Uncategorized DRAFT AT 120 DAYS AFTER NEGOTIATING DATE By Mr Old Man Posted on October 6, 2015 4 min read 2 1 12,099 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr QUESTION Dear Mr. Old Man, We received an UPAS LC as follows: Issuing bank: KB Korea L/C amount: USD33,581.35 Date and expiry: 151014 at negotiating bank L/C available with any bank by negotiation Drafts at 120 days after nego date Reimbursing bank: KB Ho Chi Minh City (SWIFT CODE: ………) 47A : Additional Conditions T/T reimbursement is not allowed When you claim reimbursement for accepting bank, you should mark nego date on your claim letter or claim message. 78 : Paying/Accepting/Negotiating Bank The credit must be negotiated at sight basis. If the presented export documents complied with all terms and conditions of the L/C Negotiating Bank may claim reimbursement from the reimbursing bank. We are acting as the presenting bank only by forwarding drafts to the reimbursing bank and the documents (except drafts) to the issuing bank. So how should the tenor of drafts be written as the nego date is not available? Whether the requirement of marking nego date on claim letter not fulfilled causes the delay in reimbursement or not in case the L/C is not amended. I am looking forward to your advice. Thank you Regards, Trang ———- ANSWER Hi, Usance draft would be drawn at xx days after bill of lading date or after sight. Usance draft is rarely drawn at xx days after negotiating bank. Since your bank decide not to act on its nomination, i.e. not to negotiate the documents, it should send the documents to the issuing bank and simultaneously ask for the issuing bank’s authorization to claim reimbursement from the reimbursing bank. If so, the draft may indicate “120 days after sight”. It should claim reimbursement from the reimbursing bank upon receipt of the issuing bank’s authorization or where the issuing bank fails to refuse the documents within five banking days from the day of receipt of the documents. Last but not least, it is recognized in practice that where an L/C available by negotiation includes an instruction to claim reimbursement from a reimbursing bank, the nominated bank would send the documents to the issuing bank and at the same time claim reimbursement from the reimbursing bank even when it has not negotiated the documents. You are not advisable to follow this bad practice. For your further reference, please refer to my related Q&A at: CLAIMING REIMBURSEMENT WITHOUT NEGOTIATION Kind regards, Mr. Old Man