L8 On UCP600 Article 08 October 16 Intake PDF

CDCS MENTOR
…....for Professionals
CDCS exam 2016

(October Intake)
preparation Program
A
Md. Mohiuddin,
Mohiuddin, cdcs
PRESENTATION
1
CDCS MENTOR,
MENTOR Md. Mohiuddin; Cell: 01716308384; e-mail: cdcs.mentor.bd@gmail.com
UCP600 Article 8:Confirming Bank Undertaking
CDCS MENTOR
a. Provided that the stipulated documents are

presented to the confirming bank or to any other
nominated bank and that they constitute a
complying presentation, the confirming bank
must:
i. honor, if the credit is available by
a. sight payment, deferred payment or acceptance
with the confirming bank;
b. sight payment with another nominated bank and

that nominated bank does not pay;
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must:
c. deferred payment with another nominated bank
and that nominated bank does not incur its deferred
payment undertaking or, having incurred its deferred
payment undertaking, does not pay at maturity;
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must:
d. acceptance with another nominated bank and that
nominated bank does not accept a draft drawn on it
or, having accepted a draft drawn on it, does not pay
at maturity;
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must:
e. negotiation with another nominated bank and
that nominated bank does not negotiate.
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must:
ii. negotiate, without recourse, if the credit is
available by negotiation with the confirming bank.
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b. A confirming bank is irrevocably bound to honor

or negotiate as of the time it adds its confirmation
the credit.
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c. A confirming bank undertakes to reimburse

another nominated bank that has honored or
negotiated a complying presentation and forwarded
the documents to the confirming bank.
Reimbursement for the amount of a complying
presentation under a credit available by acceptance
or deferred payment is due at maturity, whether or
not another nominated bank prepaid or purchased
before maturity. A confirming bank's undertaking to
reimburse another nominated bank is independent
of the confirming bank's undertaking to the
beneficiary.
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d. If a bank is authorized or requested by the issuing

bank to confirm a credit but is not prepared to do so,
it must inform the issuing bank without delay and
may advise the credit without confirmation.
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Confirming bank’s undertaking begins…………

A confirming bank is irrevocably bound to honor or negotiate
(subject to availability)
as of the time it adds its confirmation to the credit.
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Confirming bank’s negotiation manner…………

negotiate, without recourse, if the credit is available
by negotiation with the confirming bank.
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Negotiation
Negotiation
with Recourse
With
Recourse….
What does it mean????
The right of a negotiating bank to claim

refund from the beneficiary.
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Confirming bank’s CDCS MENTOR
Undertaking …....for Professionals
An confirming bank’s two fold irrevocable undertaking

through adding confirmation the credit.
To Beneficiary: for Honour
To Nominated Bank: for reimbursement
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Confirming bank’s
Undertaking
An confirming bank’s irrevocable undertaking to reimburse
the nominated bank depends on the following:
1. Honoured a complying presentation or

Negotiated a complying presentation
2. forwarded the documents to the confirming bank
3. Reimbursement under a credit available by acceptance or

deferred payment is due at maturity.
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Confirming
bank’s
HONOR
Confirming Bank MUST Honour under conditions of :
o All stipulated documents are presented
o Presented to the nominated bank or;

Presented to the confirming bank
o constitute a complying presentation
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Confirming
bank’s
bindings to
HONOR
A confirming bank’s irrevocable bindings to honour

commences while adds confirmation the credit. (In case
of amendment, while advise the amendment)
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An confirming bank undertakes to

reimburse a nominated bank that has
acted on its nomination.
Confirming An confirming bank's undertaking to

the nominated bank is independent
Bank’s of the undertaking given to the
Undertaking beneficiary.
to the Even if the nominated bank has paid
nominated in advance under a credit available
by acceptance or deferred payment,
bank(s)
the confirming bank has no
obligation to pay before maturity.
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Can a non-
non-bank confirm a credit?
YES
Can there be more than one confirming

bank in a credit?
YES
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ICC Banking Commission Opinion …....for Professionals
[R742]
Query: When a credit states ‘may add’ regarding confirmation:

What does it mean?
Answer: ‘Such an instruction(i.e. may add) allows a

bank to add its Confirmation upon a request received
from the beneficiary. Such a request need not be
forthcoming at the time of advising the credit and may
occur at any time.’
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[R520*]
Query: How long a confirmation exist?
Answer: Where documents are presented to the

confirming bank within the validity of their
undertaking, and found to be discrepant, and the
confirming bank provides a notice of refusal in
accordance with the UCP, its undertaking would no
longer exist in respect of that presentation (subject to
the beneficiary being unable to correct the
discrepancies within the credit timelines).
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ICC Banking Commission Opinion
[R520*]
If the documents, on instructions of the beneficiary, are

subsequently sent to the issuing bank on an approval basis and the
discrepancies are waived, the confirming bank has no obligation to
make payment unless it has indicated its willingness to do so at the
time of providing its notice of refusal.
The presentation of discrepant documents to the
confirming bank would end its obligation under the
credit unless it has stated otherwise, and the fact that
the issuing bank accepts a waiver of discrepancies
would not further obligate the confirming bank.’
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R737 [TA742rev]
Query:
A bank added confirmation as requested by the LC

issuing bank. The beneficiary presented documents to
the confirming bank. The confirming bank found
some discrepancies and sent refusal notice to the
presenter. At the request of the beneficiary, the
confirming bank forwarded the non-complying
documents to the issuing bank.
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R737 [TA742rev]
Question01 :
Was the confirming bank obligated to honor or negotiate those
non-complying documents.
ICC answer: No
Question02:
The issuing bank later waived the discrepancies and sent the
acceptance message to the ‘confirming’ bank. Was the confirming
bank obligated to honor or negotiate the documents at this stage?
ICC answer: No
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R737 [TA742rev]
Question03:
Can the confirming bank reinstate its confirmation at this stage
without further request or authorization from the issuing bank?
ICC answer : YES

Question04:
Can the confirming bank refuse to reinstate its confirmation at this
stage even if required by the beneficiary?
ICC answer : YES

but for that non-complying presentation only.
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R737 [TA742rev]
Conclusion:
Once a nominated bank’s confirmation has lapsed as a result of

complying documents not being presented within the validity of the
credit, any subsequent agreement by the nominated bank either to
reinstate its confirmation or to agree to act as if its confirmation still
stands in respect of the presentation, is solely for the nominated bank
to decide. It may do so without further reference to, or authorization
from, the issuing bank.
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CDCS MENTOR

CDCS exam 2016

a. Provided that the stipulated documents are

b. sight payment with another nominated bank and

a. Provided that the stipulated documents are

a. Provided that the stipulated documents are

a. Provided that the stipulated documents are

a. Provided that the stipulated documents are

b. A confirming bank is irrevocably bound to honor

c. A confirming bank undertakes to reimburse

d. If a bank is authorized or requested by the issuing

Confirming bank’s undertaking begins…………

Confirming bank’s negotiation manner…………

The right of a negotiating bank to claim

An confirming bank’s two fold irrevocable undertaking

To Beneficiary: for Honour

To Nominated Bank: for reimbursement

1. Honoured a complying presentation or

2. forwarded the documents to the confirming bank

3. Reimbursement under a credit available by acceptance or

Confirming Bank MUST Honour under conditions of :

o All stipulated documents are presented

o Presented to the nominated bank or;

o constitute a complying presentation

A confirming bank’s irrevocable bindings to honour

An confirming bank undertakes to

Confirming An confirming bank's undertaking to

Can there be more than one confirming

Query: When a credit states ‘may add’ regarding confirmation:

Answer: ‘Such an instruction(i.e. may add) allows a

Query: How long a confirmation exist?

Answer: Where documents are presented to the

If the documents, on instructions of the beneficiary, are

A bank added confirmation as requested by the LC

ICC answer : YES

ICC answer : YES

Once a nominated bank’s confirmation has lapsed as a result of

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