Best Trade Solution

My question here is related to documentary letter of credit available by sight payment and sight negotiation.

For documentary letter of credit available by sight payment and sight negotiation, the proper reimbursement instruction in the DLC should be for issuing bank to effect payment within 3 banking days to the nominated bank basis receiving an authenticated teletransmitted swift message from nominated bank certifying complying presentation. The issuing bank must not say they only pay when they received the complying documents. Is this correct?

I understand for documentary letter of credit available by acceptance, deferred payment or non-sight negotiation, the norm is for issuing bank to effect payment on maturity date only upon receiving the complying presentation.

Hi Pal,

strictly speaking a negotiation l/c even at sight must not contain instructions of reimburse, document will be paid on presentation to the issuing bank(confirming bank , art 35 may vary this position.The negotiating bank will esbourse its
own money to the beneficiary and wait for reimbursement.

In payment l/c the nominated bank will receive money from issuing bank and pay the beneficiary.

Both banks will act following the UCP so they must avoid to give money if the documents are not correct, but it is evident that in negotiation issuing bank may lift reserves and stop the reimbursement, in payment l/c it may just ask to be refunded of the money already paid.

Correct documents are the only key to obtain money, we may speak of pretestous discordances, but having a good knowledge of UCP, Opinions etc they may be resolved.

Other comments appeciated-Ciao

Hi Picant:

If i understood you correctly, sight payment and sight negotiation have the "immediate payment element" in which if the nominate bank were to honor or negotiate in the truest sense, they will pay the beneficiary upfront once the nominated bank received the documentary presentation from the beneficiary prior to checking whether the documentary presentation is clean.

If document is found to be discrepant later, then nominated bank claim refund, with any interest applicable, back from the beneficiary (negotiation/honor with recourse).

Hi Pal,

read well art 2 negotiation and honour then art 12
ciao