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deal all,

today i encountered this case

A bank issued a letter of credit in favor of XYZ. after a week the applicant informed the issuing bank that the beneficiary wants to substitute its name with one of its sister concern. the issuing bank propose to make the LC transferable. but the applicant insisted on changing the name of the beneficiary. later the beneficiary managed to sent a swift 799 message through the advising bank informing that its not in a position to ship the goods and requested to amend the name of the beneficiary to one of its sister concern. the bank having this message in hand, amend the LC accordingly.

whats your opinion on the case?

regd
shahriar

Dear,
If we think as follows:
A letter of credit issued by the Bank X = One undertaking
A amendment foolowed it = another Undertaking. which is independent and separate.[ one will get taste of it from transferable credit]
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So basically the issuing bank bears two undertaking rather than one on above cases.

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Does it harm to much.
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if no, then whats harm to change the name of the beneficiary.
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i think under above cases, issuing bank bears two independent and separate undertaking to two different beneficiary and should booked two contigent liability for its customer (applicant].
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now it is upto the issuing bank.....
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if i go wrong way pls ractify.
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regards
nesar

dear nesar,

to be effective, an amendment must be accepted by the beneficiary. here the amendment is changing the name of the beneficiary. if the beneficiary accept it, then he is giving up his right. if he doesn't the new beneficiary has no right. so i dont think that there will be two liability.

however this whole discussion sounds too odd :shock:

i have a supplementary question. does the beneficiary needs to accept an amendment further where the process is actually initiated by the beneficiary?

regd
shahriar

Dear Jimitra,
You are absolutely right regarding acceptance of beneficiary [old]. yes i do agree, no amendment will become effective unless beneficiary [old] accept it. sub article 10(a).
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There I explain it with an assumption of above.
MY thinking is a bit theoritical with a view to emphasis on two separate undertaking of original credit and amendment.
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From practical point of view:
I think the best possible alternative is to call back original credit from the old beneficiary and advised the original credit with an amendment to the new beneficiary.
what is your thinks.
regards
nesar

Changing the beneficiary name does not double the issuing bank undertaking . Once issuing bank receives a set of documents it will now whether the amendment was accepted or rejected.

When advising bank amendment to the advising change/replacement beneficiary in field 59, is advising bank require to original beneficiary whose name come in MT-700 or to second beneficiary whose name came in MT-707?

What would be obligation of LC advising bank to old Beni and new Beni.
How the new Beni shall get the original LC Instrument and all rights of old beni shall relinqquish

There are many unnswered question. Is ICC ever given their opinion on this