Confirming just original credit, but not an amendment

[Negotiator]

Dear all,

Pls let me assume a situation like this :

(A) MT700 - ISSUE OF A DOCUMENTARY CREDIT
Currency Code / Amount : USD 500,000
Description of Goods and/or Services (45A):
QUANTITY UNIT PRICE TOTAL AMOUNT
---------------------------------------------------------------------------------
MOBILE PHONE 1,000 USD 500 USD 500,000

(B) MT707 - AMENDMENT TO A DOC CREDIT
Increase of Documentary Credit Amount : USD 150,000
New Documentary Credit Amount After Amendment : USD 650,000
Narrative :
THE FIELD 45A WILL BE ENTIRELY REPLACED BY :
/QUOTE/
QUANTITY UNIT PRICE TOTAL AMOUNT
---------------------------------------------------------------------------------
MOBILE PHONE 1,300 USD 500 USD 650,000
/UNQUOTE/
I/O PREVIOUS. ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.

Issuing Bank requests this credit to be confirmed.
The confirming bank adds its confirmation on original credit (A), but refuses to extend its confirmation on following amendment (B).
Beneficiary presents documents to the confirming bank, in a single set which represents full quantity and amount after the amendment. (i.e., for 1,300PCS of Mobile Phones and amount of USD 650,000)

In this situation, provided that the presentation is complying under the credit (after the amendment),
1) The confirming bank is entitled to reject the docs completely.
2) The confirming bank is obliged to pay beneficiary the amount of USD 500,000.

What would be your answer? Any comments will be welcome.

Thanks and regards,
Lee

[richemon24]

Hi,

As per Article 15(b), when a confirming bank determines that presentation is complying, it must honour or negotiate and forward the documents to the issuing bank. In this case, they have not extended their confirmation to the amendment, the confirming bank is obliged to pay for the original amount of the LC (USD 50,000).

[Jackie]

Hi all

I agree totally with the last post. The confirming bank is only obligated to reimburse for the amount of the original l/c.

thanks Jackie

[nayanrshah]

Hi !

I also agree with prichemon24 . The confirming bank is only obligated to reimburse for the amount of the original l/c.