2.03 conditions to issuance
A standby is issued when it leaves an issuers control unless it clearly specifies that it is not then issued or enforceable.
Statements that a standby is not 'available'' ,''operative'',''effective'',or the like do not affect its irrevocable and binding nature at the time it leaves the issuers control..
Does above clause mean to say that if LC has a condition that standby letter of credit is not operative/not effective, it does not require any attention of the confirmer/beneficiary?
what would be the scenario despite knowing the above said condition, issuer issues an LC with statement like not operative/not effective.
Thanks & Regards
Dinesh
2.03 conditions to issuance
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dinesh2476
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dinesh2476
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Re: 2.03 conditions to issuance
Dear Experts,
Any opinion welcome..
Thanks & Regards
Dinesh Kumar.
Any opinion welcome..
Thanks & Regards
Dinesh Kumar.
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picant
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Re: 2.03 conditions to issuance
Hi Pal,
ISP98 are not well known in Italy, first of all not expression of the banking system, than rare and limited
to some Countries. However The Official Commentary referring to Rule 2,03 states:
2: Operative Conditions: Terms which require the occurrence of some action or document before the standby has become "effective", "operative", or "available" do not effect its irrevocable character and are only conditions to the requirement of the issuer to pay. If these conditions are non-documentary, they must be disregarded under ISP98 rule 4.11. If they are documentary they must be performed in the same fashion as any other condition although, by thr terms of the standby, they may be required to be performed before any drawing is made. Often these terms are based on dates(e.g. drawing not available until 31 december 20...) or facts determinable from the issuer's own records(e.g. drawing not available until advance payment of USD-EUR-GBP is made to applicant's account no..... with us).
Frankly I dont understand this comment, if it is not operative, IMHO it is not valid.
Bank of Italy stated that in case of advance payment bond, the applicant has to have a credit line with the issuing bank, but the risk is booked only when the advance is on the applicant's account. In this way the Central of Risks with Bank of Italy will show the credit facility but the fact that the applicant has money on its account(e,g, coverage of overdraft !)
Others unknown
Ciao
ISP98 are not well known in Italy, first of all not expression of the banking system, than rare and limited
to some Countries. However The Official Commentary referring to Rule 2,03 states:
2: Operative Conditions: Terms which require the occurrence of some action or document before the standby has become "effective", "operative", or "available" do not effect its irrevocable character and are only conditions to the requirement of the issuer to pay. If these conditions are non-documentary, they must be disregarded under ISP98 rule 4.11. If they are documentary they must be performed in the same fashion as any other condition although, by thr terms of the standby, they may be required to be performed before any drawing is made. Often these terms are based on dates(e.g. drawing not available until 31 december 20...) or facts determinable from the issuer's own records(e.g. drawing not available until advance payment of USD-EUR-GBP is made to applicant's account no..... with us).
Frankly I dont understand this comment, if it is not operative, IMHO it is not valid.
Bank of Italy stated that in case of advance payment bond, the applicant has to have a credit line with the issuing bank, but the risk is booked only when the advance is on the applicant's account. In this way the Central of Risks with Bank of Italy will show the credit facility but the fact that the applicant has money on its account(e,g, coverage of overdraft !)
Others unknown
Ciao