Does A Confirmation Covers The Usance Period

[Md.zakir Hossen]

Today I opened a Confirm Credit.Confirmed by XXXX
Credit is 120 days sight.
date and place of Expiry :20 October 2008.
I WANT TO KNOW WHETHER THE CREDIT IS CONFIRMED ONLY UP TO 20 OCTOBER 2008?

AFTER GETTING THE COMPLYING DOCS ISSUING BANK WILL PROVIDE ACCEPTANCE AND DUE DATE FOR PAYMENT.SAY DUE DATE FOR PAYMENT IS 20 JANUARY 2009.IS IT NECESSARY FOR THE CONFIRMING BANK TO PROVIDE THE CONFIRMATION AGAIN FOR PAYMENT ON JANUARY 20,2009?

[jmitra]

dear zakir,

the obligation of confirming bank is upto 20th October. from your question i had a feeling that the document will be presented to the issuing bank directly. in that case the confirmation expires without utilization. whats the benefit of confirmation then. a prudent beneficiary will present the document to the confirming bank which will incur the deferred payment undertaking. in that case the issuing bank undertaking will remain in force.

regards

mitra

[shahriar]

i agree with mitra. here is a reference which might be helpful -

ICC Opinion R-399

The confirmation period is from the time of adding the confirmation until the expiry date. The Usance period is a reimbursement condition.

regd

shahriar

[iLC]

I have a question. If the document is presented to the nominated bank which has presented the document to the issuing bank instead of the confirming bank and the issuing bank does not pay at maturity, is the confirming bank liable to pay?

regd

iLC

[Md.zakir Hossen]

MY OPINION IS:CONFIRMING BANK IS NOT LIABLE TO PAY:

SEE ARTICLE NO8(C) : "A CONFIRMING BANK UNDERTAKES TO REIMBURSE ANOTHER NOMINATED BANK THAT HAS HONORED OR NEGOTIATED A COMPLYING PRESENTATION AND FORWARDED THE DOCS TO THE CONFIRMING BANK."

[jmitra]

dont be so sure dear zakir. if the nominated bank represent the document to the confirming bank, the confirming bank liable to pay.

have a nice day

mitra

[nesarul]

Dear all,
this is a argumental issue. the real essence of the following R.14 of ICC Publication 371 which was superseded by Official Opinion R520 might be helpful
regards
nesar.

[shahriar]

i think i will go with mitra. UCP says

a. provided that the stipulated documents are presented to the confirming bank or to any other nominated bank and that they constitute a complying presentation, the confirming bank must:

that means if a presentation is made to nominated bank, that is a binding to confirming bank. if the document is complying, the confirming bank has to pay even if the credit expires by the time it reaches the confirming bank

regd

shahriar

[Md.zakir Hossen]

I THINK MITRA ARGUMENT IS CONSIDERABLE.

[shahriar]

now we are three

regd

shahriar