Issuing bank undertaking to nominated bank

[CDCS2009]

Article 2 says Nominated bank means the bank with which the credit is available. Article 6 says b. A credit must state whether it is available by sight payment, deferred payment, acceptance or negotiation. Acting on its nomination means utilizing the availability of the credit. If the nominated bank incurs a deferred payment undertaking but does not pay, then its not honor and the bank is not acting on its nomination. Because honor means both incurring undertaking and payment at maturity. Therefore LC still exists even after the deferred payment undertaking. Again as per article 7c, issuing bank undertaking works when the document is honored by the nominated bank. Can it be said that unless the nominated bank does not pay at maturity, 7c does not come into effect. R399: The confirmation period is from the time of adding the confirmation until the expiry date. The Usance period is a reimbursement condition.

[nesarul]

dear,
The usages of nominated bank in UCP 600 can be described in two ways: one is nominated bank acting its nomination and another one is named nominated bank.
Another premise that we can assume that it has been well settled as international standard banking practice that invited nominated bank will handle the document despite its decision not to honour or negotiate.
Sub article 7(c) is taiking about to reimburse nominated bank who present the document(not to only nominated bank acting on its nomination) which will indirectly reimburse the beneficiary also.
Nesar
Nesar

[CDCS2009]

dear nesarul,


its not clear to me. let me explain again. article 7c says

An issuing bank undertakes to reimburse a nominated bank that has honored or negotiated a complying presentation and forwarded the documents to the issuing bank. Reimbursement for the amount of a complying presentation under a credit available by acceptance or deferred payment is due at maturity, whether or not the nominated bank prepaid or purchased before maturity. An issuing bank’s undertaking to reimburse a nominated bank is independent of the issuing bank’s undertaking to the beneficiary.

the first bold line means that the nominated bank is acting on its nomination and not just any nominated bank. the 2nd bold line further reinforce that the nominated bank is acting on its nomination.

now my point is honor is not complete till the nominated bank pay at maturity. so if the nominated bank does not pay at maturity, its not honoring and therefore not acting on its nomination. so 7c only applies if the nominated bank actullay pay the beneficiary on maturity and not becuase it has incurred a deferred payment undertaking and forwarded the document to the issuing bank.

[nesarul]

Dear,
First bold line i think you agreed that here issuing bank's reimbursement to the nominated bank acting on its nomination.
second bold line:
if i quote fro m here:

whether or not the nominated bank prepaid or purchased before maturity.

if [WHETHER]prepaid or purchase:
issuing bank's reimbursement to the nominated bank acting on its nomination.
if [NOT]:
my previous remarks:

Sub article 7(c) is taiking about to reimburse nominated bank who present the document(not to only nominated bank acting on its nomination) which will indirectly reimburse the beneficiary also.

nesar