If on the other hand, the LC was confirmed, such advising/confirming bank would have no option but to take up documents which comply with the terms and conditions of the LC and honour its commitment to the exporter.
Negotiation deserves a special mention. Negotiation is a term which regularly confuses exporters and perhaps even some bankers. If an LC is available by negotiation with an advising bank and not confirmed, that bank has the option to pay to the exporter, remit the documents and claim payment from the issuing bank. The exporter must realize that the final decision as to whether or not documents meet the terms and conditions of the LC, and consequently as regards payment, rests with the issuing bank. The negotiating bank will request repayment from the beneficiary (with interest) if payment is not received from the issuing bank. Negotiation without confirmation is with recourse.
An LC available by negotiation and confirmed by the negotiating bank means that the negotiating bank has no option but to negotiate documents presented complying with the terms and conditions of the LC. Such negotiation under a confirmed LC is without recourse. Where an LC is only available by negotiation and not confirmed, many banks which have been nominated as negotiating banks are not prepared to take the risk of paying the exporter for fear they may not get reimbursed. Exporter should appreciate the service provided by a bank when it negotiates documents, and also understand why a bank is not always prepared to negotiate.