Silent Confirmation and Some of Its Issues in Law of Letters of Credit

Irrevocable commercial letters of credit, in one respect, are divided into confirmed and non-confirmed credit. The confirmation of credit, in and of itself, is a new judicial act which contains same terms and conditions of confirmed credit. It creates a direct, primary and independent obligation upon confirming bank, so that it add confirming bank's obligation to issuing bank's obligation. The confirmation of credit in strict legal sense requires authorization or request of issuing bank. However, banking market bring about a new type of confirmation which have not this requirement, but it creature of a private contract between beneficiary of credit and a bank; i.e. it takes form at the request of beneficiary of credit rather than issuing bank. This specific type of confirmation is called "silent confirmation", distinguishing it from confirmation in strict legal sense. This article study concept of silent confirmation, differences between two types of confirmation, legal effects and risks of silent confirmation.