Negotiation vs UCP600,A12(b)

malla · Post by **malla** » Sat Mar 06, 2010 7:46 pm

hi

could you please clarify me the difference of the below statments?

"Negotiation means the purchase by the nominated bank of drafts (drawn on a bank other than the nominated bank) and/or documents under a complying presentation,by advancing or agreeing to advance funds to the beneficiary on or before the banking day on which reimbursement is due to the nominated bank."

12(b) says "by nominating a bank to accept a draft or incur a deffered payment undertaking, an issuing bank authorizes that nominated bank to prepay or purchase a draft accepted or a deffered payment undertaking incurred by that nominated bank"

appreciate your valuble comments

regards
malla

shahriar · Post by **shahriar** » Sun Mar 07, 2010 8:48 am

hi!

here is a quote from commentary on UCP 600 which should help

With this new sub-article, the rules provide for discount authorization simply by the issuing bank nominating a bank to accept a draft or incur a deferred payment undertaking. A bank nominated to negotiate is, by the definition of “negotiation” in UCP 600, as well as UCP 500, authorized to purchase a complying presentation (under UCP 500 to “give value”).

There is now no difference between the authorization to prepay or purchase a draft accepted or deferred payment undertaking incurred by a nominated bank and the authorization to negotiate, i.e., to purchase a complying presentation.