Mr Old Man Q&A DISCOUNTING VS NEGOTIATION By Mr Old Man Posted on April 25, 2015 1 min read 1 0 6,774 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr Hồ Hòa Trung QUESTION What is the difference between discounting and negotiation? Please clarify. MK ———– ANSWER Hi, With regard to the purchase of drafts and/or documents presented under LCs, UCP 600 does not use the term “discounting” but the term “negotiation” which means the purchase by the nominated bank of drafts (drawn on a bank other than the nominated bank) and/or documents, by advancing or agreeing to advance funds to the beneficiary on or before the banking day on which reimbursement is due to the nominated bank. However, in practice the terms “discounting” and “negotiation” would be used interchangeably without causing any misunderstanding. I see that LC experts in their articles would use the term “discounting” to mean the negotiation by the nominated bank of usance drafts or deferred payment undertakings which have been accepted or incurred by the nominated bank itself. My above answer is restricted to negotiation/discounting of drafts and/or documents presented under LCs only. Kind regards, Mr. Old Man
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
CAN THE ISUING BANK CITE “LATE PRESENTATION” AS A DISCREPANCY SOLELY BASED ON THE DATE OF THE COVER LETTER?
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
CAN THE ISUING BANK CITE “LATE PRESENTATION” AS A DISCREPANCY SOLELY BASED ON THE DATE OF THE COVER LETTER?