Must The Negotiating Examine The Document?

[raseen]

should the negotiating bank check the documents presented to him . & how far should he go to fulfil his obligation regarding that .

[shahriar]

dear raseen,

under UCP 600 framework, the nominated bank is not oblige to examine the document unless it has taken up its nomination. taking up his nomination means that is nominated bank is ready to honor or negotiate the document under a complying presentation.

when you are using the word negotiating bank, to me it means that the bank is negotiating the document; that is acting on its nomination. thus a negotiating bank must examine the document; not should. however if the bank is not negotiating the document or not acting on its nomination, its not mandatory to examine the presentation. nevertheless, a presenting bank should examine the document with a view to sever the beneficiary, which is its client most of the time, in a better way.

article 14a answers your 2nd question. the article says

a. A nominated bank acting on its nomination, a confirming bank, if any, and the issuing bank must examine a presentation to determine, on the basis of the documents alone, whether or not the documents appear on their face to constitute a complying presentation.

here the term on their face means that banks will check the documents against the UCP and ISBP. i have a feeling from your question that you wanted to know whether bank should look for fraud or not. article 34 of UCP 600 says that bank assumes no liability on this issue. the purpose of this article is to make the life of the document checker simple. or else he or she will be more a detective than a banker. but this does not mean that when the document checker knows that what is presented is not right or is fraud, he or she can not turn a blind eye on it. the presentation should be refused.


hope that will answer the question.

regd

shahriar

[raseen]

Dear Sir,

thanks a lot for your quick & helpful reply . but I want to be sure of something , did you mean that the bank which documents sent through to the issuing bank is not necessary to be a negotiating bank ?? I would appreciate more explanation .

[iLC]

dear raseen,

simple answer is no. there is no requirement for the presenting bank to be a negotiating bank. there are many related facts related to it though like making effective presentation etc. it would be nice if you please share the situation you are facing which would help to us to help you.

anyway, again, there is no requirement in UCP that the presenting bank; that is the bank which is sending the document to the issuing bank; need not be a negotiating bank.


iLC

[jmitra]

dear raseen,

i would like to add that there are two possible scenario here -

1. the presenting bank is a nominated bank but not acting on its nomination. in this case the nominated bank is not a negotiating bank and is not oblige to examine the document.

2. the presenting bank (say XYZ) is not a nominated bank. therefore its not a negotiating bank. in addition presentation to bank xyz does not make a valid presentation under UCP and is not protected by UCP 600 article 6.d.i & ii, article 2 and article 29

regards

Mitra

[raseen]

thanks all , I think I got it .

[Mehdi]

Thanks for nice discussion.

However, could you please elaborate the issue if the nominated bank (not acting on its nomination) issues EXP form. What would be its fate if the documents are returned without payment pertaining to repatriation of export proceeds in local law.

Regards........mhr

[shahriar]

dear mehdi,

very good question for many of us though its outside the scope of UCP. i think the responsibility will remain same. i havent seen any part of local law which does consider nominated bank in this manner. in local law there is only banks!!

regd

shahriar