Best Trade Solution

dear all,

im bit confused with the answer given in FAQ3 12.18 where it has been said that if the nominated bank has accepted a draft, it must pay at maturity even if the issuing bank has not reimbursed them. i have heard similar positions but all the experts opine that it depends in the language of the deferred payment undertaking. is the case of acceptance different?

regd

shahriar

Issuing Bank Undertaking (UNDER UCP 600)
a. Provided that the stipulated documents are presented to the nominated bank or to the issuing bank and that they constitute a complying presentation, the issuing bank must honour if the credit is available by:
.....
iv. acceptance with a nominated bank and that nominated bank does not accept a draft drawn on it or, having accepted a draft drawn on it, does not pay at maturity;

Clear enough I dare to say.....

The a/m situation will not apply when nominated bank has added confirmation to a/m credit. ...

usually a nominated bank is not oblige to honor a deferred payment undertaking. but when accepting a draft... im not sure. local law plays a very important role for issues related to draft. may be a lawyer can give you the right answer.

regards

mitra

Dear,
Here I try with my own concept. I know its huge tough for me to do it.
.
If credit available with a nominated bank by deferred payment or acceptance, in order to prove nominated bank acting on its nomination, it has to perform two functions:
1. incurred owm DPU or accepted draft
2. make payment [ at maturity or advancing on its own DPU or accepted draft].
.
So merely fulfilling the one function doesn''t prove that nominated bank acting on its nomination due to sub article 7(a)(iii) & (iv).
.
Now lets analysis the issue under the following two presentations of same credit on above availability.
in one presentation:
1. nominated bank stated that" we shall[emphasis added] effect payment at maturity i.e........ as per credit terms & condition.
in another presentation:
2. the same nominated bank stated that" we may[emphasis added]l effect payment at maturity i.e........ as per credit terms & condition.
.
the first statement is proved that nominated bank acting on its nomination and thereby obligated to honour the presentation.
.
The second statement didn't proved that nominated bank acting on its nomination and thereby will not obligated to pay.
.
hope this will add .
.
regards
nesar