Can an Issuing Bank Rescind an Accidental Acceptance? Legal and Practical Insights

In the fast-paced world of documentary credits, a single SWIFT message sent in error can expose an issuing bank to serious risks—especially when it concerns acceptance of discrepant documents. One such query came from Suraj, raising an important issue:

What happens when a bank mistakenly sends an acceptance message without first securing a waiver from the applicant—and then tries to undo it?

Below is my analysis of the possible scenarios, the risks involved, and the options available to the issuing bank in such a situation.

QUESTION

Dear Sir,

Wishing you a good health.

I wanted your expert opinion in a following case:

We had mistakenly sent an acceptance for a maturity of a discrepant bill without obtaining the required waiver/acceptance letter from the applicant. Now the applicant has denied settling the bill on maturity and has requested us to null and void the sent message to the nominated/beneficiary bank.

Now in this scenario, what if the nominated/beneficiary bank does not respond or provide their confirmation for the cancellation.

What steps should an applicant bank should take on legal grounds to rescind our liability to pay at maturity?

Need your valuable expertise for the same sir.

Suraj

_____

ANSWER

Hi Suraj,

Thank you for your thoughtful question.

My response is based on the following assumed scenarios:

Scenario 1:

The presentation was discrepant, but your bank failed to issue a notice of refusal as required under Article 16 of UCP 600 within five banking days. Instead, you sent a message to the nominated/presenting bank confirming acceptance and maturity of the bill.

If this is the case, your bank is likely precluded from rejecting the documents under UCP 600, and therefore obligated to honour the bill at maturity—despite the discrepancies.

Scenario 2:

The presentation was discrepant, and your bank did issue a timely notice of refusal under Article 16. However, you mistakenly sent a subsequent message confirming acceptance and the maturity date to the presenting bank.

In this case, your bank should send an authenticated SWIFT message to the nominated/presenting bank, requesting them to disregard and treat the previous acceptance message as null and void, and to confirm their agreement to this cancellation.

You may also include a deadline in your message, stating that if no response is received by [date], your bank will consider the original acceptance message cancelled.

Risks if the nominated/beneficiary bank remains silent or refuses to confirm cancellation:

The nominated bank may have already negotiated or discounted the bill based on your acceptance message, making it difficult to rescind the obligation.

• If the bank remains silent, and the matter escalates to a legal dispute, even though you have proof of your cancellation request, the final decision will depend on local law and how the court interprets the communication and intent. No outcome can be guaranteed.

These are just my personal observations and not legal advice.

Best regards,

Mr. Old Man