I have received an acceptance LC with the Drawee as Issuing bank. The L/C however is "Available with Any bank by Acceptance".

Please let me know, if we can negotiate under such LC, and what we should do when the Beneficiary presents the documents to us. Is there any difference if the LC is available by deferred payment I/O by acceptance?

Thanks

That bank will have the possibility to negotiate (by concluding a contract with the beneficairy, outside the LC) with or without recourse, agreeing to advance the funds to the beenficiary on or before the maturity date stated on the draft (or determinable from draft content).

By choosing to negotiate, the nominated bank will accept the draft drawn on issuing bank.

Under LCs you can meet two principal kinds of docs: commercial docs (invoice, transport document, packing list, certificate of origin etc) and financial docs (drafts)

When drafts are required and payment follows to be made at a maturity date the LC is available by acceptance of the draft. When no draft is required and payment follows to be made at a maturity date the LC is available by deferred payment.

Under both scenarios the nominated bank may negotiate.

Best regards,

Bogdan

1. to negotiate draft under a credit, the credit should be available by negotiation with that bank. If it is available with any bank, then any bank is nominated to negotiate. Here the issuing bank maybe the drawee.
    
2. to accept a draft, the LC should be available with the nominated bank by acceptance. Thus the drawee will not be the issuing but rather the nominated bank with which the LC is available.
    
3. deferred payment credits maybe available by negotiation with the nominated bank.

As such if you are comfortable the issuing bank's risk and willing to negotiate documents you need to have the LC amended; thus the LC should read that it is available with you by negotiation. If you want to accept the draft and prepay or purchase the draft, then, the LC should be available with you by acceptance.

Regards

2) Notwithstanding the fact that the UCP 600 opens for freely available credits by acceptance - I would be reluctant to accept such. If I am to accept a draft (and obligate myself) to pay at maturity - such draft should be drawn on me (similar to Abdulkaders point 2) - and not on the issuing bank.

Best regards

Kim