Uncategorized DRAFTS DRAWN ON THE CONFIRMING BANK UNDER NEGOTIATION LC By Mr Old Man Posted on June 27, 2014 1 min read 5 0 3,679 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, Is there a possibility that LC is available by negotiation with advising bank who also adds its confirmation, but drafts drawn on issuing bank? Any UCP article/opinion dealing with this matter? Thanks in advance for yr reply Shirki ——- ANSWER Hi, Where LC is available by negotiation with the confirming bank, drafts SHOULD and MUST be drawn on the issuing bank or on another nominated bank other than the confirming bank. Please refer to the definition of negotiation in UCP 600 Article 2, which says: “Negotiation means the purchase by the nominated bank of drafts (drawn on a bank other than the nominated bank) …”. The confirming bank cannot negotiate drafts drawn on itself. Where drafts are drawn on the confirming bank, it must pay and not negotiate. Drafts can be drawn on the confirming bank under LC available by acceptance. Notwithstanding the above analysis, in practice some confirming banks would insist drafts be drawn on themselves irrespective of whether LCs are available by negotiation or by acceptance. Kind regards, Mr. Old Man