Articles LC AVAILABLE BY NEGOTIATION WITH DRAFTS ON CONFIRMING BANK By Mr Old Man Posted on January 6, 2017 2 min read 4 0 6,246 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, Can the confirming bank negotiate the documents in the event of Draft drawn on them? My understanding is if the draft is drawn on a bank, it can only honour the payment. However, one of my colleagues told me that it is possible for the confirming bank to negotiate the documents as per the UCP 600 Article 8a ii i.e. negotiate, without recourse, if the credit is available by negotiation with the confirming bank. Danuska —————– ANSWER Hi, Where the LC is available with the confirming bank by negotiation, the LC should not require drafts to be drawn on the confirming bank. If drafts are drawn the confirming bank, the confirming bank must pay and not negotiate. Please refer to the definition of negotiation in Article 2 UCP 600, which says “Negotiation means the purchase by the nominated bank of drafts (drawn on a bank other than the nominated bank)…” Notwithstanding the above rule, in practice some confirming banks would still insist drafts be drawn on them. Whether the confirming bank pays under drafts drawn on itself, or whether it negotiates drafts drawn on the issuing bank; in both cases, payment to the beneficiary is without recourse. Kind regards, Mr. Old Man