Performance Bond certified by Applicant

[elly.may]

Hi Experts,

I have an LC which calls for Performance Bond certified by the applicant.

Is this kind of requirement usual in LCs?

For your reference, we neither have such kind of bond between us nor a standby letter of credit instead, we have a Bid Bond. If i present the docs with Bid Bond, its clearly a discrepancy on lts face.

Does the UCP600 or ISBP600 cover this subject or I should enforce the amendment in LC?

What is your comment on it?

Many thanks in advance.

elly

[Jackie]

Hi Elly

In order to be able to respond please could you provide some more details as to how the pb is shown in the l/c and what are the requirements against this.

PBs, BBs etc are normally governed by URDG458 which is being revised later this year.

Thanks Jackie

[danohng]

The LC is inoperative without the performance bond certified by the applicant. There should be an agreement between the applicant and the beneficiary that the beneficiary will require to issue an independent performance bond thru their banker.

ISBP para 4 stated that if the beneficiary do not agreed with such arrangement, they should seek an amendment to remove this requirement, otherwise, they will have to comply with them and bear the risk of failure to do so.

BTW - Performance bond may also subject to ISP98.