ISBP paragraph 49 says that a draft must be endorsed if necessary.
please explain what are the cases when endorsement on a draft becomes mandatory under a letter of credit transaction.
endorsement on a draft as per ISBP
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shim
- Posts: 6
- Joined: Fri Mar 06, 2009 11:01 pm
hi ^^
I belive you to be aware that there are some parties to a draft of exchange. (ie: drawer, drawee, payee )
1.when the Payee of draft is Drawer(beneficiary), the draft must be endorsed by drawer(beneficiary) in favor of beneficiary's nego bank.
2.and when payee is beneficiary's nego bank, the draft must be endorsed by the nego bank in favor of themselves(nego bank) and present it to the Drewee bank that could be issuing bank or confirming bank.
3.and when payee is first nego bank(beneficiary's nego bank) and if first payee present it to the re-negotation bank,
the draft must be endorsed by first payee in favor of re-negotation bank...
I think these are all case.. and actually I am not in English-speaking countries.so I am diffident about speaking English and It could be diffcult for you to understand what I am explaining......sorry~
1.when the Payee of draft is Drawer(beneficiary), the draft must be endorsed by drawer(beneficiary) in favor of beneficiary's nego bank.
2.and when payee is beneficiary's nego bank, the draft must be endorsed by the nego bank in favor of themselves(nego bank) and present it to the Drewee bank that could be issuing bank or confirming bank.
3.and when payee is first nego bank(beneficiary's nego bank) and if first payee present it to the re-negotation bank,
the draft must be endorsed by first payee in favor of re-negotation bank...
I think these are all case.. and actually I am not in English-speaking countries.so I am diffident about speaking English and It could be diffcult for you to understand what I am explaining......sorry~
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ofei
- Posts: 93
- Joined: Tue Oct 28, 2008 8:51 am
depends on if there is need of fiance
Dear all,
In fact, I think whether or not a draft needs to be endorsed depends on whether there is need for the holder to acquire fiance.
For example, a draft is issued by a seller and the payee is himself, then he may endorse it to his bank if the bank prepares to provide fiance. That may be discounting if the draft is a usance one. That may also be negotiation under letter of credit. Once the bank discount or negotiate to the draft, it becomes a holder in due course and will be protected by instrument laws.
But there might be another circumstance that the bank won't prepare to provide fiance. Thus the bank will only forward the bill (as well as documents) at the request of the seller to an importing bank for collection of payment.
Just for your reference.
Regards
Ofei
In fact, I think whether or not a draft needs to be endorsed depends on whether there is need for the holder to acquire fiance.
For example, a draft is issued by a seller and the payee is himself, then he may endorse it to his bank if the bank prepares to provide fiance. That may be discounting if the draft is a usance one. That may also be negotiation under letter of credit. Once the bank discount or negotiate to the draft, it becomes a holder in due course and will be protected by instrument laws.
But there might be another circumstance that the bank won't prepare to provide fiance. Thus the bank will only forward the bill (as well as documents) at the request of the seller to an importing bank for collection of payment.
Just for your reference.
Regards
Ofei