Mechanism of confirmation in LC
Posted: Sun Mar 31, 2019 12:10 pm
Hello, experts,
Someone can explanation mechanism of confirmation for me.
1. In CDCS book say that " If a confirming bank is not a nominated bank, it is likely that it is being asked to undertake to pay in the event of non-payment of a complying presentation by the issuing bank, and not to undertake to honour or negotiate against the presentation of complying documents to it. The wording of the confirmation advice must clearly reflect the form of undertaking that the bank is giving." I understand the statement
However, its also say that "When a confirming bank is a nominated bank under a documentary credit that is available with any bank, UCP 600, sub-articles 8(a)(i)(b)–(e), require that it honour or negotiate if another nominated bank does not act on its nomination or, having acted on its nomination, does not effect settlement on the due date."
I do not really understand. I know that even if L/C is available by honor/nego with any bank, there is only 1 nomimated bank. However, in the above statement, there is 2 nominated bank: confirming bank as nominated bank and another nominated bank
2 Artice 8, UCP 600 will be applied in two above case?. When will article not be applied?
3.In CDCS book say that: Consider, however, a confirming bank using the following wording.
" We hereby add our confirmation to this credit and undertake that we shall [honour or negotiate] all drafts and / or documents that are presented to us, at our address mentioned above, on or before the expiry date mentioned in the credit, provided that they fully comply with the terms and conditions of the credit."
In this case, the undertaking of the confirming bank is limited to a presentation being made to it and to no other bank. In these circumstances, UCP 600, sub-articles 8(a)(i)(b)–(e), will be modified.
I do not understand how UCP 600, sub-articles 8(a)(i)(b)–(e), will be modified.
Thank you so much
Someone can explanation mechanism of confirmation for me.
1. In CDCS book say that " If a confirming bank is not a nominated bank, it is likely that it is being asked to undertake to pay in the event of non-payment of a complying presentation by the issuing bank, and not to undertake to honour or negotiate against the presentation of complying documents to it. The wording of the confirmation advice must clearly reflect the form of undertaking that the bank is giving." I understand the statement
However, its also say that "When a confirming bank is a nominated bank under a documentary credit that is available with any bank, UCP 600, sub-articles 8(a)(i)(b)–(e), require that it honour or negotiate if another nominated bank does not act on its nomination or, having acted on its nomination, does not effect settlement on the due date."
I do not really understand. I know that even if L/C is available by honor/nego with any bank, there is only 1 nomimated bank. However, in the above statement, there is 2 nominated bank: confirming bank as nominated bank and another nominated bank
2 Artice 8, UCP 600 will be applied in two above case?. When will article not be applied?
3.In CDCS book say that: Consider, however, a confirming bank using the following wording.
" We hereby add our confirmation to this credit and undertake that we shall [honour or negotiate] all drafts and / or documents that are presented to us, at our address mentioned above, on or before the expiry date mentioned in the credit, provided that they fully comply with the terms and conditions of the credit."
In this case, the undertaking of the confirming bank is limited to a presentation being made to it and to no other bank. In these circumstances, UCP 600, sub-articles 8(a)(i)(b)–(e), will be modified.
I do not understand how UCP 600, sub-articles 8(a)(i)(b)–(e), will be modified.
Thank you so much