Silent Confirmation Charges: Applicant or Beneficiary?

QUESTION

Dear Old Man,

Please guide:

Scenario:

– LC issued MT-700 by MCBLMUMUXXX MAURITIUS

– LC received and transmitted by BOMLAEADFTC UAE to BAFL-India via MT-710

– LC requested and confirmed by BOMLAEADFTC UAE

– All charges outside (ALL LOCAL AND FOREIGN WHETHER WITHIN OR OUTSIDE IS ACCOUNT OF APPLICANT)

– Available by BOMLAEADFTC UAE Payment

– 1st confirming bank: BOMLAEADFTC UAE

– 2nd confirmation by BAFL-India on request of beneficiary

Remittance cover was made and sent to BOMLAEADFTC UAE claiming bill amount + confirmation charges. However, payment received from BOMLAEADFTC UAE only included the bill amount.

My question:

In this scenario, who will pay 2nd confirmation charges — applicant or beneficiary?

Warm regards,

Faisal

——

ANSWER

Hi Faisal,

Based on your scenario:

– The LC was confirmed first by BOMLAEADFTC UAE (1st confirming bank), likely at the request of the issuing bank.

– Later, a second confirmation was added by BAFL India, but at the request of the beneficiary, not the issuing bank.

This second confirmation is considered a “silent confirmation”, since it wasn’t instructed by the issuing bank.

Who pays what?

– The applicant is responsible for the 1st confirmation charges (BOMLAEADFTC UAE), as the LC states all charges are on the applicant’s account.

– The beneficiary is responsible for the 2nd confirmation charges (BAFL India), because this confirmation was added at their request.

Final Summary:

– 1st confirmation (BOMLAEADFTC UAE): Paid by applicant

– 2nd confirmation (BAFL India, silent): Paid by beneficiary

Best regards,

Mr. Old Man