ISP98 Form 8 - Model Confirmation of Standby

Introduction & How to Use:

ISP98 Model Form 8 is a template for a Confirmation of a Standby Letter of Credit (SBLC).

The download links below offer a fillable Word file that can be edited, copied, or modified as you want for use in your systems. The second item also has the template, but includes explanations and annotations to aid the specialist to understand how to use this Form.

Further explanation of this Form is available at the bottom of this page.

📄 Download Fillable, Customizable Forms:

• Download the Fillable ISP98 Model Form 8 (MS Word file)
• Download the Annotated ISP98 Model Form 8 (MS Word file)

Preview:

Model Confirmation of a Standby:

[name and address of beneficiary]
[date of issuance]

Issuance:
We [name and address of confirmer at place of issuance] (“Confirmer”) issue this irrevocable confirmation number [reference number] (“Confirmation”) in favour of [name and address of beneficiary] (“Beneficiary”) in the maximum aggregate amount of [currency/amount]. Confirmer is nominated to issue this Confirmation[[1]] under standby letter of credit number [reference number] (“Standby”) issued by [name of standby issuer and its address at place of standby issuance] (“Issuer”) on the application of [name and address of applicant] (“Applicant”).[[2]]

Undertaking:
Confirmer undertakes to Beneficiary[[3]] to pay Beneficiary’s demand for payment in the currency and for an amount available under this Confirmation that (i) identifies this Confirmation (by the name and address of the Confirmer and reference number for this Confirmation, as shown above) and identifies the Standby (by the name and address of the Issuer and of the Applicant and reference number for the Standby, as shown above), (ii) is presented to Confirmer at the following place for presentation to Confirmer: [address of place for presentation], on or before the expiration date, (iii) is dated and signed by Beneficiary, and (iv) states that Applicant is obligated to pay to Beneficiary the amount demanded under the agreement between Beneficiary and Applicant titled [agreement title] and dated [date].[[4]]

Expiration:
The expiration date of this Standby is [date].

Presentations only to Confirmer:
Confirmer’s undertakings to Beneficiary are limited to presentations made to Confirmer under this Confirmation. Confirmer disclaims responsibility under ISP98 Rule 2.01 or otherwise for any presentation Beneficiary makes to Issuer.[[5]]

Effect of presentations to Issuer:
All of Confirmer’s obligations under this Confirmation shall terminate automatically upon Beneficiary’s making a presentation to Issuer under the Standby unless such presentation is made (i) through Confirmer or otherwise with Confirmer’s express consent or (ii) to enforce a presentation wrongfully dishonoured by Confirmer.[[6]]

Confirmer’s fees:
This Confirmation shall be automatically cancelled on [date] if Confirmer has not received before that date Beneficiary’s payment of Confirmer’s fees and charges for issuing this Confirmation, as follows: [currency/amount], and either payment or satisfactory assurance of payment of Confirmer’s other fees and charges in connection with this Confirmation, as follows: [description of other fees and charges].[[7]]

ISP98:
This Confirmation is issued subject to the International Standby Practices 1998 (ISP98) (International Chamber of Commerce Publication No. 590).[[8]]

Communications:
Communications to Confirmer about this Confirmation other than demands may be made by telephone, telefax, or SWIFT message, to the following: [numbers/addresses]. Beneficiary requests for amendment of this Confirmation, including amendment to reflect a change in Beneficiary’s address, should be made to the Issuer’s Applicant, who may then request issuance of the desired amendment of the Standby and this Confirmation.

                                                                       [Confirmer's name]

                                                                         ____________________
                                                                        [Name of Authorized Signer]
                                                                        [Title of Authorized Signer]

About the ISP98 Model Forms

Produced by the Institute of International Banking Law & Practice, the ISP98 Model Forms are designed to help standby users, including their regulators, to develop sound, workable, and appropriate texts for standbys in light of specialized standby practices and laws worldwide and can also be used for demand guarantees subject to ISP98.

These forms are fillable, editable, and ready to use.

See All ISP98 Model Forms

ISP98 Official Commentary

Rule by rule analysis, comparison, and recommendations for the ISP

Read it Here

Copyright © 2024 by the Institute of International Banking Law & Practice, Inc., www.iiblp.org (“IIBLP”).  Unlimited permission is hereby granted to copy and use this ISP98 form, including endnotes, for all purposes except publication for a charge to a purchaser or subscriber.

Additional Information on ISP98 Model Form 8

This ISP98 Form 8 model confirmation is intended to be used to confirm an ISP98 Form 7 model standby.  It is intended to be self-contained, rather than a short advice in which the confirmer adds its confirmation to a standby that is attached to or reproduced in the confirmer’s advice.  Like ISP98 Form 7, this form also assumes that the beneficiary intends to rely on and use the confirmation and not the standby.

This confirmation form is based on the ISP98 Form 1 standby, generally substituting “Confirmer” for “Issuer” and “Confirmation” for “Standby” and omitting most of the optional clauses.  Like ISP98 Form 7, ISP98 Form 8 describes in the text what documents must be presented rather than attaching a form of demand.

The endnotes to this form include alternative and other optional terms of particular relevance to confirmations, as well as references to relevant ISP98 rules.  See ISP98 Form 1, including endnotes, for explanation of wording that is common to ISP98 Forms 8 and 1 and for alternative and optional wording that may be adapted to a confirmation.  See also ISP98 Form 7, including endnotes, for explanation of wording in this Form 8 that is determined by the text of the standby to be confirmed or that is common to both forms.

This form is published for educational purposes and not as legal or professional advice.  Potential users should consult with their own advisers in the drafting or use of a standby letter of credit.  ISP98 and letter of credit educational and training materials, including The Official Commentary on the International Standby Practices containing official interpretations of ISP98, are available from IIBLP at a cost, or free to DCW subscribers.

[[1]]: Nomination.  ISP98 Rule 1.09 (Defined Terms) defines “confirmer” as one who adds its confirmation on the nomination of the issuer.  A nomination to confirm should be stated in the Standby and, preferably, referenced in the Confirmation so as to clarify in both undertakings the Confirmer’s status as a confirmer.  This confirmation form, including these endnotes, do not address issues that may arise where a purported confirmer (sometimes referred to as a “silent confirmer”) has not been nominated in the standby to add its confirmation.

[[2]]: Identification of Standby.  A confirmation should state the confirmer’s separate reference number for the confirmation and also state the reference number and other identifying information for the standby, including identification of the applicant for the standby.  In this regard, ISP98 Rule 1.11(c)(i) (Interpretation of these Rules) treats the standby issuer as the confirmer’s applicant.

[[3]]: Confirmer’s undertaking.  A confirmer is a person that is nominated by the issuer of a standby to add its confirmation and that does so by undertaking to honour a complying presentation.  See ISP98 Rules 1.09(a) (Definitions), 1.11(c) (Interpretation of these Rules), and 2.01(d) (Undertaking to Honour by Issuer and Any Confirmer to Beneficiary).

A confirmation may incorporate, rather than restate, the terms and conditions of the issuer’s obligations under the standby to which the confirmer has added its confirmation.  This model form of confirmation (ISP98 Form 8) restates all of the terms and conditions affecting the confirmer’s obligations to the beneficiary.  Restatement is common for confirmations of standbys in favor of beneficiaries that insist on confirmation to satisfy requirements for an approved local bank obligor.  This model form of confirmation should qualify as a letter of credit undertaking of the confirmer under ISP98 (and likely also under applicable law) whether or not the standby issuer authorized issuance of the confirmation.

[[4]]: Form of demand and statement.  The requirements for demanding payment under a confirmation should follow the requirements of the standby, supplemented by specific information as to the manner, time, and place of presentation to the confirmer.  For additional and alternative model texts and forms of beneficiary demands and statements, see ISP98 Forms 1-4 and their endnotes.

[[5]]: Confirmer not responsible for presentations to issuer.  ISP98 Rule 2.01(d) (Undertaking to Honour by Issuer and Any Confirmer to Beneficiary) provides that if a confirmation permits presentation to the Issuer, then the confirmer is responsible for the issuer’s wrongful dishonour.  This rule is intended to maximize a beneficiary’s rights against a confirmer.  This model confirmation overrides that rule on the assumption that the typical beneficiary intends to use the confirmation and not the standby and is willing to rely solely on the confirmer.  Similarly, the typical confirmer will prefer to rely solely on its own processing of demands and is unwilling to accept the added uncertainty and risk of remedying the issuer’s possible wrongful dishonour of a presentation made directly to the issuer.

[[6]]: Prohibition on circumventing the confirmer.  If the required documents consist of a demand and statement prepared and signed solely by the beneficiary, then the beneficiary may easily make multiple contemporaneous presentations.  If a beneficiary is permitted to present to the issuer in either the standby or the confirmation, then the confirmer receiving a demand will want to satisfy itself that neither it nor the issuer has received a conflicting demand or other communication from the beneficiary.  This involves risk and delay, which the confirmer may refuse to accept.  This model confirmation form includes wording intended to deter presentation other than to the confirmer by providing for a forfeiture of the beneficiary’s rights against the confirmer.  The possibility of presentation on either the confirmer or the issuer affects not just the wording of the confirmation but also the wording of the standby.  If a confirmation provides for transfer of drawing rights or other discretionary or automatic amendment of its terms, then even greater attention must be paid to prohibiting or limiting beneficiary requests or demands for action by the standby issuer that might affect the confirmer.

[[7]]: Confirmer’s charges.  This optional clause assumes that the issuer is not responsible for confirmer charges (see the ISP98 Form 7 model standby optional disclaimer of responsibility for confirmer charges) and that the confirmer has not obtained payment or satisfactory assurances of payment from the beneficiary before issuing its confirmation.  If the effect of non-payment is to be non-issuance of the confirmation rather than automatic cancellation, then this confirmation should be differently worded in light of ISP98 Rule 2.03 (Conditions to Issuance).

[[8]]: Applicable practice rules, law, court, arbitration, and sanctions.  A confirmation is an independent undertaking.  Questions as to where, how, and under what practice rules and law a confirmation may be enforced should be dictated by the confirmation and not by the standby it confirms.  A confirmation may be issued subject to ISP98, even though the standby states that it is issued subject to different practice rules or no rules.

A confirmer may desire clarity that its confirmation is subject to the law of the place where its confirmation is issued (or where presentation to the confirmer must be made), and the beneficiary may also want clarity that the confirmer cannot defend dishonour of its confirmation on the basis of the law applicable to the issuer.  In this regard, beneficiaries obtain confirmations to avoid the country risk as well as credit risk associated with the issuer.  If the standby includes a choice of law or court or arbitration clause or a sanctions clause, particular attention should given to the possible effect or lack of effect of each such clause on the confirmer’s obligations.  See ISP98 Form 1, endnote 19.