WHETHER A CONFIRMING BANK IS A NOMINATED BANK — AND WHAT HAPPENS WHEN THERE ARE TWO CONFIRMING BANKS INTRODUCTION Questions about whether a confirming bank is also a nominated bank may sound academic at first glance, but in practice they can become critically important — especially when a credit involves more than one confirming bank, a specific place of expiry, and documents moving across several borders. This Q&A examines a real-life scenario involving two confirming banks and explores … Read More
Short Shipment or Not? Clarifying Quantity Requirements When an LC Covers Multiple Lots In practice, letters of credit covering multiple lots of goods often give rise to misunderstandings about whether each lot may be shipped separately — and how the limit on the number of shipments should be interpreted. On this occasion, let’s take a look at an interesting scenario raised by our colleague … Read More
FREIGHT PREPAID VS FREIGHT PAYABLE AT DESTINATION — A LOOK BACK AS TA.958 APPROACHES INTRODUCTION With Technical Advisor Opinion TA.958 now on the table—specifically the question of whether a bill of lading showing both “freight prepaid” and “freight payable at D” should be considered conflicting under a credit that explicitly requires the document to be marked “freight prepaid”—the trade finance community is once again paying close attention. As we all know, the ICC Banking … Read More
When CIF/CIP Value Cannot Be Determined — How Should the Invoice Be Issued? Intro In practice, banks and beneficiaries often face uncertainty when a credit requires a CIF or CIP term but does not state how freight or insurance should be shown. Must the invoice break them down? What if the actual freight or insurance charges are unknown at the time of issuing documents? Mr. Old Man shares some guidance based on ISBP … Read More
Negotiation with Recourse vs. Negotiation without Recourse — What’s the Real Difference? Introduction In export financing, the terms with recourse and without recourse often cause confusion, especially when applied to negotiation under LCs or discounting of drafts under collections. Although both methods provide early funding to exporters, the underlying risk allocation—and therefore the pricing and discounting ratios—are very different. Below is Mr. Old Man’s explanation to a reader who asked why banks … Read More
Applicant vs. Consignee on a Certificate of Origin — Does It Matter? A Practical Q&A with Mr. Old Man In documentary credit work, applicants, consignees, and importers often end up being the same party, yet the terminology on document templates is rarely consistent. A common question is: If the LC asks for the “Applicant,” but the COO form only provides space for the “Consignee,” will banks treat that as a discrepancy? Let’s … Read More
When a Confirming Bank Adds Its Own Sanctions Clause — Is It Allowed? Introduction Sanctions clauses continue to create operational challenges in documentary credit practice, especially when multiple banks apply different compliance standards. A common problem arises when the confirming bank adds its own sanctions requirement, even though the issuing bank has already inserted a sanctions clause in the LC. In this Q&A, we look at a real case involving an LC issued … Read More
CIF Breakdown and “Irrespective of Percentage” – Two Common LC Questions In today’s LC practice, two issues appear repeatedly and often cause confusion for both exporters and bankers. The first is whether an invoice under CIF or CFR must show a cost breakdown, especially the insurance premium. Many presentations include partial breakdowns—or even show freight as zero—raising the question of whether such invoices are compliant when the LC itself is silent. … Read More
How Should Issuance Commission Be Calculated for a Revolving LC with Declining Exposure? Intro: A practitioner raised a practical question regarding the appropriate method for computing issuance commission on a cumulative revolving LC, especially when the bank’s exposure changes over time. Below is the refined question and Mr. Old Man’s response. Question Dear Mr. Old Man, I would appreciate your guidance on the following: We have a cumulative revolving LC issued for USD … Read More
Can the Drawee’s Bank Cancel Its Aval after Confirming it by SWIFT? A Q&A with Mr. Old Man When dealing with documentary collections, many bankers assume that an aval—once issued—is as solid as steel. But what happens when an avaling bank suddenly cancels its commitment, cites problems with the underlying goods, and even goes to court? In this Q&A, Mr. Old Man breaks down how avalization really works, which rules govern it, … Read More