Confirmation with a Side Agreement? And When the Confirming Bank Doubles as Reimbursing Bank! Intro Our friend Thomas from a Korean bank brought up two rather unusual LC situations that would make even the most seasoned trade finance professional pause for a sip of coffee. In the first, the confirming bank adds its confirmation but signs a side agreement with the beneficiary — allowing recourse if the issuing bank refuses payment due to discrepancies. … Read More
Who Should the Bill of Lading Be Made Out To — the Presenting Bank or the Issuing Bank? When a Letter of Credit (LC) says it’s available with any bank by deferred payment and requires a Bill of Lading (B/L) made out to the order of the negotiating bank and endorsed to the issuing bank, exporters sometimes get stuck on a practical question: To whose order should the Bill of Lading actually be issued? _____ QUESTION Dear Mr. … Read More
When a Revolving LC Keeps Turning — and When It Stops Intro: Every once in a while, a question pops up that seems simple but opens a door into the practical logic behind trade finance. This one came from Max, who was planning to use a revolving letter of credit for regular shipments and wanted to understand how the “cumulative” and “automatic” features actually work in real life. Question from Max … Read More
When a Feeder Vessel Is an Ocean Vessel A reader’s question to Mr. Old Man on interpreting Bills of Lading in transshipment cases Introduction In container trade, it’s common to see Bills of Lading (B/Ls) that mention both a feeder vessel and a mother vessel. However, confusion often arises when the same vessel appears as both the “Feeder Vessel” and “Ocean Vessel” on different pages of the B/L. … Read More
When the Confirming Bank Goes Insolvent — What Happens Next? Intro Confirmed LCs are designed to give exporters peace of mind — the comfort that even if the issuing bank or its country faces trouble, a confirming bank (often in the exporter’s own country) will step in and pay. But what if the confirming bank itself goes under before documents are presented? This question, raised by Ts., is not just … Read More
Who’s Really Insured? — When the Policy Lists Two Names Intro: Sometimes a small wording twist in an insurance document can spark big compliance headaches. One reader recently asked whether an insurance policy showing both the beneficiary and the issuing bank as insured parties meets LC requirements. Let’s see what Mr. Old Man has to say. QUESTION Dear Mr. Old Man, Warm greetings. I hope this message finds you well. … Read More
Five Banking Days — and When to Pay INTRO Everyone in trade finance knows the famous “five banking days” rule under UCP 600 — but confusion often arises about what happens after those five days. If the bank finds the documents complying, must it pay right away? Or can it wait until the fifth day (or even later) to release the funds? _____ QUESTION Dear Mr. Old Man, … Read More
Does “Mail Advice of Negotiation” Delay Payment under the LC? INTRO Every now and then, someone spots a mysterious line in Field 78 of a letter of credit and starts to wonder if it hides a trap. One of those lines reads: “On receipt of mail advice of negotiation, we shall cover as per instruction received.” Does that mean the issuing bank won’t pay until they receive such a “mail … Read More
Once in a while, a little flower falls my way Not money from the sky, but a kind mention from Narendra Kumar Kalra, a respected international trade consultant, who shared my post “Sanctions vs. Honour: What If the LC Has No Sanctions Clause?” on LinkedIn. For someone long “retired from the battlefield,” being remembered by fellow trade finance professionals — and seeing that old slogan still alive — “For those … Read More
ONE GUARANTEE ISSUED AGAINST MORE THAN ONE COUNTER-GUARANTEE (When one guarantee has two “parents”) INTRO Every now and then, a guarantee comes into this world with not one, but two proud parents — two counter-guarantors, each claiming their share of responsibility. Sounds like a happy family? Well, it can be… provided everyone knows exactly who pays what when the baby cries. That’s exactly the situation raised in this … Read More