Home Mr Old Man WHETHER TO SEND DOCUMENTS ON APPROVAL BASIS TO THE ISSUING BANK or THE CONFIRMING BANK?

WHETHER TO SEND DOCUMENTS ON APPROVAL BASIS TO THE ISSUING BANK or THE CONFIRMING BANK?

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QUESTION

 

Dear Mr. Old Man,

We as the second advising bank and the beneficiary’s bank received MT 710 from Bank B (Country B) with the following details:

Field 40B (Form of Documentary Credit): IRREVOCABLE ADDING OUR CONFIRMATION

Field 52A (Issuing bank): BANK A (in Country A)

Field 41A (Available with … by): BANK B BY NEGOTIATION

The beneficiary presented the documents to our bank, but the presentation was not compliant due to late presentation and some other discrepancies. At the beneficiary’s authorization, we sent the documents on approval basis directly to the issuing bank instead of the confirming bank as required by the LC.

In similar situations, would your bank do the same or send discrepant documents on approval to the confirming nominated bank?

I am interested in hearing your bank’s practice.

Thank you for your comment.

M

——-

ANSWER

Hi,

By adding confirmation, the confirming bank undertakes to honour or negotiate only when the documents presented are complying with the credit terms and conditions. It is not obligated to honour or negotiate discrepant documents sent on approval basis. It may refuse and return the documents to the presenter as per Article 16 UCP 600.

The beneficiary was right in authorizing your bank to send the discrepant documents on approval basis directly to the issuing bank. This helped save time and cost, especially when the confirming bank was domiciled in a country other than that of the beneficiary and your bank.

We do the same practice!

Best regards,

Mr. Old Man

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