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CONTRADICT OR NOT?

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Ghubshawi's Query
Is this contradiction

Dear All,

UCP600, Article 12(a) states;
Unless a nominated bank is the confirming bank, an authorization to honour or negotiate does not impose any obligation on that nominated bank to honour or negotiate, except when expressly agreed to by that nominated bank and so communicated to the beneficiary.

As far as I unerstand form the above that the nominated bank will be obliged to honour or negotiate, in case he agrees and so communcates to the beneficiary.
Do not you think the above is in contradiction with Articles 7(a) ii to v, 8(b) to (e), 9(a) & 12(c).

Please clarify

Best,
Ghubshawi

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Mr. Old Man's Response to Ghubshawi's Query
Contradict or not ?

Dear Ghubshawi,

A nominated bank may be a nominated non-confirming bank or a nominated confirming bank.
A nominated non-confirming bank is not obliged to honour or negotiate unless it agrees to honour or negotiate and so communicates to the beneficiary.
A nominated confirming bank once adding its confirmation is obliged to honour or negotiate (up to the case).

The above is explained in accordance with the spirit of Article 12 (a), which you seem to have understood very well..

I do not think the provision in Article 12 (a) is in contradiction with Article 7 (a) ii to v, 8 (b) to (e), 9 (a) and 12 (c).

Article 7 (a) ii to v refer to the issuing bank’s obligation to honour the complying documents which have been presented to and not honoured or negotiated by the nominated bank.

Artilce 8 (b) to (e) refer to the confirming bank’s obligation to honour or negotiate the complying documents which have been presented to and not honoured or negotiated by another nominated bank. (LC may be issued by Bank A, confirmed by Bank B and to be available with Bank C. Bank C is understood as another nominated bank).

Article 9 (a) refers to the advising bank’s obligation to advise LC or its amendment at the request of the issuing bank. If the advising bank is not a confirming bank it advises the LC or its amendment without undertaking to honour or negotiate. Please also note that an advising bank may or may not be a nominated bank:

– If the LC is available with any bank, the advising bank may be a nominated bank.
– If the LC is available restrictedly with the advising bank, the advising bank is a nominated bank.
– If the LC is available restrictedly with a name nominated bank other than the advising bank, the advising bank is not a nominated bank under the LC.

Article 12 (c) refers to the examination and forwarding of the documents by a nominated bank that is not confirming bank. This nominated bank is not liable to honour or negotiate the documents. And the action of examining and forwarding the documents by this nominated bank should not be understood as an action of honour or negotiation. Please read these above articles more carefully you’ll see they are not in contradiction with Article 12 (a) at all.

Best regards
Nguyen Huu Duc

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