Doc. presented directly to Issuing Bank

[akomolpa]

Dear all,

If LC specified that Docs must be presented to "A" Bank for negotiation, but Beneficiary presented the docs. to "B" Bank (Their Bank).
To avoid the charges, "B" Bank presented the docs. directly to Issuing Bank.
Is it a discrepancy?

Rgds,
Ajcha

[ajoy]

Hi

My two bits:

The issuing bank is obliged to honour its credit even where docs are presented directly to it assuming all else is in order. So no not a discrepancy.

Cheers

[pebble]

Presentation means the delivery of docs to the issuing bank or nominated bank (art2 ucp600). So it's absolutely available for B bank presenting docs directly to issuing bank. It also means that the beneficiary unwanted to negotiate at A bank. That's not discrepancy so.

[rania]

see also sub article 6a 'a credit available with a nominated bank is also available with the issuing bank'

[cristiand969]

When documents are presented by a bank other than that nominated, the LC automatically expires at issuing bank counters.

[narisa]

Dear Akomolpa
In case l/c available with bank B,be careful for l/c authorize to claim reimburse with third bank,it is only nominated bank (bank B) can claim reimburse with that reimbursing bank.
rgds.

[ajoy]

that the reimbursement clause in the original Lc could be an issue.

Basically such presentation means there alternative arrangement forreimbursement is required.
IB would typically cancel the original reimbursement authorisation it sent to the RB and make alternative arrangemnet to reimburse.They could also amend the reimbursement authorisation allowing the presenting bank to cliam reimbursement from the same RB. In any case, this may delay realisation of proceeds from the LC considerably..

Also, there are some other complications /problems which might come up:

In such cases, if docs get lost in transit (and presenting bank has already discounted the same) they will not have any protection under the UCP which a nominated bank would normally have.

Another scenario these days is where the IB cannot do business with the presenting bank due to internal or external policies on compliance etc...again leading to delays etc..

Again if nominated bank has confirmed the LC then the bene will lose the protection under the confirmation as it might not be able to retrieve and present the docs to the Confirming Bank within the validdity of LC.

A bene and a presenting/negotiating bank which choose to bypass a 'nominated bank' should keep these /risks / possibilities/scenarios in my mind.

Cheers

[nesarul]

Dear,
i agreed with cristain and ajoy regarding pointing out the risk factor and protection of beneficiary. very nice explanation.
here i want to put another thing from issuing bank point of view:
Issuing bank should seek confirmation from Bank A that no presentation has taken place at their counter and request Bank a to properly marked that presentation has already been made by another Bank. However, this process must complied with sub article 14(b) of UCP 600.
Regards
Nesar

[akomolpa]

Dear all,

Appreciate all of your comments. All of you are so smart.

Best rgds,
akomolpa