WHETHER THE ADVISING BANK CAN ADVISE THE LC DIRECTLY TO THE BENEFICIARY BYPASSING THE 2ND ADVISING BANK

QUESTION

Dear Mr. Old Man

We have received and LC from the Issuing bank. There is also a 2nd advising bank given in the LC. The beneficiary is our client as well. If the beneficiary is ok, can we advise the LC directly to them or should we necessarily follow the route of the 2nd advising bank to advise the LC?

LC is available with any bank by negotiation.

Regards

Rohini

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ANSWER

Hi,

Normally, if an LC provides that the LC is advised through a named second advising bank, the advising bank should follow the issuing bank’s instructions. However, if the beneficiary, who maintains account with the advising bank, requests the advising bank to advise the LC directly to him bypassing the second advising bank to avoid costs due to involvement of many banks and the advising bank agrees to do so, the advising bank should inform the issuing bank of the same.

By the way, I would like to draw your attention to UCP 600 article 9 (d), which says “a bank utilizing the services of an advising bank or second advising bank to advise the LC must use the same bank to advise any amendment thereto.

Best regards,

Mr. Old Man