Lifestyle Q&A PARTIAL CONFIRMATION By Mr Old Man Posted on November 16, 2016 4 min read 6 0 5,412 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr QUESTION Dear Mr Nguyen, I hope all is well on your side. I have a query on L/C confirmation and was referred by some Vietnamese counterparts to you as you are the Trade Finance expert in Vietnam. I wanted to ask you if you have across partial confirmation for L/Cs. According to some colleagues, that have told me that according to UCP 600, partial confirmation is not allowed. Assuming that there is a case of an L/C for the construction of a big infrastructure project. The L/C amount is more than USD100mil and the expiry of L/C is approx. 30 months. Will it be possible for confirming bank to add partial confirmation to the L/C assuming that the beneficiary only wants to cover partial risk of the L/C? Appreciate your kind assistance and help. Really appreciate it. Best regards, David ———— ANSWER Hi, Why not? Below is what I answered to a similar question on Letter of Credit Forum in 2007: Quote Partial confirmation is not covered under UCP 600, hence, if partial confirmation is allowed by the LC, the bank that wishes to add partial confirmation to the LC should have a specific agreement with the beneficiary and the issuing bank with regards to its confirmation obligation and the issuing bank’s reimbursement obligation and so on. Unquote Now I would like to quote herewith a scenario where a confirmation is deemed to be a partial confirmation: Bank I issued a confirmed L/C for USD100,000 in favour of XYZ Company. Bank C added its confirmation to the L/C and advised the same to XYZ Company. One month later Bank I issued an amendment to increase the L/C amount by USD100,000. However, Bank C advised the amendment to the beneficiary without adding its confirmation to the increased amount, and informed the issuing bank of the same in accordance with sub-article 10 (b) UCP 600. The L/C amount after amendment is USD200,000 but only USD100,000 is confirmed by Bank C. So, this is a partial confirmation, isn’t it? Back to your case. The fact that UCP 600 is silent as to partial confirmation does not signify that it prohibits confirmation for part of the L/C amount. So, Why not? If requested and agreed by the beneficiary and/or the issuing bank. the confirming bank may add its confirmation to part of the L/C amount. Kind regards, Nguyen Huu Duc
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
CAN THE ISUING BANK CITE “LATE PRESENTATION” AS A DISCREPANCY SOLELY BASED ON THE DATE OF THE COVER LETTER?
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
CAN THE ISUING BANK CITE “LATE PRESENTATION” AS A DISCREPANCY SOLELY BASED ON THE DATE OF THE COVER LETTER?