HOW TO GIVE NOTICE OF REFUSAL TO THE BENEFICIARY WHO HAS PRESENTED THE DOCUMENTS DIRECTLY TO THE ISSUING BANK?

QUESTION

Dear Mr. Old Man,

I understand that sub-article 6 (a) UCP 600 allows the beneficiary to present the documents directly to the issuing bank. However, I want to know how the issuing bank give the notice of refusal to the beneficiary in case the presented documents contain discrepancies.

Thank you for your advice

Best regards,

L.L

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ANSWER

Hi,

According to sub-article 16 (c) UCP 600, when a nominated bank acting on its nomination, a confirming bank, if any, or the issuing bank decides to refuse to honour or negotiate, it must give a single notice to that effect to the presenter.

The notice must include: (i) statement of refusal; (ii) discrepancies; and (ii) disposal of documents.

The notice must be given by telecommunication, or if not possible, by other expeditious means no later than the close of the fifth banking day following the day of presentation.

So, in your case the issuing bank can give the notice of refusal to the beneficiary by fax, telex, email, phone call…

However, please note that if the notice of the refusal is communicated to the beneficiary by phone call, it should be recorded to prove that the notice of refusal in accordance with sub-article 16 (c) UCP 600 was communicated to the beneficiary.

Where the issuing bank and the beneficiary are located in the same city or the same country and if the beneficiary happens to visit the issuing bank, it is recommended that the issuing bank give the notice of refusal in writing.

Kind regards,

Mr. Old Man