Definition

Under the Irrevocable Negotiation Documentary Credit, the Issuing Bank's engagement is extended to third parties who negotiate or purchase the Beneficiary's Draft/Documents presented under the Documentary Credit. This assures anyone who is authorized to negotiate Draft(s)/ Documents(s) that these Drafts/Documents will be duly honoured by the Issuing Bank Provided the terms and conditions effectively negotiates Draft(s)/Document(s) buys them from the Beneficiary, thereby becoming a holder in due course.

The engagement of the issuing bank is normally indicated in the Documentary Credit as available for negotiation by a Nominated Bank and expiring for presentation of documents at the offices of such a Nominated Bank. Alternatively, the engagement of the Issuing Bank may be stated more explicitly as follows:

"We hereby agree with the drawers, endorsers, and bona fide holders of Drafts/Documents drawn under and in compliance with the terms and conditions of the Credit that such Drafts/Documents will be duly honoured on due presentation if (negotiated) or (presented at this office) on or before (expiry date)", or words of similar intent.

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