Dear friends,
.
Consider an LC, available with nominated bank by deferred payment.
Field 47a states "this LC is discountable" and no other details stated. If nominated bank refuses to discount the LC, is the issuing bank obliged to discount the LC?
Regards
Discountable LC
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Navi
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21vita
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dear navi
it's really an interesting case
i think it's not only an issuing bank's authorization to nominated bank ,it's mainly a issuing bank's notification of intention to provide such a financing to bene and nominated bank.
in my opinion,the way issuing bank express is the key,the words"this LC is discountable"clearly shows the characteristic of the lc ,in addition to that of defer payment,and nominated bank's discounting is surely under gurantee of lc,in addition to that of UCP. if IB's intention is just to express it's willing and discounting afterwards shall depends, then the words that may lead to confusion shall not be used, the words in 47a as " we are willing to ...if discounting request is approved by us"is preferable. otherwise IB is under risk of being forced to discount.
i think it's not only an issuing bank's authorization to nominated bank ,it's mainly a issuing bank's notification of intention to provide such a financing to bene and nominated bank.
in my opinion,the way issuing bank express is the key,the words"this LC is discountable"clearly shows the characteristic of the lc ,in addition to that of defer payment,and nominated bank's discounting is surely under gurantee of lc,in addition to that of UCP. if IB's intention is just to express it's willing and discounting afterwards shall depends, then the words that may lead to confusion shall not be used, the words in 47a as " we are willing to ...if discounting request is approved by us"is preferable. otherwise IB is under risk of being forced to discount.
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shahriar
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does not make much diffrence
dear navi,
good question. to me the clause does not make much difference. in fact sometimes issuing bank (i did it in fact) include such clause just at the request of the applicant as beneficiary without much knowledge of UCP600 believes that it give them added comfort. to me it simply like restating the precise meaning of article 7c and 12b.
i would not say so. discountable and we will discount is not the same thing. the issuing bank is simply speaking of a possibility.
good question. to me the clause does not make much difference. in fact sometimes issuing bank (i did it in fact) include such clause just at the request of the applicant as beneficiary without much knowledge of UCP600 believes that it give them added comfort. to me it simply like restating the precise meaning of article 7c and 12b.
Navi wrote:If nominated bank refuses to discount the LC, is the issuing bank obliged to discount the LC?
i would not say so. discountable and we will discount is not the same thing. the issuing bank is simply speaking of a possibility.