ISP98 2.04 Nomination

[Shirley]

Under ISP98 2.04 Nomination point C. "A nominated person is not authorized to bind the person making the nomination."
I am so confusion who is authoriser, who is the person making the nomination. Anyone know the exactly meaning of this sentence?

[Judith]

I’m not too sure about it as I do not work with guarantees on a daily basis but here’s the closest example that I can think of.

Under letters of credit, the act of a nominated bank can sometimes ‘bind’ the issuing bank. For example, if the beneficiary presents an invoice which exceeds the balance under the credit, the nominated bank can choose to accept the invoice present and negotiate documents provided that the amount negotiated does not exceed the balance under the credit. This act of the nominated bank binds the issuing bank. (Article 18(b) of UCP 600).

My guess is that such ‘binding’ is not allowed under ISP98.

Under ISP98 2.04 Nomination point C. "A nominated person is not authorized to bind the person making the nomination."
I am so confusion who is authoriser, who is the person making the nomination.

With regrds to your specific questions:
- The authoriser is ISP98 itself!
- The person making the nomination is usually the 'issuer'...

Hope this helps.
Other comments appreciated.

[nesarul]

DEAR,
Before analysis the issue first of all we have to look into the following:

2.02 Obligation of Different Branches, Agencies, or Other Offices
For the purposes of these Rules, an issuer's branch, agency, or other office acting or undertaking to act under a standby in a capacity other than as issuer is obligated in that capacity only and shall be treated as a different person.

.
From the above fact we can say that each party is separated on the basis of function such as: issuing, confirming, advising, transfer etc. and one party action doesn't bind other party.
then if we read the following:

2.04 Nomination
a. A standby may nominate a person to advise, receive a presentation, effect a transfer, confirm, pay, negotiate, incur a deferred payment obli-gation, or accept a draft.

I think the above paragraph is simply remind us that under ISP every body is only responsible for its function only.......here one of the authorizer is the issuer....
regards
nesar

[shahriar]

i consider this clause to be in line UCP 600. here a nominated person is equivalent to nominated bank while person making the nomination may be issuing bank.

now let understand this with UCP. under UCP say the nominated bank or the confirming bank finds a document complying and send it to issuing bank. the issuing bank can still refuse the document. that is the action of confirming bank is not binding the issuing bank. same is for applicant issuing bank relation.

hope that helps

[nesarul]

DEAR,
WHAT ABOUT SUB ARTICLE 18(B) OF UCP 600 AS JUDITH SAID.
REGARDS
NESAR

[shahriar]

18B is an exception even within UCP