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Silent Confirmation
A Silent Confirmation is a term used to describe an arrangement between the beneficiary of a Letter of Credit and the Negotiating Bank. A Silent Confirmation involves the bank's commitment to negotiate (i.e., purchase) documents under a Letter of Credit without recourse at a future date. A Silent Cconfirmation is not a confirmation in the true sense as it it normally used in connection with Letters of Credit that are subject to the terms of the UCP 600.
The Negotiating Bank will not use the word "confirm." The Negotiating Bank will require that the Letter of Credit be negotiable or payable by itself in order to be able to establish holder-in-due-course rights equivalent to those of a Confirming Bank.
© 2011 by Michael C. Dennis. All Rights Reserved. Mr. Dennis is the author of "1001 Collection Tools and Tips."