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HONOUR Vs NEGOTIATION

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YASEEN'S QUERY
Honour / Negotiate

Hi Everybody!

How can we precisely define the difference between HONOUR and NEGOTIATE.

A definition which could touch our memory immediately as someone asks
to define.

Thanks.
Yaseen.

—————————–

MR. OLD MAN'S RESPONSES TO YASEEN'S QUERY

Dear Yaseen,

I think you may have already known the definitions of the terms “honour” and “negotiation” in UCP 600 Article 2, but what you want is a brief and clearer explanation of the difference between the two terms.
OK, I’ll try to help you but I’m afraid what I ‘m going explain to you is neither clearer than the existing definitions nor able to touch your memory immediately as you expected.
The term “honour” is used for Sight Payment LCs, Deferred Payment LCs and Acceptance LCs, which means respectively as defined in Artilce 2, i.e.,

a. to pay at sight if the LC is available by sight payment.
b. to incur a deferred payment undertaking and pay at maturity if the LC is available by deferred payment.
c. to accept a bill of exchange (“draft”) drawn by the beneficiary and pay at maturity if the LC is available by acceptance.”

The term “negotiation” is used for Negotiation LCs, which means as defined in Article 2, i.e., the purchase by the nominated bank of drafts (drawn on a bank other than the nominated bank) and/or documents under a complying presentation, 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.

Best regards,
Nguyen Huu Duc …

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