Irrevocable at Sight by Payment VS Irrevocable at Sight by Negotiation

I received L/C from my applicant, ussually they used Irrevocable at sight by Payment but now they use Irrevocable at Sight by Negotiations.
Please kindly explain the different,good and bad by using irrevocable at sight L/C by payment and by negotiations.Thank you in advance

Replying to [davindo]:

The rationale will take up several pages (You got to read my book some day....!] Very briefly, and generally speaking:

---LCs available by 'payment' are those which are available with the issuing bank;

---LCs available by 'negotiation' are those that are NOT available with the issuing bank.

In UCP lingo all 'payments' (replaced with the term 'Honour' since UCP 600) are without recourse, as are negotiations by confirming banks.

Replying to [Catalyst]:Thank you CatalystYou are the first one who always answer my post...thanks again for your kind attention. What do you mean by "NOT AVAILABLE: with the issuing bank?It's safe for seller?it's better than by payment?

Replying to [davindo]:

Ooooops, sorry! 'Available' means (the bank with which an LC is) available for presentation of documents. That is again UCP lingo.

"Not available" with....(banks) means the LC is restricted to exclude those banks with which the documents are "not available" for negotiation or payment. Therefore, you cannot present documents to those banks and expect them to negotiate.

Remember also that an LC available for negotiation, acceptance, or payment with any (other) bank is also (and always) available for payment with the issuing bank.

I am afraid, that it is a bit confusing. If you want to know all about these issues, then the only solutions are (1) to attend my seminars and workshops, or (2) to read my book. Short of that, there is a limitation and constraint to what can be explained in these forums. Sorry. Hope you understand?

Replying to [Catalyst]:Actually ...I 'm confused...need to read again and again , maybe.You remind me with my lecture when I was in university...his first explaination make student confused, must be repeated again and again to make understand. Sure I will read your books

Replying to [davindo]:

Sorry I sound like a professor. I never was and never would qualify as such. I love to share what I know. Pl do read my replies carefully, repeatedly. Do ask me about any particular point if you are still confused.

Replying to [Catalyst]:

You said:
"---LCs available by 'payment' are those which are available with the issuing bank"

Does that mean lc available by payment cannot be made available with any bank other than issuing bank?

My understanding is that LC by payment can be made available with a bank other than the issuing bank provided that the issuing bank has an arrangement with that bank whereby that bank is authorized to examine and pay the docs on behlaf of issuing bank. If that bank however fails to honour a complying presentation or refuses to take up the documents, then the docs should be presented to the issuing bank through any bank on collection basis.

Am I right? Plz comment.
plz also let me know the title of your book and from where it is available. I am placed at LC opening dept. of a bank recently and started learning about LC.

Replying to [spider man]:

I tried to be a bit clever by qualifying/prefacing the statement with the words "generally speaking". But you are right.

A paying bank (apart from the issuing bank) is one ON WHICH THE DRAFT IS permitted to be DRAWN. "Payment" is always without recourse. The term 'payment' has now been replaced with the term 'Honour' in UCP 600.

I must qualify your statement: "My understanding is that LC by payment can be made available with a bank other than the issuing bank provided that the issuing bank has an arrangement with that bank whereby that bank is authorized to examine and pay the docs on behalf of issuing bank." with an example.

When a bank discounts/purchases a cheque (drawn on another bank) it negotiates. It is done with recourse. If the cheque bounces, the beneficiary (the payee or the holder in due course) has to pay back. In contrast, if the drawee bank pays (it does NOT negotiate), the payment is final and binding on the bank. The drawee pays (honours), it never negotiates (even without recourse, as a confirming bank does).

This is the precise difference between the terms payment and negotiation.

Replying to [Catalyst]:
Thanks for making the concept clear to me.

Can you qualify my following assessment too

The issuing bank issues usance LC that is
available with
XYZ Bank in bene's country
By acceptance

This means that exporter will draw drafts on XYZ bank and XYZ bank will honor the presentation, not negotiate. But UCP's article 12b says
" By nominating a bank to accept a draft or incur a deferred payment undertaking, an issuing bank authorizes that nominated bank to prepay or purchase a draft accepted or a deferred payment undertaking incurred by that nominated bank."

All this means that XYZ Bank will honor by accepting the drafts drawn on it and then negotiate without recourse. Right???????

Replying to [spider man]:

This article is to allow for discount of deferred payment undertakings. UCP 500 did not have that provision.

To answer your question: The nominated bank first accepts. It may then discount and pay the beneficiary (and refinance itself) if it chooses to. Or it may not.

On maturity date, it honours/pays beneficiary- if it hasn't discounted already, or pays itself, if it has.

Once it accepts, it must pay/honour on due date. Such payment is withour recourse. (The issuing bank continues to be liable, anyway, under Article 7).