NEGOTIATION UNDER RESERVE AND GUARANTEE IS NOT ALLOWED

2 Comments

1. 

   Xvir

   October 29, 2017 at 4:19 pm

   Hello Mr Old Man, weve opened an lc 100percent advance payment, payment will be against presentation of foreign bank guarantee, bene of lc is asking for removal of clause ” negotiation under reserve/guarantee not allowed ” wouldnt it comprise us the applicants bank incase advance payment is made after removal of such clause and bene negotiates docs with bene bank which is also our correspondent and lc advising confirming bank. Kindly guide.

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• 

  mroldman

  October 29, 2017 at 4:56 pm

  Hi,

  Whether or not the beneficiary can negotiate the documents with a certain bank depends on the type of L/C that is issued by the issuing bank.

  If L/C is available with the issuing bank by payment, then no bank is authorized (by the issuing bank) to negotiate the documents. If L/C is available with confirming bank/any bank by negotiation, then the confirming bank/any bank is authorized to negotiate the documents.

  As I do not see the L/C, I cannot give an exact answer. However, I understand that when asking for removing the above clause, the beneficiary wishes to receive an L/C that allows him to negotiate the documents with the nominated bank/confirming bank.
  Kind regards,
  Mr. Old Man

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