EXCLUSION OF SUB-ARTICLE 7(c)

GSHAM – Singapore
Posted 27 Jun 11 |

LC contains the following clause: "ARTICLES 7 (c) AND 12 (b) OF UCP 600 REVISION 2007 ARE EXCLUDED IN THIS L/C."

By simply excluding these articles without further elaboration, does it mean that the opposite is true? For instance, by excluding article 7(c), does it mean that an issuing bank does not undertake to reimburse a nominated bank that has honoured or negotiated a complying presentation and forwarded the documents to the issuing bank? If that is not the intended consequence for excluding article 7(c), the issuing bank need to elaborate what it wants to achieve by excluding the article.

Can issuing banks be more responsible please?

Gabriel
———-
Duc N.H – Viet Nam
Posted 27 Jun 11 |

Dear Gabriel,

An L/C that excludes sub-article 7(c) must be available with the issuing bank, and there should be no nominated bank involved.

If the L/C is available with a nominated bank but excludes sub-article 7(c), that nominated bank will certainly refuse to act on its nomination, i.e., not negotiate or honor, unless the L/C incoporates under field 78 an alternate reimbursement undertaking that is acceptable to the nominated bank.

Regards,
Duc N.H
———–
GSHAM – Singapore
Posted 27 Jun 11 |

Dear Duc N.H.

Thank you for your comments. I agree with you that nominated banks should refuse to act on the nomination for such LCs unless the issuing bank's reimbursement undertaking is clearly indicated in the LC.

Regards
Gabriel