When an issuing bank do not request or do not authorise the advising or nominated bank to add confirmation to the credit, but despite that a confirmation is added at the request of the beneficiary, then it is called "silent confirmation".
Certainly, the "silent confirmation" is a legal agreement between the beneficiary and a bank that remains confidential between those two parties, subject to the applicable law of the confirming bank.
What happens when the payment is not received by the beneficiary under sight LC or on due date under usance credit which was silently confirmed?
Since the silent confirming bank (though being a nominated bank - did not negotiated or provided the value from their own funds or they were not a negotiating bank because of the credits being payable at the counters of the issuer) they were aware that they had no rights to sue the issuer. (Normally, the terms of the agreement would obligate the silent confirming bank to pay only after expiry of 30 days as a safe harbor period from the date of receipt of the documents by the Issuing Bank.) However, under the agreement, the beneficiary would sue the issuer and the legal cost would be borne by the silent confirming bank.
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