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Dear Mr Old Man,

I know that you are very busy but if you have time I wish to have your clarification in LC availability.

1. From your post on “conditional acceptance of payment” http://my.opera.com/mroldmanvcb/blog/2011/04/19/conditional-acceptance-of-payment, in case of LC available with a nominated bank by payment, nominated bank will NOT have recourse to the beneficiary once it honors. Only in case that docs were found discrepant, nominated bank can pay on a with recourse basis. I have asked some experts from Citibank, Wells Fargo… and they share the same view with you.
However, from the CDCS textbook and Internet (e.g. website http://letterofcredit.biz/Availability.html), they said that” UNLESS THE NOMINATED BANK IS ALSO THE CONFIRMING BANK, ANY SETTLEMENT RECEIVED BY THE BENEFICIARY MAY WELL BE WITH RECOURSE TO THE BENEFICIARY” in the section of sight payment. I cite page 85 and 86 of the textbook as attached file.
Could you pls have a look into this different point of view and give me your clarification.

2. Similarly, in case of LC available with nominated bank by acceptance or deferred payment, issuing bank has already released its own reimbursement undertaking to nominated bank and nominated bank prepays or purchases a draft accepted or a deferred payment undertaking incurred by itself. At maturity, due to some reasons (e.g. court injunction) issuing bank can not reimburse nominated bank. Can nominated bank be refunded from beneficiary?

Thank you very much for your kind support.

Wish you have a nice day



1) This is to re-confirm to you that where L/C is available by payment and the nominated bank has paid it is without recourse to the beneficiary.

I see that the statement “UNLESS THE NOMINATED BANK IS ALSO THE CONFIRMING BANK, ANY SETTLEMENT RECEIVED BY THE BENEFICIARY MAY WELL BE WITH RECOURSE TO THE BENEFICIARY” causes misunderstanding that the nominated bank that has paid the beneficiary under the L/C available by payment is always entitled to have recourse to beneficiary if no reimbursement is received from the issuing bank.

2) No. When the nominated bank has accepted a draft or incurred a deferred payment undertaking it is also without recourse to the beneficiary unless there has been a specific agreement (between the nominated bank and the beneficiary) that the nominated bank is entitled to have recourse to the beneficiary in the event the issuing bank is prevented by a court order from effecting payment/reimbursement.

The nominated bank that has paid, accepted a draft or incurred a deferred payment undertaking and paid at maturity can request the court to lift the order by giving evidence that it has acted on its nomination and is entitled to reimbursement from the issuing bank. However, please note that court order or injunction is a matter of local law and outside UCP. It is the judge that makes the final decision.

Best regards,
Mr. Old Man
P/s: For future contact, please send your questions directly to my frequently used email: nhduc.dng@vietcombank.com.vn

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  1. anonymous

    March 19, 2012 at 4:03 pm

    phan loc writes:chào anh, cho em hỏi 1 vấn đề. E đang làm 1 cái phyto cert và fumi cert, nhung tren phyto, ở phần ngày ng ta đề là 3/13/2012, trong khi ở fumi đề là 13/3/2012. Lúc gửi lên ngân hàng thì bị bắt sửa lại tại họ kêu bất hợp lệ. A có thể cho ý kiến không ạ? Cám ơn anh


  2. mroldmanvcb

    March 19, 2012 at 8:03 pm

    Không bất hợp lệ nếu ngày của fumi cert hay phyto cert trước ngày xuất trình chứng từ.


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