WHERE THE CONFIRMING BANK DOES NOT EXTEND ITS CONFIRMATION TO AN AMENDMENT

QUESTION

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

————-

ANSWER

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. 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