A letter to Kim Christensen in regard to the term "honour"

Dear Kim Christensen,

I have read your view on the definition of honor in UCP 600. I agree with you that the introduction of the term will change the language of UCP 600, that is to say, the UCP 600 is much easier to read and understand. However, I think that the definition of honor seems not to adequately reflect the practice and that it should include the action of sight payment under a negotiation credit. My reasons are as follows:
(i) That the issuing bank or the confirming bank (up to the case) must pay at sight a complying presentation under a negotiation credit, which is not negotiated by the beneficiary’s bank or by the nominated bank is true and normal. The issuing bank’s or the confirming bank’s action of payment under the negotiation credit, in this case, is quite the same as that under the sight payment credit. Accordingly, it should be called honor.
(ii) Honor in Article 2 UCP 600 seems inconsistent with honor in Article 7 and 8 UCP 600. Please refer to the followings which I quote from the said articles:
(a) “... the issuing bank must honor if the credit is available by negotiation with a nominated bank and that nominated bank does not negotiate.”
(b) “... the confirming bank must honor if the credit is available by negotiation with another nominated bank and that nominated bank does not negotiate.”
(c) “An issuing bank is irrevocably bound to honor as of the time it issues the credit”
(d) “A confirming bank is irrevocably bound to honor as of the time it adds its confirmation to the credit”

My remarks:
1. (a) and (b) show that honor includes the action of sight payment under a negotiation credit.
2. (c) and (d) show that honor can be applied to any type of credit, irrespective of sight payment credit, acceptance credit, deferred payment credit or negotiation credit.

Honor in Article 2 UCP 600 should have included the action of honor under a negotiation credit. The concept of honor in UCP 600 will be complete if the following or similar wording is added to its definition: “to pay at sight a complying presentation under the credit available by negotiation if such a presentation is not negotiated by the nominated bank”.
I will be very grateful if you have any comment on my view about the definition of honor.

Best regards,
Nguyen Huu Duc
Vietcombank