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An issuer undertakes to the beneficiary to honour a presentation that appears on its face to comply with the terms and conditions of the standby in accordance with these Rules supplemented by standard standby practice. An issuer honours a complying presentation made to it by paying the amount demanded of it at sight, unless the standby provides for honour: i. An issuer acts in a timely manner if it pays at sight, accepts a draft, or undertakes a deferred payment obligation or if it gives notice of dishonour within the time permitted for examining the presentation and giving notice of dishonour.
A confirmer undertakes to honour a com plying presentation made to it by paying the amount demanded of it at sight or, if the standby so states, by another method of b.
An issuer honours by paying in immediately available funds in the currency designated in the standby unless the standby states it is payable by: i. The undertaking of a confirmer is separate and independent from that of an issuer and is so understood in standby practice. UCP Art. Subrule d states the consequences of an unqualified undertaking where the documents are permitted to be presented to another person. Presentation to Confirmer.
Standbys typically permit presentation to the confirmer, and the presentation typically is made first to the confirmer.
Presentation to Issuer. It is also commonly assumed that the beneficiary may make presentation directly to the issuer, bypassing the confirmer and that in such a situation the issuer is obligated to pay. The obligation of the confirmer is less well appreciated in such a situation.
Under these Rules, a presenter is permitted to present to either the issuer or the confirmer unless the obligation of the issuer or the confirmer is conditioned on its receipt of documents. A confirmer that wishes to limit responsibility for issuer dishonor should require that documents be presented to it. ISP98 Rule 2. A person not so nominated cannot be a nominated confirmer under ISP This situation typically arises where the issuer is not prepared to incur additional obligations to a confirmer for economic or political reasons.
For the very same reasons, beneficiaries often desire the added comfort of an undertaking by a local bank. An undertaking to purchase documents presented is not a confirmation under these Rules. However named or described, the undertaking may be and usually is enforceable as a separate standby issued by the person undertaking to purchase the documents and, if given subject to these Rules, would be governed by them.
Where the undertaking is given by someone not nominated to advise and pay or to negotiate, there are serious operational and safety and soundness issues connected with an undertaking to purchase which are beyond the scope of rules of practice. If on the last business day for presentation the place for presentation stated in a standby is for any reason closed and presentation is not timely made because of the closure, then the last day for presentation is automatically extended to the day occurring thirty calendar days after the place for presentation re-opens for business, unless the standby otherwise provides.
Upon or in anticipation of closure of the place of presentation, an issuer may authorise another reasonable place for presentation in the standby or in a communication received by the beneficiary. If it does so, then i.
Official Comments: 1. Many standbys vary UCP Arts. This Rule recognizes this practice and, by stating a balanced rule, seeks to avoid the current confusion resulting from poorly drafted idiosyncratic and impractical clauses which appear in some standbys.
When Applicable. This Rule applies where the place designated in the standby for presentation is closed on the last day for presentation. Thus, the Rule would be applicable where the place for presentation is stated even if presentation could be made at another place e. The Rule, however, does not anticipate every possible situation such as where the standby provides for multiple places for presentation e.
This approach avoids the need to determine whether, where, when, and for how long force majeure has occurred. The question is whether the person is closed on a day that it is regularly scheduled to be open for business.
Any Deadline. This Rule applies not only if the closure is on the expiration date but on any other deadline in the standby e. Non-Presentation Caused By Closure. The beneficiary is not entitled to an extension under this Rule if it could not have made a complying presentation at the closed office had it been open or at another designated office that was open. The Rule does not address the form in which these facts are to be established.
Because the situation is extraordinary and the Rule deals with remedies in the same sense as a transfer by operation of law in ISP98 Rule 6. Where the issuer honors a late presentation following closure on the last day for presentation, it is entitled to reimbursement by the applicant, and the issuer is entitled to request a statement that the beneficiary was able to make a complying presentation but was prevented from doing so because of the closure.
Should a dispute arise, the question of who would bear the respective burdens of proof of the underlying facts is left to the applicable local law. In this situation, courts may look for guidance to rules regarding anticipatory repudiation of an undertaking. Automatic Extension. If the closure of the place of presentation on the last day for presentation prevents presentation, the Rule automatically extends the last day for presentation for thirty calendar days as opposed to business days after the place of presentation re-opens.
Thus, if the place of presentation reopened Tuesday, 9 June, since June has thirty days, the last day for presentation would be extended to Thursday, 9 July. Thirty Day Period. The time period for the extension has been the subject of negotiation between the applicant and issuer and will, no doubt, continue to be so under ISP98 although probably to a lesser extent.
The thirty day period was selected, in part, because it is widely used, as is evidenced by its adoption the for standbys in which the U. Government is a beneficiary see U. A number of insurance regulators also mandate the thirty day period for reinsurance standbys. Subrule b Generally. Subrule b permits the issuer to designate a different place for presentation in lieu of waiting until the re-opening of the original place for presentation. While the ability to designate an alternative place is particularly useful where the place of presentation is not to be re-opened for a considerable period of time, or where a permanent closing has been planned in advance, this measure can be used under any circumstance.
Advantage of Alternative. This alternative procedure offers considerable advantages to both issuer and beneficiary. It allows the issuer to suspend the accumulation of potential expenses and to avoid repudiation and it opens a direct channel by which the beneficiary can make its presentation. A Reasonable Place. By designating an alternative place, the issuer has, in effect unilaterally amended the standby, albeit in a limited manner. Presumably, a place at another branch of the same bank at a location in the same country would be practicable for most beneficiaries in most circumstances, whereas a distant location at a materially greater distance or one that is materially less accessible or subject to materially different laws or practices may not be reasonable.
For example, a beneficiary located in Chicago which had been required to present in New York would typically not be materially affected by a change to Los Angeles because, in any case, the presentation will be by courier. Any objection that the place designated has a materially adverse effect must be made promptly by the beneficiary so that another place can be designated.
Planned or Unplanned Closure. As indicated, this Rule operates whether closure is planned in advance or unplanned. Where the closure is planned e.
If the notice is received more than thirty calendar days before the last date for presentation, there is no extension of time under Subrule a or b , and presentation must be made at any reasonable designated alternative place since the beneficiary will have been given ample time either to comply or to object to the reasonableness of the place.
If the notice is received less than thirty calendar days from the last date for presentation and presentation is not made for that reason, the last day for presentation is extended thirty calendar days from the last day for presentation in the standby.
For example, if the last day for presentation is 30 June, and notice was received on 4 June, the last day for presentation would be extended to 30 July. Varying Rule in Standby. The Rule operates as a default rule where the standby or an amendment does not otherwise provide.
Even where different norms are desired and specified e. Thus, if the standby requires a different time frame i. No Effect on Jurisdiction. This Rule is intended for operational convenience in the event of a change whose particulars are unforeseen when the standby is issued. The designation of an alternative place which is reasonable but located in another legal or regulatory jurisdiction, however, does not oust the jurisdiction which would otherwise apply in connection with the place for presentation originally stated.
The consequences of prolonged closure at the only place designated for presentation in the standby or ISP98 e. As indicated in ISP98 Rule 4. Problems Addressed.
This Rule addresses standbys that specify the wording in a document. The practice has arisen of inserting specified wording in the standby or attaching an exhibit which indicates the text which is to be included in or which constitutes a required document. Because standby documents typically derive their significance from what they say rather than what they are as is usually the case with commercial LC documents , standbys frequently detail the contents of required documents.
Analogy to UCP Art. To what extent must the text of the documents presented mirror the text specified in the LC? Many of the answers to this question have relied upon simplistic formulas or terminology without taking into account the character of the documents and the degree of compliance which is required under standard practice. In this respect, the UCP offers important guidance in its requirements regarding the exactitude of the description of the goods in invoices as compared to other documents.
In a commercial LC, the description of the goods is of considerable significance. Nonetheless, how the description of the goods in the LC must appear in the documents depends on their commercial function.
Neither transport documents nor insurance documents, for example, focus on the description of the goods, but the invoice does and, with respect to it, UCP Art. In standby practice, the operative language of the drawing document stated in the standby occupies a similar position of importance to the description of the goods in the invoice.
No Wording Specified. In such a situation, it must be apparent that the same meaning is conveyed. Precise Wording Specified. Where the standby specifies the wording, there is less scope for judgment but some remains. Must the layout be identical? If an exclamation mark is used instead of a period, is that a discrepancy?
Slavish Imitation Not Mandated. For that reason, misspellings in the standby need not be duplicated and there can be some difference in line placement and spacing. Typographical errors in the documents are not automatically fatal. Exact Wording Required.
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