• International Commerce and Information Review
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• v.14 no.4
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• pp.433-456
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• 2012

The confirming bank undertakes to make payment to the beneficiary, provided that a complying presentation is made and complies with its confirmation. In case L/C fraud is evident, though, the confirming bank as well as the issuing bank does not have the obligation to make payment. That is, the confirming bank does not take the risks involving documentary fraud. The confirming bank cannot exercise the right to recourse toward the beneficiary or the nominated bank when the issuing bank finds the discrepancies which the confirming bank has not noticed. This is because under UCP600, the issuing bank or the confirming bank cannot refuse to make payment with the cause of documentary discrepancy after 5 banking days following the presentation of documents. Even if the issuing bank accepts the discrepant documents following the confirming bank's request to do so, the confirming bank does not have the responsibility for the confirmation. When under Usance Negotiation Credit, the confirming bank acts as the nominated bank, the confirming bank should make payment in no time if the beneficiary presents complying documents. Therefore, unless the confirming bank intends to make immediate payment, they should consider using Deferred Payment or Acceptance L/C in Usance Credit. It is also safer for the beneficiary to have the reimbursing bank's undertaking to the reimbursement than just have confirmation of the credit because in the latter case they may not have full payment due to disputes regarding discrepancies of the documents even if they have confirmation of the credit.