Payment Will Be Made Unless Applicant Objects

[shahriar]

dear all,

lets a 90 days deferred payment LC has the following reimbursement condition;

payment will be made after 60 days from the date of bill of lading unless the applicant place a refusal advise within that period.

the LC is available with confirming bank by negotiation. will the confirming bank negotiate with recourse basis? if it negotiate without recourse basis and the applicant place a rejection notice, what will be the outcome?

regd

shahriar

[jmitra]

dear shahriar,

that would be the most difficult question one would have encounter in his entire banking career. personally i would never confirm such a credit.


regards


mitra

[nesarul]

dear shahriar,
-90 days Deferred payment L/C
-payment will be efected 60 days after shgipment date
-applicant can provide notice of refusal?????????????????????
-credit available by negotiation
.
Really tough to guess.......
.
two very important point to know:
.
1. why they don't involve in open account trade.
2. the credit conditions which change article 16.[pls mentioned here... i am eagerly looking forward] i mean applicant provide notice of refusal.
.
if an issuing bank can do it, i really give them bravo.......pls mentioned here.
.
nesar
.

[shahriar]

dear nesar,

about your two questions

1. This is a educational query
2. Issuing bank will issue the refusal advice and also incur the deferred payment undertaking. but will not pay if the applicant place a refusal advice to the issuing bank before the maturity.

regd

shahriar

[cristiand969]

This L/C is so inconsistent so that it may be rejected at once unless modifications are expected or L/C is not subject to UCP (even so it is inconsistent).
Nesarul noticed very well such inconsistencies. Besides refusal notice can only be sent by the issuing bank (by virtue on its undertaking) and within 5 banking days after receiving docs.
With regard to Shahriar posting I would add that we can expect such L/C to be under an educational query in the same way as a teacher tells to his classroom : 'suppose 2+1 is 7' . Then what is 2 x 1?
Regards
C.

[iLC]

i dont think its a pure education query even if the intention was such. there are real examples. sorry bit busy right now. hope will be back soon

iLC