Home Uncategorized LC CONFIRMED BY THE FIRST ADVISING BANK

LC CONFIRMED BY THE FIRST ADVISING BANK

2 min read
8
0
8,670

QUESTION

Dear Mr. Old Man,

I follow up your blog and see it very helpful. I have a question for you.

Bank B sent Bank C an MT 710 showing some details as follows:

Field 40B (Form of Documentary Credit): IRREVOCABLE ADDING OUR CONFIRMATION
Field 52A (ISSUING BANK): BANK A
Field 41A: (Available with … by): BANK B BY NEGOTIATION
Field 49 (Confirmation instructions): WITHOUT

Is this a confirmed or unconfirmed LC?

Should the beneficiary present the documents to Bank A or Bank B?

Thank you very much

Best regards,
LT
—————-

ANSWER

Hi,

Field 40B of MT 710 specifies the type of LC and whether or not the Sender is adding its confirmation to the LC. It is understood from your description that the Sender (Bank B) added its confirmation to the LC and advised it to the beneficiary through Bank C by MT 710.

Field 49 (Confirmation Instructions) indicating WITHOUT implies that the Receiver (Advising Bank) is not requested to confirm the LC. In your case Bank C is not requested to add its confirmation to the LC (as indicated in Field 40B the LC was confirmed by Bank B).

According to Article 6 UCP 600, the beneficiary may present the documents directly to the issuing bank (Bank A). However, it is advisable for the beneficiary to present the documents to the confirming bank (Bank B) through Bank C.

Kind regards,
Mr. Old Man

Load More Related Articles
Load More By Mr Old Man
Load More In Uncategorized

8 Comments

  1. anonymous

    September 17, 2013 at 10:09 am

    HoangLong writes:Dear Mr. Old Man,Your knowledge is admirable. I have a question regarding C/O presentation. I would greatly appreciate if you could help me to clarify.A credit subject to UCP 600 asked for presentation of “One original and 2 copies of certificate of origin evidencing China origin” for sales of 10,000 MT steel goods from Hong Kong to Dubai. A certificate of origin issued by a Chamber of Commerce in China covering 30,000 MT of steel goods was presented, showing shipment from Hong Kong to Dubai. The issuing bank regarded the certificate of origin discrepant because: Q1 It covers 30,000 MT instead of 10,000 MT of steel goods. Q2 The issuing date of the certificate of origin is two months before the credit issuing date.Is the discrepancy valid ?Many thanks,HL

    Reply

    • Thuong

      March 30, 2015 at 7:04 pm

      Dear Mr Old man
      Em co cau hoi rat mong nhan duoc su giup do cua anh. Cong ty em vua nhan duoc 1 LC co noi dung nhu sau:
      :41D: AVAILABLE WITH….BY….
      ANY BANK
      BY DEF PAYMENT
      :42P: DEFERRED PAYMENT DETAILS
      150 DAYS AFTER BILL OF LADING DATE
      :49: CONFIRMATION INSTRUCTIONS
      WITHOUT
      :47B: ADDITIONAL CONDITIONS
      + BILL OF EXCHANGES/DRAFTS NOT REQUIRED.
      + DESPITE THE TENOR BEING USANCE BENEFICIARY WILL GET PAYMENT
      AT SIGHT

      Anh cho em hoi day co phai la UPAS LC khong? Theo nhung dieu khoan tren thi viec thanh toan tra ngay co bi anh huong gi khong?

      Em cam on anh rat nhieu ah.

      Reply

      • mroldman

        March 30, 2015 at 9:47 pm

        Hi,

        Thông tin bạn cung cấp chưa đầy đủ nên không thể đưa ra câu trả lời cụ thể với nhiều chi tiết hơn. Tuy nhiên, nhìn sơ qua nội dung mô tả, vẫn có thể xem đây là UPAS LC.

        Kind regards,
        Mr. Old Man

        Reply

  2. mroldmanvcb

    September 17, 2013 at 11:09 am

    Hi,.The answer is based on the assumption that the C/O appears to relate to the invoiced goods and two or more invoices issued for a single shipment are indicated on the C/O (?).According to paragraph Q6 (b) ISBP 745, a certificate may indicate a quantity that is greater than that stated in the credit or on any other stipulated document..According to sub-article 14(i) UCP 600, a document may be dated prior to the issuance date of the LC, but must not be dated later than its date of presentation..In line with the above, the C/O in question is acceptable. There is no discrepancy..Best regards,Mr. Old ManP/s: Not sure the answer is correct 100%. I'll check if para Q6 (b) applies to C/O.

    Reply

  3. Chính

    March 26, 2015 at 1:17 pm

    Dear anh Old man,
    em có một thắc mắc rất mong được anh giải đáp :

    Em nhận được Lc có nội dung tóm tắt như sau:
    – Issuing bank: A
    – 41A: available with Bank B by negotiation.
    – 42C: Draft at: 180 days from the date of aceptance but benificiary will get pay ment at sign.
    – 42A: Drawee: Bank B
    – 47A:
    + Though the LC is 180 days from the date of acceptence but beneficiary will get payment at sign from bank B, and bank B will get payment will claim reimbursement form issuing bank at maturity.
    + Desptch the original document to issuing bank by courier
    – 49: Confirmation instructruction: Confirm.

    57A: Advise through bank: Bank C.

    Cho em hỏi trong trường hợp này là LC confirmed hay là UPAS LC?
    – Trong trường hợp này người xuất khẩu có gặp rủi ro gì trong thanh toán hay không?

    Em cảm ơn anh rất nhiều, mong rằng sau này anh tiếp tục có nhiều bài viết bổ ích làm nguồn tài liệu tham khảo bổ ích cho tất cả mọi ngươi.

    Reply

    • mroldman

      March 27, 2015 at 7:53 am

      Hi
      This is a confirmed UPAS LC. The beneficiary receives double payment undertaking from issuing bank and confirming bank. Therefore, theoectically, he will receive payment if the documents presented are complying. It is obviousthat this LC is less risky than non confirmed LC. The issue concerned is whether the issuing bank and/or the confirming bank are/is good bank(s).
      Kind regards

      Reply

  4. bon

    November 14, 2017 at 10:29 pm

    Dear Mr Old Man,

    I would like to ask you about confirmed LC.
    Bank B are requested by iss bk to act as confirming bank. Let say tenor at sight and partial shipment allowed. Bank B advised the LC to bank C with adding confirmation. Then bank B received amendment , expiry LC from 25 Dec 20xx become 25 Jan 20xx and late shipment date from 30Nov20xx become 30Dec20xx. Bank B have not yet extend their confirmation for this amendment. My question :
    1. If bank B receive the docs on 20 Nov 20xx from bank C, does bank B obligate to pay the docs to bank C ?

    2. When partial shipment effected and bene did not give their acceptance for the amendment, does confirming bank obligate pay for documents under shipment on dec 1, 2017 ??

    3. Can the confirmation subject to payment of confirm fee ?

    4. If the confirming bank fails to communicate to iss bk but confirming bank already adding confirmation to 2nd adv bk or bene , is it Confirmed LC or not ??

    Thank you.

    Reply

    • mroldman

      November 15, 2017 at 5:46 am

      Hi,

      It should be agreed that a confirming bank may extend its confirmation to an amendment and will be irrevocably bound as of the time its advises the amendment. However, it may choose to advise an amendment without extending its confirmation and if so, it must inform the issuing bank without delay and inform the beneficiary in its advice.

      The confirming bank that does not extend its confirmation to the amendment will be obligated to honour or negotiate the presentation complying with the original L/C only.

      In view of the above I would like to answer your questions as follows:

      1) The documents are presented to Bank B on 20 Nov, 20xx, i.e., before expiry date. If the presentation complies with the terms and conditions of the original L/C, the confirming bank must honour.

      2) As Bank B does not extend its confirmation to the amendment, it is not obligated to honour the documents complying with the amendment but not complying with the terms and conditions of the original L/C.

      3) No. If confirmation fees are for the beneficiary’s account, the confirming bank may deduct when effecting payment to the beneficiary.

      4) Once the confirming bank adds its confirmation to the L/C and advises the same to the beneficiary, the L/C is deemed to be a confirmed L/C.

      Kind regards,
      Mr. Old Man

      Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

Check Also

ĐẠP XE Ở NHÀ MÙA GIÃN CÁCH COVID

Mới có một vài ngày tuân thủ lệnh giãn cách xã hội nhưng không ít đạp thủ Đà Nẵng đã cảm t…