursement authorization is a irrevocable undertaking of reimbursing bank to reimburse a claim upon receipt of claim from claiming bank which complies with the terms and conditions mentioned in the reimbursement undertaking and claim should be sent within the expiry date of undertaking

[picant]

Hi Pal,

as I said before, the claiming bank has received messages from the reimbursing bank, I meant
it is an IRU or a simple authorization to honor a claim? An IRU naturally is to be honored but
the other no.
Ciao

[cristiand969]

Facts:
1. Reimbursing bank has received a valid claim from claiming bank
2. Reimbursing bank has previously provided the claiming bank with IRU as the text implies, otherwise we could not have knowledge of IRu existence
3. Applicable articles from URR 725:
-art 2 g. “Reimbursement undertaking” means a separate irrevocable undertaking of the reimbursing bank, issued upon the authorization or request of the issuing bank, to the claiming bank named in the reimbursement authorization, to honour that bank’s reimbursement claim, provided the terms and conditions of the reimbursement undertaking have been complied with.
-art 9 G : A reimbursing bank is irrevocably bound to honour a reimbursement claim as of the time it issues the reimbursement undertaking.
- art. 9 H i An irrevocable reimbursement authorization cannot be amended or cancelled without the agreement of the reimbursing bank. Note: A request of cancelation of IRU from issuing bank equates to an amendment by which IRu is cancelled

4. Action of reimbursing bank under issuing bank request of cancellation: Rerimbursing bank declines such request of issuing bank as it has irrevocably undertaken !
Therefore option c is correct!

[LOAN]

C honour the claim and debit the issuing bank's account.

(pls refer to URR725 - art.9 (g))
regds,