Assignment Of Letter Of Credit

Assignment Of Letter Of Credit-48
A new Article 12(b) was introduced into UCP 600 as follows: “By nominating a bank to accept a draft or incur a deferred payment undertaking, an Issuing Bank authorizes that Nominated Bank to prepay or purchase a draft accepted or a deferred payment undertaking incurred by that Nominated Bank'' thereby facilitating the fundamental business need for the discounting of deferred credits.The provision applies where the Nominated Bank which has incurred a deferred payment undertaking discounts its obligation before maturity and subsequently fraud is discovered.Krungsri will transfer only the right to receive payment according to L/C while the right to take actions under L/C conditions still remains with exporters or beneficiaries specified in L/C.

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Many articles were written at the time, resulting in one of the most important changes in the updated ICC Uniform Customs and Practice for Documentary Credits The ICC was compelled to ensure that there was consistency between regions on a point so critical to the survival of secondary market trading.

Furthermore, if an Issuing Bank gives an undertaking of payment at maturity to a Third Party Bank, and such Third Party Bank then assigns proceeds to another Bank, does this give the same rights to the Third Party Bank as those of the Nominated Bank?

What can a Nominated/presenting Bank do if the Issuing Bank refuses to amend reimbursement instructions and insists that its obligations are limited to those set out in UCP600?

Most of the issues in this area relate to the vulnerability of assignees to defects in the rights being ''sold'' by the assignor.

Before discussing these issues it is worth noting that these problems can be avoided by ensuring that the financial institution intending to discount a deferred payment credit is appointed as the Nominated Bank, either by having the Credit available with them or alternatively, available with any Bank.


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