Dear sir,
we issued a LC at sight available by negotiation with any bank in Canada. the LC calls for a draft drawn on our bank. the draft shows
pay to the order of ------------ (beneficiary’s name)
for USD ------------(Full LC Value)
drawn under ------------ (out bank name and LC no.)
the draft is endorsed by the beneficiary to the order of HSBC bank Canada. HSBC further endorsed it showing “pay to the order if any bank, banker or trust co.”
is this draft complying? does drawn on and drawn under have the same meaning?
is the draft complying?
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jmitra
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its complying
to the draft is complying though its largely dependent on the local laws. the draft is issued to the order of beneficiary which is ultimately transferred to the order of any bank. so you should not have any problem with paying the presenting bank. i think drawn on and drawn under bear almost the same meaning in this case.
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sunny
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draft
From the information provided We are not able to identify if draft is correct or not.
The Bill of exchange Act provide some mandatory elements so that draft to be valid and I would like to mention at least the name DRAFT/ BILL OF EXCHANGE. On the other hand , is this draft signed on its face (not only endorsed) by the drawer, is the drawee stated/or stated correctly?
brgds
The Bill of exchange Act provide some mandatory elements so that draft to be valid and I would like to mention at least the name DRAFT/ BILL OF EXCHANGE. On the other hand , is this draft signed on its face (not only endorsed) by the drawer, is the drawee stated/or stated correctly?
brgds
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shahriar
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does drwan under means drwaee
im not very much conversant with the bill of exchange act. does the drawn under the .... means the drawee if the drawee name is mentioned there?
regd
shahriar
regd
shahriar
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loankim
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refusing on discrs of draft ?
Hi Jabra,
I see a lot of drafts like that presented to our bank and final decision is complying.
As far as the UCP is concerned, a draft is only required under a credit available by acceptance. For at sight credit it is not necessary but the definition of negotiation refers to drafts and/or documents. So yr lc calling for draft is okie.
I agree with Jmitra that drafts will dependent on the local laws and those endorsements are suitable for transfer the right of reimbursement, but I think that “drawn on” is drawee and “drawn under” is backgrounds which people base on to draw a draft such as ( LC no, contract no., etc). Issues such as LC numbers, import licence numbers etc. should not be added to a draft and if not added should not be a reason for refusal, so we shoudn’t focus so much on “drawn under”
When a draft is examined, it can only be assessed based on the following:
- correct tenor according to the credit
- amount and words matches the amount of the invoice or amount that is due (if amount due is less than invoice value)
- drawn on the correct party
- issued by the beneficiary
From yr information provided, even draft is one kind of docs required on field 46A, most of good banks seldom give a refusal notice basing on dicrs of drafts, they often notice to presenter and they will arrange to resent corrected drafts. However, this action will not be done in some contries which have a requirement for the issuing bank to present a draft to the applicant in order to obtain reimbursement from them. It is for this reason that the UCP allows for a draft on the applicant to be called for as a normal document. This draft is NOT for acceptance by the applicant and has no bearing on the undertaking of the bank.
Rgds,
loankim
I see a lot of drafts like that presented to our bank and final decision is complying.
As far as the UCP is concerned, a draft is only required under a credit available by acceptance. For at sight credit it is not necessary but the definition of negotiation refers to drafts and/or documents. So yr lc calling for draft is okie.
I agree with Jmitra that drafts will dependent on the local laws and those endorsements are suitable for transfer the right of reimbursement, but I think that “drawn on” is drawee and “drawn under” is backgrounds which people base on to draw a draft such as ( LC no, contract no., etc). Issues such as LC numbers, import licence numbers etc. should not be added to a draft and if not added should not be a reason for refusal, so we shoudn’t focus so much on “drawn under”
When a draft is examined, it can only be assessed based on the following:
- correct tenor according to the credit
- amount and words matches the amount of the invoice or amount that is due (if amount due is less than invoice value)
- drawn on the correct party
- issued by the beneficiary
From yr information provided, even draft is one kind of docs required on field 46A, most of good banks seldom give a refusal notice basing on dicrs of drafts, they often notice to presenter and they will arrange to resent corrected drafts. However, this action will not be done in some contries which have a requirement for the issuing bank to present a draft to the applicant in order to obtain reimbursement from them. It is for this reason that the UCP allows for a draft on the applicant to be called for as a normal document. This draft is NOT for acceptance by the applicant and has no bearing on the undertaking of the bank.
Rgds,
loankim