Confirmation of Transfer LC

[Suresh Parthasarathy]

Can a bank add confirmation to the transferred DC at the request of 2nd beneficiary when the 1st bene does not insist on confirmation to the transfer DC ?

[nesarul]

Dear,
Well come to Best trade.
First of all we have to consider reasons for allowable alteration at sub article 38(g):
= Profit margin of first beneficiary should keep intake and hide [amount and unit price clause in sub article and insurance to some extend]
= First beneficiary can get adequate time to perform under credit [expiry, period of presentation and last date of shipment etc].
= transferred credit must maintain at least same undertaking of the transferable credit.
.
Lets consider your case: There might two possible issue that we may consider:

Where Transferring bank is a confirming bank of a transferred credit:

My opinion:
in this case the total chain of transferable credit is not extended moreover 2nd beneficiary's payment at transferring bank's counter is certain subject to complying presentation.moreover, substitution of document has taken place,if any , at the counter of transferring bank where the whole transaction is recorded. Hence this possible alteration is not cause harmful. moreover undertaking of a transferred credit is doubled by adding confirmation of transferring bank. Hence, from my point of view, it should be allowed.

Where confirmation is done by a bank other than transferring bank

Despite theoretically , I personally think that it is possible. but it is very tough to materialized because of limited stipulated time frame, upcoming amendment, substitution etc. Hence, I will not go for it.
Regards
Nesar

[shahriar]

Dear,

you did not mention whether the original LC was confirmed or not. i guess no. otherwise the question would not have raised. if the original credit shows "confirmation: without", then we need to consider article 2 here

Confirming bank means the bank that adds its confirmation to a credit upon the issuing bank’s authorization or request.

therefore any confirmation by the transferring bank, no matter whether the first beneficiary agrees or not, would be outside the scope of this LC and will more closely be related to silent confirmation which purely depend on the banker customer relation.

[nesarul]

Dear,
Yes, I agreed with shahrier, I made a basic mistake on my previous posting. Pls ignore it.
Regards
Nesar