Opened revocable and freely negotiable credit but a debtor requested credit cancellation therefore, the cancellation notification was notified to the seller through the advising bank. Regardless of the cancellation, the seller shipped the goods, prepared the shipping documents and inquiry purchase through other bank than the advising bank.
without knowing the cancellation, the negotiating bank requested the payment to the opening bank after purchasing however, payment for the credit was rejected.
Case study
1. If purchased was made prior to the cancellation notification of the opening bank.
In no doubt, the negotiating bank can request for the payment to the opening bank if the purchase was made before the notification of the cancellation of the opening bank.(The Sub-Article 9(b) of U.C.P.)
2. If purchase was made after the cancellation notification was made by the opening bank.
In this case, if the negotiating bank knowingly purchased, the negotiating bank can no be reimbursed for the payment. If the negotiating bank purchased a document that corresponds to the terms of credit without knowing the cancellation of the credit, the act of negotiating bank can be regarded as a good intention purchase and under the I.C.C.(I.C.C. pub 459. case No.10)., the payment can be reimbursed.
At this point, the negotiating bank will have to support evidence that the bank was not aware of the cancellation of the credit at the time of purchasing.
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8-Revocation of a Credit
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