Request to issue seperate undertaking

[ahmad]

Dear All,

Can someone explain a bit the ISP 98 clause 4.21(Request to issue seperate undertaking)

Thanks.

[danohng]

This happen mostly for cross border issuance. for example, the applicant in Singapore enter into a contact with a beneficiary in China , a guarantee is require by the beneficiary in China to be governed by the law of China. The applicant's banker in Singapore (Bank A) will not be able to issue such guarantee as the bank has no expert in China law. What Bank A will issue is the counter standby in favour of a bank in China (Bank B) and request Bank B to issue a local guarantee subject to China law in favour of the beneficiary. The Counter standby from Bank A is a request to issue a separate undertaking and the local guarantee issue by Bank B is the separate undertaking upon request from Bank A.

Please refer to the manual (guide to documentary credit), section 3.2.3.1 - under "Counter Standby".

Hope the above explanation helps.

[mia vervacke]

I'm making a study of standby letter of credits?

Where can I find the guide to documentary credits, section 3.2.3.1 'Counter Standby'

[danohng]

Dear Mia,
You may refer to "The Guide to Documentary Credit" by Gary Collyer - Page 39 under Types of Standby letter of credit, bullet point no. 4 :
A 'Counter Standby' support the issuance of a separate letter of credit or other undertaking by the beneficiary of the counter standby.