What Is A Silent Confirmation Agreement

The confirming bank is the bank that adds its confirmation to a credit on authorization or request from the issuing bank. Open confirmation is the case when a bank issuing L/C adds confirmation from the advisory bank on the L/C. Unspoken confirmation is the case if the confirmation is added only at the exporter`s request. There is no request for confirmation on the L/C by the L/C issuer bank. An official confirmation letter corresponds to a confirmed loan. The seller poses a very low risk when making a sale to a customer who has received a formal confirmation letter. The only way the seller is not paid is when the buyer, the domestic bank and the foreign bank are all late with the payment. Home > bank > exchange of letters: Unspoken confirmations do not deprive the rights of a worthy bank as a bank designated under UCP 600 Article 12 of UCP 600 defines the status of designated bank. The appointment does not require the designated bank, unless the bank has expressly agreed to it and the agreement is notified to the beneficiary. The mere receipt of documents or receipt, accompanied by the examination, does not make the designated bank`s responsibility to the beneficiary. Instead of following this simple and effective procedure, designated banks sometimes choose to enter into separate agreements with the recipient that purport to “validate” the credit under certain conditions.

The conditions are always unfavourable to the beneficiary, the procedure is called “tacit confirmation”. The defendant has committed to credit the account upon presentation of the corresponding documents, which is subject to the provisions of the UCP. However, the agreement gave the defendant a right of appeal. This runs counter to the UCP`s conditions for bank confirmation. A confirmation bank guarantees payment on the due date, in addition to the payment guarantee of the L/C issuing bank. If exporters are not satisfied with the payment guarantee of the issuing bank, L/C confirmation is valid to cover the exporter`s future receivables. The latest version of UCP 600, which codifies best practices in letters of credit, allows a designated bank from which the balance is made available by the issuing bank to add its confirmation upon request or authorization from the issuing bank. Confirmation means “a definitive commitment from the confirmation bank… honour or negotiate an appropriate presentation.” With respect to UCP600, only a confirmation bank and no designated bank is required to comply with a compliant submission. Recipients therefore prefer that a credit be confirmed to ensure that the bank does not have room for discretion with respect to mail-order credits when submitting such a project. In cases where the issuing bank has not authorized or asked a bank to add its confirmation to a credit, designated banks, at the request of the beneficiaries, often add their tacit confirmation to these credits. Tacit confirmation is a purely contractual agreement between the designated bank and the beneficiary, which excludes the issuing bank and is not regulated by UCP 600.

It often includes rights of appeal that are not approved by UCP 600 and requires the beneficiary to transfer or transfer to the designated bank its rights to the issuing bank under the credit. Costello J. also found that the applicant had argued that the defendant had violated the tacit provisions of the agreement. He acknowledged that there were unspoken conditions under which the defendant would take all necessary measures to obtain a dangerous and dangerous means in the event of a late payment by the “tacit confirmation” of BOI.13, although usually.