QUERY FROM CHARLES
LC’s confirmed or confirmable
Need advise – Could someone explain the meaning of LC’s be confirmed or confirmable – What is the difference?
I appreciate any help with this
Charles
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COMMENT FROM ARMAGEDO
Simple
Hi!
I think this refer to discussion of contract or something like this
CONFIRMED means that LC should bear confirmation upon issuance. And, as for me, if contract states that LC issued to be confirmed then confirmation charges to be born by issuing bank (applicant).
CONFIRMABLE should provide for possibility to add confirmation which means that upon issuance of LC there to be an option for beneficiary whether to confirm or not this LC. And in most cases such confirmation charges will be on account of beneficiary
Please, see MT700 SWIFT message, field no. 49.
There is 3 options used for confirmation:
1/ CONFIRM
2/ MAY ADD
3/ WITHOUT
CONFIRM and MAY ADD correspond to your asked "confirmed" and "confirmable".
WITHOUT is self-explanatory.
Hope this will help You.
Good luck
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COMMENT FROM MR. OLD MAN
Confirmed and confirmable
Hi
I guess Charles means LC (is) to be confirmed or confirmable.
Such phrases or sentences are normally used in sale contracts rather than in LCs as now most banks issue LCs in SWIFT MT 700 and requirement in connection with confirmation shall be filled in Field 49 with “ADD”, “MAY ADD” or “WITHOUT” in accordance with the applicant’s instruction in his application for opening LC.. ADD is to be used if the applicant wants the LC to be confirmed. The advising bank is requested to add its confirmation. If it is is not prepared to do so, it must inform the issuing bank without delay and may advise the credit without confirmation.
MAY ADD is to be used when confirmation is open, which means the advising bank may add its confirmation if the advising bank is willing to do so. MAY ADD reflects the spirit of “confirmable”.
Last but not least, Armagedo’s explanation is excellent but I do not think that confirmation charges are to be born by issuing bank (applicant) if the contract states that LC issued to be confirmed. IMHO, who pays for confirmation charges depends on the agreement between the buyer (applicant) and the seller (beneficiary) and this is to be indicated in the LC. As discussed previously, confirmation charges are normally for the beneficiary’s account for in reality it is the beneficiary, not the applicant, that requires the LC to be confirmed.
Best regards,
Nguyen Huu Duc …
